To,
The Members
Future Supply Chain Solutions Limited
The Directors of your Company are pleased to present the 16th
Annual Report of the Company for the financial year ended March 31, 2021.
FINANCIALS HIGHLIGHTS
(Rs in Lakh)
| Particulars |
For the year ended March 31, 2021 |
For the year ended March 31, 2020 |
| Total Income |
50,027.89 |
1,16,058.17 |
| Profit Before Tax |
(18,436.19) |
(6,388.24) |
| Profit After Tax |
(18,436.19) |
(6,388.24) |
| Earnings Per Share-Basic & Diluted (Rs) |
(42.01) |
(15.51) |
OPERATIONAL PERFORMANCE
A significant portion of the financial year under reporting was washed
away on account of COVID-19 situation and consequent lockdowns, movement and other
restrictions imposed by the Central/ State Governments from time to time. As of the March
31, 2021, FSC operations run through 65 distribution centres across India, covering
approximately 8.02 million square feet of warehouse space. The Company utilises a
"hub-and-spoke" distribution model comprising 13 hubs and 123 operational
branches and covering 11,780 pin codes across the country. FSC operates 13
temperature-controlled warehouses with total pallet capacity of 21,303 pallets. During the
year 2020-21, the warehousing capacity was rationalized from 8.20 mn sq. ft. in 2019-20 to
8.02 mn sq. ft. in 2020-21, while consolidating its number of warehouses from 74 in
2019-20 to 65 in 2020-21. Led by a COVID-19 affected weak macro-economic environment and
consumption slowdown in India, FSC undertook several initiatives to improve productivity
and increase operational efficiencies which 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 and revisiting customer contracts where FSCs ROI was
sub-optimal. Overall efficiency was increased but on account of low volume, the operations
were resulted into losses.
FUTURE OUTLOOK
Although the COVID-19 pandemic impacted supply chain disruptions gave a
significant blow to the logistics sector in the country, the industry is gradually
recovering impressively. With the fear of COVID-19 pandemic still around, the
discretionary consumption of non-essential goods is unlikely to pick up during the year
2021-22 and hence, it would affect revenue growth and profit margins. However, from a
longer period outlook perspective, management believes that the Company would 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, growth of consumption-led sectors and fast evolving consumer behaviour.
Additionally, FSC will benefit from its strategic partnership with Nippon Express, wherein
the two companies will jointly sell the 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.
COMPOSITE SCHEME OF ARRANGEMENT
During the year 2020-21, 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.
As on the date of this report, necessary directions from the Hble
National Company Law Tribunal for convening the meetings of the shareholders and creditors
for their approval, remained awaited.
DIVIDEND
In view of losses, your Directors are unable to declare any dividend.
Dividend Policy
A Dividend Policy adopted by the Company is given with this report as
Annexure A.
Unclaimed Dividend
Details of unclaimed dividends of earlier years have been provided in
Corporate Governance report.
Investor Education and Protection Fund
It is confirmed that during the year 2020-21, 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.
RESERVES
No amount is proposed to be transferred to the General Reserves or any
other Reserves.
holding, subsidiary, joint venture and associate company
The Company did not have any holding or subsidiary company during the
year 2020-21. Leanbox Logistics Solutions Private Limited ("Leanbox") is an
Associate entity of the Company. Leanbox acts as a General Trade Distribution Partner for
CPG/Brand Companies and as Supply chain Partner for small store format retailers in India
by helping them improve sales and efficiency using its technology platform, order
processing and delivery capabilities. Leanboxs tech platform is custom built to enable
the critical processes for in-city distribution supply chain. For the year 2020-21,
Leanbox registered total income of Rs 6,884.75 Lakh and net loss of Rs 132.25 Lakh. A
statement in prescribed form AOC-1 in annexed to this report as an Annexure B.
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.
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 2020-21 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 in Annexure C.
DIRECTORS & KEY MANAGEMENT PERSONNEL
During the year 2020-21, P V Sheshadri resigned as Chief Executive
Officer of the Company effective from April 4, 2020.
During the year 2020-21, Vimal K Dhruve - Company Secretary and
Compliance Officer of the Company resigned effective from September 17, 2020. The Board
appointed Rohan Gavas as a Company Secretary and Compliance Officer effective from
November 7, 2020. However, Rohan Gavas resigned on February 1, 2021.
After close of the year 2020-21, Nippon Express (South Asia &
Oceania) Pte Ltd. withdrew their nomination of Hiroyuki Tanaka and accordingly, Hiroyuki
Tanaka resigned on June 24, 2021.
Pursuant to nomination by Nippon Express (South Asia & Oceania)
Pte. Ltd. under the Shareholders Agreement, the Board of Directors appointed Shinichi
Kaikyama as an Additional Director (termed as "Non-Executive Director") of the
Company effective from June 24, 2021 who holds office as such till the date of ensuing
annual general meeting. The Company has received a notice from a member of the Company
proposing the candidature of Shinichi Kakiyama for the appointment of Director.
After close of the year 2020-21 and subsequent to the recommendations
of the Nomination and Remuneration Committee, the Board at its meeting held on June 24,
2021 appointed Vimal K Dhruve as a Company Secretary and Compliance Officer of the Company
effective from July 1, 2021.
In terms of section 152 of the Companies Act, 2013, Rakesh Biyani
retires at the ensuing annual general meeting and eligible for re-appointment.
Information as required pursuant to regulation 26(4) and 36 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.
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 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
MEETINGS OF THE BOARD & COMMITTEES
The Board met seven times during the year 2020-21 on July 31,2020,
August 29, 2020, September 11,2020, November 7, 2020, November 27, 2020, February 10, 2021
and March 31,2021. Other details of the meetings of the Board of Directors and various
Committees thereof including the details of composition, meetings and attendance are given
in Corporate Governance Report.
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.
CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION ANALYSIS
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.
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.
DEPOSITS
During the year 2020-21, the Company has not accepted any deposits
within the meaning of section 73 of the Companies Act, 2013.
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
Corporate Governance Report.
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 brought to the notice of the Audit Committee and the Board of Directors 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.
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 victimization 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. The Company has 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 (Prohibition of Insider
Trading) Regulations, 2015.
AUDITORS
During the year 2020-21, GMJ & Co.; Chartered Accountants, resigned
as Statutory Auditors of the Company w.e.f. November 7, 2020. The Board at its meeting
held on November 27, 2020 had appointed DMKH & Co. as Statutory Auditors to fill the
casual vacancy caused by the resignation of GMJ & Co. The said appointment was
approved by the members at the annual general meeting held on December 28, 2020.
DMKH & Co. - Chartered Accountants, Statutory Auditors of the
Company, are eligible to hold office as such for the financial year 2021-22 and have
issued a certificate to that effect.
The Statutory Auditors included a qualification in their report on the
Financial Statements for the year 2020-21. The Audit Committee and Board of Directors at
their respective meetings while approving the said Financial Statements reviewed such
qualification and agreed appropriate explanations therefor. As required under section
134(3)(f) of the Companies Act, 2013 and regulation 34(2) of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, a statement containing the details of
qualification, explanation by the Board and impact of the qualifications is annexed to the
Financial Statements.
During the year 2020-21, 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.
SECRETARIAL STANDARDS
The Company has devised a system to ensure compliance with the
provisions of applicable Secretarial Standards. 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 2020-21 issued by K Bindu & Associates, Company Secretaries in wholetime
Practise, is appended hereto as Annexure D.
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.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREX EARNINGS AND
OUTGO
The particulars required under Section 134(3)(m) of the Companies Act,
2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 relating to energy
conservation, technology absorption and foreign exchange earnings and outgo, are given in
Annexure E appended hereto.
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.
disclosures ON POLICIES & OTHER STATUTORY DOCUMENTS
Information on codes and policies adopted by the Company pursuant to
the Companies Act, 2013 and/ or SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 is given in Corporate Governance Report.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors of the Company, based on recommendation made by
CSR Committee, has formulated and approved a CSR Policy in line with the requirements of
the provisions of the Companies Act, 2013. The disclosures according to the Companies
(Corporate Social Responsibility Policy) Rules, 2014 is given in prescribed form which is
appended hereto as Annexure F.
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.
ONE TIME DEBT RESTRUCTURING
The COVID-19 has deeply impacted the long-term business viability and
led to significant financial stress across the industries. The debt burden had become
disproportionate relative to the cash flow during this pandemic period, posing significant
financial stability risks. In view of this and to facilitate revival of business and
mitigate the impact of COVID-19, the Reserve Bank of India ("RBI") had provided
a window under the Prudential Framework to enable the lenders to implement a resolution
plan in respect of corporate exposures without change in ownership, subject to specified
conditions. The Company opted to avail the relaxations so proposed by the RBI by
restructuring its financial debt so as to manage the cash flow and ensure the business
continuity.
After the close of the year 2020-21, the Company and its financial
lenders had agreed to a resolution plan to restructure the financial debt of the Company
as permitted under the Resolution Framework for COVID 19-related Stress announced by the
RBI. The Resolution Plan provided for, inter alia, extension in repayment of all term
loans and complete waiver of all penal interest and charges, default premiums, processing
fees etc.
Further, as part of the Resolution Plan, the debt raised through the
non-convertible debentures issued by the Company under Series - I and Series - II
("NCDs") were also proposed to be restructured. The Company also received
consent of the holder(s) of the NCDs and the Debenture Trustee, inter alia, to extend the
maturity date of the said NCDs, subject to the approval of the Stock Exchange.
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 in
Annexure G appended hereto.
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, is excluded from the Annual Report in physical form but 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.
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 given in Annexure H appended hereto.
ANNUAL RETURN
In terms of section 134(3)(a) and 92(3) of the Companies Act, 2013, a
form of annual return for the year ended March 31, 2021 is available on the website of the
Company at https://www.futuresupplychains.com/annual-reports.php.
PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES
There were no penalties/ punishments/ compounding of offenses for
breach of any section of Companies Act, 2013 against the Company or its Directors or other
officers in default, if any, during the year 2020-21.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors of the Company state that -
• in the preparation of the annual accounts for the year 2020-21, the applicable
accounting standards have 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 2020-21 and of the 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,
2021 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 operating effectively; and
• they have devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems are adequate and operating effectively.
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, Prohibition 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 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.
MATERIAL CHANGES AND COMMITMENTS
Except as disclosed in this report, there are no material changes,
commitments or events affecting the financial position of the Company, which have occurred
after the closure of the year 2020-21 till the date of this report.
acknowledgement
Your Directors desire to place on record, their appreciation to all
employees at all levels, who during the year 2020-21, with dedicated effort, enabled the
Company to deliver a satisfactory performance during the year which was largely affected
by COVID pandemic.
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 |
| Mumbai, June 24, 2021 |
+91-9892691696
