Future Supply Chain Solutions Ltd Directors Report.

To,

The Members

Future Supply Chain Solutions Limited

The Directors of your Company are pleased to present the 15th Annual Report of the Company for the financial year ended March 31, 2020.

1. FINANCIALS HIGHLIGHTS

(Rs. in Lakh)

For the year ended March 31, 2020 For the year ended March 31, 2019
Total Income 1,16,058.17 1,11,838.44
Profit/(Loss) Before Tax (6,388.24) 6,515.72
Profit/(Loss) After Tax (6,388.24) 6,515.72
Earnings Per Share-Basic (?) (15.51) 16.27
Earnings Per Share-Diluted (?) (15.51) 16.24

2. OPERATIONAL PERFORMANCE

FSC operations are run through 74 distribution centres across India, covering approximately 8.20 million square feet of warehouse space as of March 31, 2020. The Company utilises a "hub-and-spoke" distribution model comprising 13 hubs and 126 operational branches and covering 11,352 pin codes across the country. FSC operates 9 temperature-controlled warehouses with total pallet capacity of 19,395.

During 2019-20, the Company increased its warehousing capacity from 7.66 million sq. ft. in 2018-19 to 8.20 million sq. ft., while consolidating its number of warehouses from 96 in 2018-19 to 74 in 2019-20. This network re-design was largely done to benefit from scale efficiencies.

Led by a weak macro-economic environment and consumption slowdown in India during the second half of 2019-20, FSC undertook several projects and initiatives to improve productivity and increase operational efficiencies, so as to improve profitability. Some of these benefits were also passed on to its customers. These include:

Warehousing network re-design & consolidation Transport cost rationalisation and move to a complete variable model Labour productivity enhancement initiatives at the warehouse level Fixed costs/overheads rationalisation

Revisiting customer contracts where FSCs ROI was sub-optimal 8W Continued investments in upgrading technologies to augment capabilities and efficiency

3. FUTURE OUTLOOK

FSCs business has been severely impacted in the near term due to COVID-19 and this is likely to affect revenue growth and profit margins for 2020-21. However, from a five-year outlook perspective, FSC is likely to benefit from sector tailwinds, which will contribute to strong revenue growth. These mainly include benefits of GST implementation, increased outsourcing of non-core activities by product companies and growing consumption- led sectors. Additionally, FSC will benefit from its strategic partnership with Japans largest global logistic player - Nippon Express Co. Ltd. ("Nippon Express"), wherein the two companies will jointly sell FSC services to Nippon Express customers globally. FSC would also expand its target market in the automotive and pharmaceutical sectors along with Nippon Express, leveraging on the latters domain expertise in these sectors.

4. Business PARTNERSHIP WITH NIPPON EXPRESS

During the year 2019-20, the Company successfully partnered with Nippon Express who agreed to acquire sizeable stake in the Company and entered into the Agreements to that effect.

In December 2019, Nippon Express acquired 22% stake in the Company, both under primary and secondary route at a price of Rs 664/- per equity share. The Company also entered into a Business Collaboration Agreement with Nippon Express to explore the synergies and for development of business.

5. DIVIDEND

In view of losses, the Board has not recommended any dividend on equity share of the Company for the year 2019-20.

5.1 Dividend Policy

5.1.1. Companys philosophy:

Future Supply Chain Solutions Limited (FSC) strives to ensure and preserve stakeholders value and work towards enhancing net worth of the Company as well as overall stakeholders value. While achieving the above objective, the Company also ensures protecting the interest of all stakeholders, including the society at large.

FSC looks upon good Corporate Governance practices as a key driver of sustainable corporate growth and long term stakeholder value creation. Good Corporate Governance Practices enable a Company to attract high quality financial and human capital. In turn, these resources are leveraged to maximise long-term stakeholder value, while preserving the interests of multiple stakeholders, including the society at large. Our Dividend philosophy is in line with the above principles. Our Dividend payout ratio would be ranging from 25% to 60% of the earned profits for the year, after adjusting any carried forward losses. Dividend Payout ratio would be reviewed every three year and would be based upon profitability and retained earnings and would be further subject to business requirements and general economic conditions. The Company will attempt to maintain a consistent dividend record to reward shareholders.

5.1.2. Declaration of Dividend:

In line with the philosophy described above, the Board reviews the operating performance every quarter and shall strive to distribute optimum and appropriate level of profits in the form of interim/final dividends, from time to time. All dividends are subject to statutory regulations and approvals, as applicable. Overall, the dividend payout in each year will depend upon business performance, investment requirements of the annual operating plan for the year and any other strategic priorities identified by the Company.

5.1.3. Per share basis:

The dividend will be declared on per share basis only.

5.1.4. Circumstances under which the shareholders of the listed entities may not expect dividend:

The Board may choose not to recommend a dividend, if there are important strategic priorities which require large investments that would deplete the Companys cash reserves or uncertainties in the business performance in the near to medium term.

5.1.5. Financial parameters considered while declaring dividend:

The financial parameters that may be considered before declaring dividend are profitability, cash flow, obligations, taxation policy, past dividend rates and future growth and profitability outlook of the Company.

5.1.6.Internal and external factors considered while declaring dividend:

The Board leads the strategic management of the Company on behalf of the Shareholders, exercise supervision through direction and control and appoints various committees to handle specific areas of responsibilities. In this endeavor, the Board reviews various types of information provided to it which has a bearing on declaring dividend. Key internal and external factors are listed below (not exhaustive):

Internal:

* Annual operating plans, budgets, updates

*Capital budgets

*Quarterly and Annual results

* Investments including Mergers and Acquisitions (M&A)

* Strategic updates/financial decisions

* Funding arrangements Any other matter/risks

External

* Macro-economic environment

* Competition

* Legislations impacting business

* Statutory restrictions

* Changes in accounting policies and applicable standards

*Client related risks

• Any other matter/risks apprehended by the Board

5.1.7. Usage of retained earnings:

Retained earnings would be used to further the Companys business priorities. If there are excess reserves beyond the medium to long term business requirements, the retained earnings would be distributed to shareholders via Dividends or other means as permitted by applicable regulations.

5.1.8. Parameters that are adopted with regard to various classes of shares:

Currently, the Company has only one class of shares. If the Company has more than one class of shares in future, dividend for each class would be subject to prescribed statutory guidelines as well as terms of offer of each class to the investors of that class of shares. To the extent permitted, the Company would aim for highest level of transparency and equitable treatment of all investors.

5.2 Unpaid Dividend

Details of unclaimed dividends for previous years are provided in the Corporate Governance report.

5.3 investor Education and Protection Fund

It is confirmed that during the year 2019-20, there was no amount of unclaimed dividends which was liable to be transferred to the Investor Education and Protection Fund as required under section 124 of the Companies Act, 2013.

6. RESERVES

In view of losses, no amount is proposed to be transferred to General Reserves or Debenture Redemption Reserves for the year 2019-20.

7. SHARE CAPITAL

As at the end of the year 2019-20, the following is the summary of equity share capital of the Company:

Date of allotment Nature of issue No. of equity shares of Rs 10 each Cumulative number of shares Cumulative paid up share capital
As at April 1, 2019 4,00,81,113 40,08,11,130
May 13, 2019 ESOP 5,020 4,00,86,133 40,08,61,330
June 18, 2019 ESOP 1,015 4,00,87,148 40,08,71,480
July 31, 2019 ESOP 800 4,00,87,948 40,08,79,480
December 17, 2019 ESOP 6,300 4,00,94,248 40,09,42,480
December 17, 2019 Preferential issue 37,89,350 4,38,83,598 43,88,35,980

8. HOLDING, SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANY

Consequent to the allotment of new equity shares on preferential basis, Ritvika Trading Private Limited and Future Enterprises Limited ceased to be holding companies effective from December 17, 2019.

During the year 2019-20, the Company divested its entire stake in Vulcan Express Private Limited - wholly owned subsidiary on December 12, 2019. As at March 31, 2020, there was no subsidiary of the Company.

During the year 2019-20, the Company transferred its last mile delivery business to the associate - Leanbox Logistics Solutions Private Limited ("leanbox") in exchange of equity shares and accordingly, Leanbox became subsidiary of the Company w.e.f. May 20, 2019. However, pursuant to further issue of shares by Leanbox, the stake of the Company reduced below 50% and hence, Leanbox ceased to be subsidiary of the Company w.e.f. June 28, 2019 and continued to remain as an associate entity.

8.1 Statement in Form AOC-1 containing salient features of the financial statement of associate company

8.1.1 Part A: Subsidiary Not Applicable

8.1.2 Part B: Associates and Joint Ventures

Name of Associate Leanbox Logistics Solutions Private Limited
Latest audited Balance Sheet Date March 31, 2020
No. of shares of Associate held by the Company on the year end 6,69,568
Amount of investment in Associate Nil*
Extend of Holding (%) 49.36%
Description of how there is significant in*ence Shareholding more than 20%
Reason why the associate is not consolidated Not Applicable
Networth attributable to shareholding as per latest audited Balance Sheet (Rs in Lakh) (1,205.45)
Profit/(Loss) for the year (Rs in Lakh)
- Considered in consolidation (1,675.48)
- Not considered in consolidation Nil

* Net off impairment in value of investment

9. PARTICULARS OF LOAN, GUARANTEE AND INVESTMENT

The particulars of investments, loans, and guarantees covered under the provisions of Section 186 of the Companies Act, 2013 read with rules made thereunder are given in the Notes to the Standalone Financial Statements of the Company.

10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Transactions entered into with related parties (as defined under Section 188 (1) of the Companies Act, 2013) during the year 2019-20 were in the ordinary course of business and on arms length basis and based on omnibus approval accorded by the Audit Committee. Pursuant to section 134(3)(h) of the Companies Act, 2013, particulars of contracts/ arrangements entered into by the Company with related parties referred to in sub section (1) of section 188 of the Companies Act, 2013 are given hereunder:

10.1 Part A - Details of contracts or arrangements or transactions not at arms length basis

Not Applicable

10.2 Part B - Details of contracts or arrangements or transactions at arms length basis

sl. No. Particulars Details
1 Name of the related party & nature of relationship Leanbox Logistics Solutions Private Limited (Associate entity)
2 Nature of contracts/arrangements/transaction Business Transfer Agreement
3 Duration of the contracts/arrangements/transaction N.A.
4 Salient terms of the contracts or arrangements or transaction including the value, if any The Agreement provides for transfer of Last Mile Delivery Business Undertaking of the Company on a going concern and as a Slump Sale basis, for issue of equity shares.
5 Date of approval by the Board February 7, 2019
6 Amount paid as advances, if any Not applicable since the transfer of business was in exchange of equity shares issued by the said Associate entity.

During the year 2019-20, there were no transactions with any entity belonging to the Promoter Group and holding 10% or more shareholding in the Company.

11. DIRECTORS & KEY MANAGEMENT PERSONNEL

Pursuant to nomination by Nippon Express (South Asia & Oceania) Pte. Ltd. under the Shareholders Agreement, the Board of Directors appointed Hiroyuki Tanaka as a Non-Executive Director of the Company effective from January 8, 2020. The Shareholders of the Company also approved the appointment by way of a resolution proposed through postal ballot process.

In terms of section 152 of the Companies Act, 2013, Chandra Prakash Toshniwal and Mayur Toshniwal retire at the ensuing annual general meeting and eligible for re-appointment.

After close of the year 2019-20, the Board had re-appointed Mayur Toshniwal as Managing Director of the Company for another term of three years, subject to the approval of the members. A necessary resolution proposing reappointment of Mayur Toshniwal is annexed to the Notice of the ensuing annual general meeting for the approval of the members. Information as required pursuant to regulation 26(4) and 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard on General Meetings in respect of Directors seeking appointment/re-appointment is given under the notice of the ensuing annual general meeting.

After close of the year 2019-20, P V Sheshadri - Chief Executive Officer of the Company, resigned effective from April 4, 2020.

After close of the year 2019-20, Vimal Dhruve - Company Secretary and Compliance Officer of the Company, resigned effective from September 17, 2020. Further, the Board has appointed R*an Gavas as a Company Secretary and Compliance Officer of the Company effective from November 7, 2020.

The Company has received requisite declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013 confirming the criteria of independence met by them as laid down in Section 149(6) of the Act and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

12. MEETINGS OF THE BOARD & COMMITTEES

Details of Board of Directors and various Committees thereof including the details of composition, meetings and attendance are given in the report of Corporate Governance.

13. PERFORMANCE EVALUATION OF DIRECTORS

Pursuant to section 134(3)(p) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has carried out an annual evaluation of its own performance, its Committees and individual Directors.

The performance were evaluated after seeking inputs from all the Directors on the basis of criteria determined by the Nomination and Remuneration Committee such as the Board composition and structure, effectiveness of processes, information and functioning, effectiveness and roles of committees etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, the Board as a whole and the Chairman of the Company was evaluated after taking into account the views of Managing Director and other Non-Executive Directors. The Board and the NRC reviewed the performance of individual Directors on the basis of criteria such as the level of participation, meaningful discussion and constructive inputs and other requisite matters. The performance of the Board, its Committees, and individual Directors was discussed at the meeting of the Board. The Independent Directors assessed the quality, independence, relevance and timeliness of the flow of the information to the Board of Directors.

Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

Based on evaluation, it emerged that the Board has an optimum level of competency, experience, qualifications and diversity. Each Board member contributed in his/her own manner to the collective prudence of the Board, keeping in mind his/her own background and experience. There was active participation and adequate time was given for various matters brought before the Board. Overall, the Board was functioning very well in a unanimous and interactive manner.

14. CORPORATE GOVERNANCE

Pursuant to regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and relevant sections of the Companies Act, 2013, a Management Discussion and Analysis Statement, report on Corporate Governance and Auditors Certificate thereon are included in this Annual Report.

15. BUSINESS RESPONSIBILITY REPORT

Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Business Responsibility Report is appended hereto and forms part of this Annual Report.

16. DEPOSITS

During the year 2019-20, the Company has not accepted any deposits within the meaning of section 73 of the Companies Act, 2013.

17. AUDIT COMMITTEE

The Audit Committee wholly comprises Independent Directors. Bala Deshpande Chairs the Committee. Other members of the Committee are Malini Chopra and Janat Shah. There were no instances where the Board did not accept the recommendations and suggestions, if any, of the Audit Committee. Various details covering terms of reference, powers and roles, meetings and attendance of the Audit Committee are disclosed in the report of Corporate Governance.

18. Risk MANAGEMENT & ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Internal control systems are commensurate with the nature of the business, size and complexity of the business operations. These controls are routinely tested by the auditors and are discussed at regular intervals. All locations are subject to regular audit on risk-based methodology and are in sync with the business verticals, operational design, financial model, systems & process and other relevant subjects. Risks, if any, are systematically addressed through mitigating actions. The audit reports detailing the efficacy of the internal controls are regularly brought to the notice of the members of the Audit Committee for their review. Suggestions and recommendations, if any, are also implemented as may be recommended by the Audit Committee. In the opinion of the Board, there is no element of risk, which threatens the existence of the Company.

19. VIGIL MECHANISM

The Company has established a vigil mechanism to provide a framework to promote whistle blowing and to provide for raising concerns about unethical behaviour, actual or suspected fraud or violation of the code of conduct or policies of the Company. The mechanism provides for adequate safeguards against victimisation of employees and Directors to avail of the mechanism and also provide for direct access to the Chairperson of the Audit Committee in exceptional cases. During the year 2019-20, the Company revised the Whistle blower Policy to include "reporting of incidents of leak or suspected leak of unpublished price sensitive information" in terms of amendments in SEBI (Pr*ibition of Insider Trading) Regulations, 2015.

20. AUDITORS

After close of the year 2019-20, GMJ & Co.; Statutory Auditors have resigned effective from November 7, 2020. The Board has appointed DMKH & Co. - Chartered Accountants, as Statutory Auditors of the Company to fill casual vacancy caused by the resignation of GMJ & Co. Pursuant to section 139(8) of the Companies Act, 2013, the said appointment is subject to the approval of the members in general meeting. Accordingly, necessary resolution has been incorporated in the Notice of the annual general meeting for members to consider and approve the appointment of DMKH & Co. as Statutory Auditors of the Company.

The statutory auditors included qualifications in their report on the Financial Statements for the year 2019-20. The Audit Committee and Board of Directors at their respective meetings while approving the said Financial Statements reviewed such qualifications and provided appropriate explanations therefor. As required under section 134(3)(f) and regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a statement containing the details of qualifications, explanation by the Board and impact of the qualifications is annexed to the Financial Statements.

During the year 2019-20, there was no instance of fraud committed against the Company by its officers or employees, as reported by Statutory Auditors or Secretarial Auditor to the Audit Committee under Section 143(12) of the Companies Act, 2013.

21. SECRETARIAL STANDARDS

The Company has devised a system to ensure compliance with the provisions of applicable Secretarial Standards.

22. SECRETARIAL AUDIT

As required under section 204 of the Act and 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, a Secretarial Audit Report for the year 2019-20 issued by K Bindu & Associates - Company Secretaries in whole time Practise, is annexed herewith.

23. COST AUDIT

Maintenance of cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013 is not applicable to the Company and hence, such accounts and records are not required to be maintained by the Company.

24. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREX EARNINGS AND OUTGO

The Company being focused on operations within the country and does not render any services outside India, hence, there are no particulars be given on export initiative.

24.1 conservation of Energy

24.1.1 The steps taken or impact on conservation of energy:

Adequate measures have been taken to reduce energy consumption. The Company, to the extent possible, uses the energy saver electronic equipment to conserve the energy. This initiative helped not only conserved energy but also reduced energy costs considerably without compromising on comfort, convenience and usage requirements. The Company also engaged external professionals to carry out energy audit at all warehouse locations with a view to evaluate opportunities to improve the energy efficiency.

24.1.2 The steps taken by the Company for utilising alternate source of energy:

All efforts are made to use more natural lights at office/warehouse locations to optimise the consumption of energy. The Company also installed solar panels at few warehouse locations as an alternate source.

24.1.3 The capital investment on energy conservation equipment:

Nil

24.1.4 Technology Absorption and Research & Development:

None

24.1.5 Foreign Exchange Earnings & Outgo:

Earnings in foreign exchange: Nil Foreign exchange outgo: Nil

25. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

Pursuant to section 178 of the Companies Act, 2013 and regulation 19(4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and consequent to the recommendations of the Nomination and Remuneration Committee ("NRC"), the Board has framed a policy on board diversity governing the criteria for appointment of Executive, Non-Executive and Independent Directors. The appointment of Directors are made based on merit, apart from compliance of legal and contractual requirements, that complements and expands the skills, experience and expertise of the Board as a whole taking into account knowledge, professional experience and qualifications, gender, age, cultural and educational background, and any other factors that the NRC might consider relevant for the Board to function effectively. While appointing any person as an Independent Director, utmost care is to be taken as to the independence of such person.

The Board has also approved a policy on remuneration payable to the Directors of the Company. In determining the remuneration of the Directors, the NRC evaluates the remuneration paid by comparable organisation and thereafter makes its recommendation to the Board. Details of availability of Policy on Board Diversity and Remuneration Policy on the website of the Company are given in the Corporate Governance Report.

26. DISCLOSURES ON POLICIES & OTHER STATUTORY DOCUMENTS

Information on codes and policies adopted by the Company pursuant to the Companies Act, 2013 and/or Listing Regulations is given in the report on Corporate Governance.

27. CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors of the Company at its meeting held on February 7, 2020 and consequent to the recommendations made by CSR Committee, approved various projects to be undertaken for spending the CSR amount. The disclosures according to the Companies (Corporate Social Responsibility Policy) Rules, 2014 in prescribed form is given in annexure to this report.

28. SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in future.

29. MATERIAL CHANGES AND COMMITMENTS

29.1 Resignation of CEO

After the close of the year 2019-20, P V Sheshadri resigned as Chief Executive Officer of the Company effective from April 4, 2020. P V Sheshadri had been associated with the Company since quite considerable time and one of the key personnel in building operational capacities and warehouse infrastructure. However, to ensure the uninterrupted business operations, the Managing Director has assumed the responsibilities earlier assigned to P V Sheshadri. In view of this, the Company does not foresee any material impact due to the resignation of P V Sheshadri.

29.2 COVID-19 PANDEMIC

At the end of the calendar year 2019, a pandemic COVD-19 adversely impacted the health of the human lives across the globe. An unprecedented situation has been prevailing since then which forced many countries to announce complete lockdown with a view to control further spread of virus. Since the last week of March 2020, the initial nationwide lockdown announced by the Government with a view to restrict the spread of COVID-19 and extended from time to time.

29.2.1 Impact of the COVID-19 pandemic on the business

From the last week of March 2020, the initial nationwide lockdown announced by the Government of India with a view to restrict the spread of COVID-19, the Company closed all its offices, warehouses & operational branches and stopped movement of transport vehicles. However, with a view to make the essential commodities available to public at large, the Company continued rendering services for foods articles from some of its distribution centers during the lockdown period. The lockdown was then extended from time to time by the Central/State Governments till May 31, 2020 with minimum and essential relaxations.

The Company caters to business requirements of various companies operated in fashion, electronics, home furnishing, general goods and merchandise, automobiles etc. Closure of stores and point of sales of these companies due to lockdown, has adversely impacted the revenues of the Company. Majority of business operations in Contract Logistics, which is the major revenue contributor, came to a halt. With respect to Express business, the Company stopped movements of transport vehicles since inter-state movement was also probited barring certain logistics activities of essential commodities. However, functions of corporate office have been remotely operational since the management advised the employees to work from their residence since commencement of lockdown period.

29.2.2 Ability to maintain operations including the factories/units/office spaces functioning and closed down During the lockdown period, the Company managed the supply chain activities relating to essential commodities in the interest of general public at large. The Company managed supply chain of the largest customer i.e. Future Retail Limited for its retail formats "Big Bazaar" and "easy day" which catered the requirements of general public for foods articles and staples during the lockdown period. Hence, barring food distribution centers, all business locations of the Company were closed in line with the Government directives.

29.2.3 Schedule of restarting the operations

With lifting of lockdown period, the Company has started its operations in phased manner and after taking necessary steps to ensure safety and appropriate distancing measures at the warehouses and other operational branches. Nearly all warehouses and Express branches are now operational with lower volume ranging from 20% to 60%. Transport vehicles have also started moving inter-state, wherever permitted by the State Governments. The Company has also allowed few employees to visit the registered office/corporate office, in rotational manner in line with the directives of the regulatory authorities, to ensure appropriate distancing and avoid overcrowding. Whenever permitted and deemed appropriate to do so, the Company would start allowing the other employees to visit the offices in gradual manner.

29.2.4 Steps taken to ensure smooth functioning of operations

The Company has taken various measures to curb spreading of COVID-19 at all its business locations. The said measures include, inter alia, requisite screening before entering the premises, availability of sanitizer products for all people visiting the premises, compulsory use of face masks, maintaining safe distance at workplace, closure of canteen within the premises, pr*ibition to bring outside food etc.

29.2.5 Impact of pandemic on capital and financial resources, profitability, liquidity position, ability to serve debt, assets and internal financial reporting and controls, supply chain and demand for services

The Companys business highly dependent upon robust consumer demands. Any drop in demand would have direct impact on the supply chain activities. During the lockdown period, there was almost zero demand in various industries like fashion, automobiles, electronics and other general merchandise. As stated earlier, the Companys food distribution centers were operational to manage the supply chain relating to food articles and staples. Barring these activities, there were no other logistics services rendered by the Company during lockdown period.

Since the end of the previous calendar year, the Company has been taking various steps to check costs in various business verticals. Warehouse network was rationalised to control the rental outgo without affecting the supply chain, transport activities have been re-looked in a manner that ensure optimum level of efficiency and minimise the running costs, steps were taken to conserve the energy at large warehouses and for temperature controlled logistics etc. However, due to drastic drop in its realisation, the Company was constrained to utilise most of its working capital limits during the lockdown period. Further, due to closure of all retail outlets (except food & staples) of the Companys largest customer i.e. Future Retail Limited, contributing almost 50% of revenues to the Company, financial conditions of the Company were adversely impacted and resulted into downgrade of rating of various facilities.

29.2.6 Existing contracts/agreements where non-fulfilment of the obligations by any party will have significant impact on the listed entitys business.

The Company derives more than 65% revenues from the Group entities considered to be related parties. Although, there is no contractual obligations with respect to the volume and order book between the Company and such Group entities, the closure of retail stores of such Group entities has led to delayed realisation of receivables from them adversely affecting the cash flow of the Company. Any prolonged delays in realisation or unavailability of funds may significantly impact the business operations.

29.2.7 Other relevant material updates about the business

Monetary Policy Committee (MPC) of Reserve Bank of India vide its press release dated March 27, 2020 after considering and careful evaluation of the current and evolving macroeconomic and financial conditions in the backdrop of COVID-19 situation has announced various credit, liquidity and monetary measures including allowing of moratorium on term loans and deferment of interest on working capital facilities.

29.3 Composite Scheme of Arrangement

After close of the year 2019-20, the Board has approved a Composite Scheme of Arrangement between various companies belonging to Future Group (Transferor Companies) and companies belonging to Reliance Group which, in order to expand its retail and wholesale footprint, is desirous of acquiring the logistics & warehousing and retail & wholesale businesses of such Transferor Companies as a going concern on Slump Sale basis in the manner provided in the Scheme. Future Group, as a first step, would consolidate the logistics & warehousing and retail & wholesale businesses of such Transferor Companies in Future Enterprises Limited - the Transferee Company which shall subsequently transfer to Reliance Group on slump sale basis.

The salient features of the said Scheme are as follows:

Amalgamation of the Company along with other Transferor companies, with Future Enterprises Limited ("FEL");

Transfer and vesting of the Logistics & Warehousing Undertaking from FEL as a going concern on a slump sale basis to Reliance Retail Ventures Limited ("RRVL");

Transfer and vesting of the Retail & Wholesale Undertaking from FEL as a going concern on a slump sale basis to Reliance Retail and Fashion Lifestyle Limited, a wholly owned subsidiary of RRVL ("RRVL WOS"); Preferential allotment of equity shares and warrants of FEL to RRVL WOS.

Pursuant to the Scheme, FEL will issue 131 (One Hundred Thirty One) fully paid up equity shares of Rs 2/- each to the equity shareholders of FSC as on the Record Date (as may be determined in terms of the Scheme) for every 10 (Ten) fully paid up equity share of Rs 10/- each held in FSC.

The said Scheme would be subject to requisite approvals of the National Company Law Tribunal, BSE Limited, National Stock Exchange of India Limited, Securities and Exchange Board of India, Competition Commission of India and other statutory/regulatory authorities, including those from the shareholders and creditors of the Transferor Companies and Transferee Company and other applicable contractual approvals.

30. PARTICULARS OF EMPLOYEES

Disclosures with respect to the remuneration of Directors and employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given hereunder:

30.1 The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2019-20, ratio of the remuneration of each Director to the Median Remuneration of the Employees (MRE) of the Company for the financial year 2019-20:

Name of the Director/ KMP and Designation Remuneration of Director/KMP* % increase in Remuneration Ratio of remuneration of each Director to MRE
1 2 3 = (1/ MRE)
Mayur Toshniwal - Managing Director 197.68 Nil 50
P V Sheshadri - Chief Executive Officer 116.14 Nil 30
Samir Kedia - Chief Financial Officer 64.42 Nil 16
Vimal K Dhruve - Company Secretary 32.34 Nil 7

* Does not include perquisite, if any, arising out of the exercise of stock options

30.2 In the financial year 2019-20, there was a decrease of 13% in the MRE.

30.3 There were 1,384 permanent employees on the rolls of Company as on March 31, 2020.

30.4 The average percentage increase made in the remuneration of employees other than the managerial personnel for the financial year 2019-20 was 8.54% whereas the increase in managerial remuneration for the same financial year was 0%.

30.5 there was no variable component in remuneration for any Non-Executive Directors. the company has not paid any remuneration to the non-executive Directors during the year 2019-20 or during the previous year. the variable component in the remuneration of the Managing Director was in line with the remuneration policy of the company taking into consideration the performance of the company, economic situation and other relevant factors.

30.6 it is affirmed that the remuneration is as per the Remuneration Policy of the company.

30.7 statement containing the names and other particulars of employees drawing remuneration in excess of the specified limits:

In terms of the provisions of 134 of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement containing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said rules are provided in Annual Report. However, in terms of the first proviso to Section 136(1) of the Companies Act, 2013, information pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, available for inspection by the members at the Registered Office of the Company during business hours on all working days up to the date of the ensuing Annual General Meeting. Any member interested in obtaining a copy thereof, may write to the Company Secretary and the same will be furnished on request. The complete Annual Report including aforesaid information is being sent electronically to all those members who have registered their e-mail addresses and is also available on the websites of the Company and Stock Exchanges.

31. EMPLOYEE STOCK OPTION PLAN

The Company has implemented a Stock Option Plan - "Future Supply Chain Solutions Limited Employees Stock Options Plan -2017" with a view to appropriately reward and retain its valuable human resources as may be proposed by the management and approved by the Nomination and Remuneration Committee. Details as required to be provided under Section 62 of the Companies Act, 2013 and Rule 12(9) of Companies (Share Capital and Debenture Rules, 2014) and SEBI (Share Based Employee Benefits) Regulations, 2014 are furnished hereunder:

31.1 Disclosure with respect to FSC ESOP 2017 as at March 31, 2020

I Date of Shareholders approval August 08, 2017 (and ratified on August 22, 2018 pursuant to reg.12 of SEBI (SBEB) Regulations, 2014
II Total number of options approved 4,00,000 stock options exercisable into equal number of equity shares of Rs 10/- each.
III Vesting requirements Options granted under FSC ESOP 2017 would vest in accordance with the terms of Grant, subject to minimum period of one year and maximum period of three years from the date of Grant of such Options.
IV Exercise price or pricing formula As may be determined by the NRC subject to condition that the exercise price would not be less than the face value and greater than market price of the equity shares.
V Maximum term of options granted Three years from the date of vesting
VI Source of shares (primary, secondary or combination) Primary
VII Variation in terms of options None
VIII Lock-in period None
IX Method used to account for ESOP Black Schedule Method

31.2 The stock-based compensation cost was calculated as per the fair value method, the total cost to be recognised in the financial statements for the year 2019-20:

Rs 113.44 Lakh

31.3 option movement during the year ended on March 31, 2020

Sl. No. Particulars Details of Fsc EsoP 2017
1 Details Number of options outstanding at the beginning of the year 2,39,200
2 Number of options revised during the year Nil
3 Number of options granted during the year 60,000
4 Number of options forfeited/Cancelled/lapsed during the year 47,500
5 Number of options vested during the year 79,221
6 Number of options exercised during the year 13,135
7 Number of shares arising as a result of exercise of options 13,135
8 Exercise Price (Rs) 350
9 Money realised by exercise of options, if scheme is implemented directly by the Company (Rs) 45,97,250
10 Loan repaid by the Trust during the year from exercise price received N.A.
11 Total number of options outstanding (in force) at the end of the year 2,38,565
12 Number of options exercisable at the end of the year 46,525

31.4 weighted average exercise price and weighted average fair values of options whose exercise price either equals or exceeds or is less than the market price of the stock: Refer Note No. 33 in Notes to the Financial Statements.

31.5 Employee-wise details of options granted under Fsc EsoP 2017 during three years prior to Ipo:

31.5.1 Senior Managerial Personnel & KMPs

Name and Designation Options granted under Fsc EsoP 2017 at an exercise price of Rs 350/-
Mayur Toshniwal (Managing Director) 42,000
P V Sheshadri (CEO) 42,000
C P Toshniwal (Non-Executive Director) 35,000
Sougato Shome (VP - CAM) 21,600
Vimal K Dhruve (Company Secretary) 15,000
ASR Prasad (VP - CAM) 15,000
Divyansh Rathore (VP - Operations) 15,000
Sanjeev Mandal (GM - Operations) 14,400

31.5.2 Employees who were granted, during any one year, options amounting to 5% or more of the options granted during that year:

Name No. of options granted under Fsc EsoP 2017
Mayur Toshniwal 42,000
P V Sheshadri 42,000
C P Toshniwal 35,000
Sougato Shome 21,600
Vimal K Dhruve 15,000
ASR Prasad 15,000
Divyansh Rathore 15,000
Sanjeev Mandal 14,400

31.5.3 Identified employees who were granted option, during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grants: - None

31.6 Employee-wise details of options granted under FSC ESOP 2017 during 2019-20:

31.6.1 Senior Managerial Personnel & KMPs

Name and Designation No. of options granted exercise Price per option (Rs)
Samir Kedia (Chief Financial Officer) 20,000 457.00
Jitender Lal (General Manager) 10,000 457.00
Hiren Kumar Ladva (General Manager) 10,000 457.00
Harpreet Singh (General Manager) 10,000 457.00
Nupur Agarwal (Head - Investor Relations) 10,000 457.00

31.6.2 Employees who were granted options amounting to 5% or more of the options granted during 2019-20:

Name and Designation No. of options granted exercise Price per option (Rs)
Samir Kedia (Chief Financial Officer) 20,000 457.00
Jitender Lal (General Manager) 10,000 457.00
Hiren Ladva (General Manager) 10,000 457.00
Harpreet Singh (General Manager) 10,000 457.00
Nupur Agarwal (Head - Investor Relations) 10,000 457.00

31.6.3 Identified employees who were granted option, during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grants: - None

31.7 Details regarding allotment of shares made under Fsc EsoP 2017

31.7.1 Number of shares issued under FSC ESOP 2017 during the year 2019-20:

A total 13,135 equity shares of Rs 10/- were issued upon exercise of vested options.

31.7.2 The price at which such shares were issued: Rs 350/- per equity shares of Rs 10/- each including a premium of Rs 340/- per share.

31.7.3 Employee wise details of the shares issued against exercise of stock options:

Senior Management Personnel Number of shares
Mayur Toshniwal 6,300
Vimal K Dhruve 1,150
Anand Sen 565
Sougato Shome 4,120
Others 1,000

31.7.4 Any other employee who is issued shares in 2019-20 amounting to 5% or more shares issued during 2019-20: None

31.7.5 Identified employees who were issued shares during 2019-20 equal to or exceeding 1% of the issued capital of the Company at the time of issuance: None

31.7.6 I dentified employees who were granted option, during 2019-20 equal to or exceeding 1% of the issued capital of the Company at the time of grants: None

31.8 Method and Assumptions used to estimate the fair value of options granted during the year:

Refer to Note No. 33 in the Notes to Standalone Financial Statements.

31.9 Details of the companys Employees welfare Trust: None

32. EXTRACT OF ANNUAL RETURN

In terms of provisions of Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration Rules), 2014 as amended, an extract of annual return for the year 2019-20 is available on the website of the Company at https://www.futuresupplychains.com/annual-reports.php

33. DIRECTORS RESPONSIBILITY STATEMENT

* The Directors of the Company state that - Sl: in the preparation of the annual accounts for the year 2019-20, the applicable accounting standards had been followed along with proper explanation relating to material departures;

* they have 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 year 2019-20 and of the profits/loss of the Company for that year;

* they have taken proper and sufficient care 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;

* they have prepared the annual accounts for the financial year ended March 31, 2020 on a going concern basis; they have laid down internal financial controls to be followed by the Company and such financial controls are adequate and were operating effectively; and

* they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

34. AWARDS AND RECOGNITION

During the year 2019-20, the Company was recognised with following awards:

- Operational Excellence in Cold Chain, ASSOCHAM Cold Chain Industry Awards 2019;

- Best Use of Digital Techniques/Technologies, 3rd Digital Enterprise Awards & B2B Marketing Awards 2019;

- B2B Brand of The Year, 3rd Digital Enterprise Awards & B2B Marketing Awards 2019;

- Best in Class Supply Chain Distribution Centre, ELSC;

- Best 3PL Company Overall, ELSC;

- Logistics Excellence 3PL Company of the Year, India Logistics Summit & Awards 2019;

- Logistics Excellence in Retail, India Logistics Summit & Awards 2019;

- Logistics Excellence in Food Industry, India Logistics Summit & Awards 2019;

- Best in Cross-Functional Collaboration, Tech Supply Chain Conference & Exposition 2019-CPO Innovation;

- Best Employer, Best Employer Brand Awards 2019, Nagpur;

- Supply Chain Company of the Year, Warehouse Excellence Awards 2019;

- Outstanding Technology Implementation in a Warehouse, 6th Inflection Conference and Awards;

- Supply Chain Excellence in Apparel Distribution Value Chain, Global Logistics Awards;

- A memento of appreciation for outstanding performance in DC operations and managing VAS at multiple distribution centres organised by Herballife SCM Service Provider Of The Year;

- Warehouse & Logistics Summit & Awards 2019, Quantic;

- Infrastructure And Design Of The Year, Warehouse & Logistics Summit & Awards 2019, Quantic.

35. PREVENTION OF SEXUAL HARASSMENT

The Company is committed to foster a healthy working environment that enables employees to work without fear of prejudice, gender bias and sexual harassment. The Company seeks to ensure that every gender should have equal opportunity and no preferential or discriminatory treatment is meted out to anyone on grounds of sex alone. The Company has in place a strong policy on prevention of sexual harassment at workplace which aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of sexual harassment. The Company conducts programs to spread awareness, prevent gender related harassment or discrimination, and in the event of such an occurrence, provides recourse to the concerned individual. This policy extends to all employees and is incorporated in the service conditions of code of conduct for all employees. This policy is consistent and designed to comply with the Sexual Harassment of Women at Workplace (Prevention, Pr*ibition and Redressal) Act, 2013.

The Company has formed an Internal Complaints Committees (ICC) across all zones in India which are responsible for redressal of complaints related to sexual harassment and follow the guidelines provided in the policy. The ICC are chaired by senior female employees of the Company at each of the zones and has representation of an external subject matter expert, Ms. Sheetal Niwalkar who is empanelled with other renowned corporates as well. The ICC work towards creating an atmosphere that promotes equality, non-discrimination and gender justice. They facilitate measures to ensure that there is no hostile environment towards employees at the workplace. ICC regularly monitors and reviews the implementation and effectiveness of sexual harassment policy acting as highest point of escalation in the Company in case of complaint.

36. ACKNOWLEDGEMENT

Your Directors desire to place on record, their appreciation to all employees at all levels, who during the year 2019-20, with sustained dedicated effort, enabled the Company to deliver a remarkable performance.

Your Directors also wish to place on record their appreciation and acknowledge with gratitude for the support and co-operation extended by the Government, clients, bankers, investors and other government agencies and look forward to their continued patronage in future.

For and on behalf of the Board of Directors of

Future supply chain solutions limited

Rakesh Biyani

Chairman

Place: Mumbai

Date: November 27, 2020