Patel Integrated Logistics Ltd Directors Report.

To,

The Members of the Company

Your Directors have pleasure in presenting their 57th Annual Report and audited statement of accounts of the Company for the financial year ended 31st March, 2019.

FINANCIAL PERFORMANCE:

The Companys financial performance for the year ended 31st March, 2019 is summarized below:

2018-19 2017-18
Income
Revenue From Operations 44774.83 42367.85
Other Income 559.19 529.00
Total Income 45334.02 42896.85
Expenses
Operating Cost 37909.52 35626.69
Employee Benefits Expense 3076.34 2848.84
Finance Costs 837.30 720.60
Depreciation and Amortization Expense 463.39 474.68
Other Expenses 2307.66 2154.62
Total Expenses 44594.21 41825.43
Profit/(Loss) before Tax 739.81 1071.42
Provision for Tax 107.27 248.88
Profit/(Loss) after Tax 632.54 822.54
Other comprehensive income
Item that will not be reclassified to Statement of Profit and Loss 364.05 68.58
Income tax relating to item that will not be reclassified to Statement of Profit and Loss (23.58) (27.97)
Total Other Comprehensive Income (340.47) (40.61)
Total Comprehensive Income for the year 292.07 781.93

The financial statements of the Company have been prepared on accrual basis of accounting in accordance with the Indian Accounting Standards (IND AS) as prescribed under Section 133 of the Companies Act, 2013 (as amended) and the accounting principles generally accepted in India. The company has uniformly applied the accounting principles during the period prescribed.

FINANCIAL PERFORMANCE REVIEW:

During the financial year 2018-19 your Company posted the total comprehensive income of 2.92 cr. for the year ended 31st March, 2019 as compared to 7.82 cr. for the year ended 31st March, 2018. Income from operations for the year ended 31st March, 2019 was 447.75 cr. as compared to 423.68 cr. for the year ended 31st March, 2018. Net Worth stood at 128.08 cr. Basic and Diluted EPS was 3.83.

Material changes and commitments affecting the financial position of the Company after the end of the financial year till the date of this Report:

The Board of Directors of the Company at its meeting held on 18th April, 2019 have approved the sale and transfer of Companys surface transport business carried on in a division called "Patel Roadways" ("Undertaking") on a going concern basis by way of Slump sale to Innovative Logistics Service Private Limited ("Purchaser"), Wholly owned subsidiary of Stellar Value Chain Solutions Pvt. Ltd upon terms and conditions contained in the business transfer agreement entered between the Company and Purchaser.

The aforesaid transaction would result in the following benefits to the Company: (i) unlocking value for the Company by sale of part of its business; (ii) Retiring of part of existing loans and reduce corresponding overheads thereby strengthening the profitability of the Company; and (iii) pursuing growth opportunities in line with its strategic directions including Warehousing.

The above transaction received approval of shareholders on 27th May, 2019 and closed on 30th June, 2019.

The Company will continue to focus and undertake air cargo business as a separate division called "Patel Onboard Couriers" and Warehousing business, under the brand "Patel Warehouse" and "Patel Logistics".

There is no other change in the nature of business during the year under review.

SUBSIDIARY, ASSOCIATES AND JOINT VENTURE:

During the year under review, Delivrex India Limited, non material wholly owned subsidiary of the Company has made an application under Section 248 of the Companies Act, 2013 for voluntary striking off its name from the Registrar of Companies (ROC), Mumbai, being a non operational Company and the same is taken on record and formal Notice to this effect from ROC is awaited. There is no other subsidiary of company as on 31st March, 2019.

The Company does not have any Associate or Joint Venture Company as on 31st March, 2019.

TRANSFER TO RESERVES:

Your Company has transferred 1.00 crore to the general reserve and 2.00 crore to contingency reserve.

DIVIDEND:

For the year under consideration, the Board of Directors recommended a dividend of 0.50 per share i.e. 5% on the equity share capital of the Company for the financial year ended 31st March, 2019. The dividend payout is subject to approval of members at the ensuing Annual General Meeting. The dividend payout for the year under review has been formulated after consideration of Companys long term objectives of growth and also for conservation of resources for diversification.

OPERATIONS AND FUTURE OUTLOOK:

In line with the strategic directions outlined by the Board of Directors, the Company sold its surface transport business on a going concern basis by way of slump sale to Innovative Logistics Service Private Limited, Wholly owned subsidiary of Stellar Value Chain Solutions Pvt. Ltd for Retiring of part of its existing loans and reduce corresponding overheads thereby strengthening the profitability of the Company.

The Company will continue to focus and undertake air cargo business and warehousing business. The Construction of warehouse facility at Bangalore on 2.20 acres of land is completed and will be operative in the current financial year. The Company also acquired 3.00 acres of land in Chennai for construction of warehouse facility.

The Companys air cargo business impacted in the month of March 2019 due to the suspension of operations by Jet Airways, but certainly hopeful of recovery in 2019. Weak cross-border trade is slowing economic growth and will continue to do so in 2019. However, with fiscal and monetary policy supporting domestic spending, most forecasters expect continued economic growth at a slower but reasonably strong pace this year, rather than recession.

This new set up will certainly lead to considerable rent saving, revenue growth and higher profitability for the Company in years to come. Plans have been put to increase efficiency of operations with reduced cost.

FINANCE:

Bank Finance:

The Company enjoys fund based and non fund based credit facilities from the Banks to meet its working capital requirements as well as long term finance for funding the part of capital expenditure. The Company also enjoys a credit line for buying the trucks on deferred payment guarantee basis. The Company is regular in payments of installments and there are no over dues as on the date of reporting. The Company could bring down interest cost by proper mix of utilization of finance from various banks and closely pursuing with the Bank to reduce the Interest cost.

Fixed Deposits:

The Company is accepting unsecured fixed deposits from the public in accordance with the requirements prescribed under Chapter V of the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014.

Accordingly, Fixed Deposits accepted by the Company stood at 1666.84 lacs as on 31st March, 2019. There were no unpaid or overdue deposits as on 31st March, 2019, other than unclaimed Deposits and interest accrued thereon aggregating 0.82 lacs out of which nothing is outstanding for the period of more than seven years and liable to be transfer to Investor Education and Protection Fund.

There has been no default in repayment of deposits or payment of interest thereon during the year under consideration. The Company has not accepted any deposits which are not in compliance with the requirement of Chapter V of the Companies Act, 2013.

Credit Rating:

The Company is continued to be rated as IND BBB [outlook stable] for Companys fund based borrowings & finance lease and IND A3+ [outlook stable] rating for its non fund based borrowings and IND tA- (Stable) for its current Fixed Deposit Programme by India Ratings & Research Private Ltd (India Ratings), a Fitch group Company. The rating is valid as on the date of reporting.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given in the notes to the Financial Statements.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

Companys CSR policy focuses on areas such as education, support for the women, elderly people, children and social inclusion. This entails transcending business interests and grappling with the "quality of life" challenges that underserved communities face and working towards making a meaningful difference to them. The detailed policy of the Company is available on our website www.patel-india.com

During the year, the Company required to spend 15,78,366/- as CSR expenditure. The Company has spent 22,93,430/- (Rupees Twenty Two lacs Ninety Three Thousand Four Hundred Thirty only) on CSR activities. Out of total cost of CSR spent 7,15,000/- paid as balance amount of CSR expenditure unspent for the previous financial year 2017-18.

The details CSR Policy statement and annual report on the CSR activities undertaken during the financial year ended 31st March, 2019, in accordance with Section 135 of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this report as Annexure [I].

RISK MANAGEMENT:

The requirement of Risk Management Committee under Regulation 21 of SEBI (Listing Obligations and Disclosures Requirements) Regulation, 2015 is not applicable to the Company as the same is applicable to top 500 listed entities.

However, the Company has voluntarily constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards Report.

The Company has a Business Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Companys competitive advantage.

There are no risks which in the opinion of the operating management threatens the existence of your Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report.

AUDIT COMMITTEE:

The Company has Audit Committee of Board of Directors constituted in accordance with section 177 of the Companies Act, 2013. The details of the Audit Committee are explained in the Corporate Governance Report.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUECY:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. However, this requires upgradation and improvement under new business environment. The Company is constantly improving the quality and implementing more internal financial controls.

The Internal Audit Department monitors and evaluates operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, the Audit Committee/ Board initiate corrective actions in respective areas and advise the operating people about the action taken on such report and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has a vigil mechanism named Whistle Blower Policy which is in compliance with the provisions of Section 177 (10) of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosures Requirements) Regulation 2015. The policy deals with instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Mr. Asgar S. Patel, Non-Executive Chairman of the Company having been at the helm of the Company since its inception in 1962 resigned w.e.f. 18th April, 2019 as he attained the age of 80 years. There is no other material reason for his resignation. Mr. Asgar S. Patel has made a significant contribution to the success of the Company and the group over five decades. Considering his tremendous experience and in the interest of the Company to avail of his guidance, valuable knowledge and wisdom from time to time in an advisory and mentoring role, the Board has appointed Mr. Asgar S. Patel as Chairman Emeritus with effect from the conclusion of the Board meeting on 18th April, 2019.

Mr. Areef A. Patel, Whole Time Director designated as Executive Vice Chairman of the Company demised on 29th July, 2019. He played crucial leadership role through his career and the Company immensely benefitted from his vision and leadership during his tenure. His sudden and unexpected passing away is an irreparable loss to the Company and all the directors of the Company convey deep sympathy, sorrow and condolences to his family.

Mr. Syed K. Husain, retires by rotation at the ensuing Annual General Meeting pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and being eligible, has offered himself for re-appointment as the Director.

Subject to the approval of members in the General Meeting, the Board on the recommendation of the Nomination and Remuneration Committee appointed Mr. Syed K. Husain (DIN: 03010306), with effect from 2nd August, 2019 as the Whole Time Director designated as Vice Chairman for filling the casual vacancy created by the demise of former Executive Vice Chairman Mr. Areef A. Patel. The approval of members is sought for the appointment of Mr. Syed K. Husain as the Whole-time Director at the ensuing Annual General Meeting.

Subject to approval of members in the General Meeting, the Board on the recommendation of the Nomination and Remuneration Committee appointed Mr. Rajesh K. Pillai (DIN: 00224193) as an Additional Director of the Company with effect from 2nd August, 2019. Mr. Rajesh K. Pillai vacates office of Director at the ensuing Annual General Meeting. The Company has received a Notice proposing the candidature as the Non Executive Director of the Company under the Companies Act, 2013 whose office is liable to retire by rotation.

Mr. Syed K. Husain, retires by rotation at the ensuing Annual General Meeting pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and being eligible, has offered himself for re-appointment as the Director. The Board of Directors on the recommendation of the Nomination and Remuneration Committee has approved his re-appointment.

The term of office of Mr. PS.G. Nair, Mr. Sandeep P Parikh and Mr. Farukh S. Wadia as Independent Directors of the Company will expire on 20th August, 2019. The Board of Directors based upon the performance evaluation and recommendation of Nomination and Remuneration committee re-appointed Mr. PS.G. Nair, Mr. Sandeep P Parikh and Mr. Farukh S. Wadia as Independent Director of the Company for the second term of 5 (five) consecutive years on the expiry of the current term of office. Approval of members is sought for the re-appointment of Mr. PS.G. Nair, Mr. Sandeep P Parikh and Mr. Farukh

S. Wadia as Independent Directors of the Company for the second term of five years, who being eligible have offered themselves for re-appointment at the ensuing Annual General Meeting.

There is no other Key Managerial Personnel appointed or resigned during the year under review.

Disclosure from Independent Directors:

Pursuant to the provisions of Section 134 of the Companies Act, 2013 with respect to the declaration given by the Independent Director of the Company under Section 149(6) of the Companies Act, 2013, the Board hereby confirms that all the Independent Directors have given declarations and further confirms that they meet the criteria of Independence as per the provisions of Section 149(6) read with Regulation 16 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Board Evaluation:

Pursuant to the provisions of the Companies Act, 2013 read with the Rules issued thereunder and the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force), the process for evaluation of the annual performance of the Directors/ Board/ Committees was carried out. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. In pursuance to the above, Independent Directors in their separate meeting held on 29th March, 2019 have reviewed and evaluated the performance of Board as a whole and other Executive Director.

Remuneration Policy:

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Meetings:

During the year five Board Meetings and 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 prescribed under the Companies Act, 2013.

RELATED PARTY TRANSACTIONS:

All related party transactions referred to in section 188(1) of the Companies Act, 2013 that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The Form AOC - 2 pursuant to Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is set out as Annexure [II].

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website.

Apart from receiving remuneration by executive directors, sitting fees by Non executive directors and professional fees paid to qualified professional directors none of the Directors have any pecuniary relationships or transactions vis-a-vis the Company.

Your Directors draw attention of the members to Note No. 40 to the financial statement which sets out related party disclosure.

The policy on related party transactions has been placed on the Companys website and can be accessed through the following link: http://patel-india.com/uploads/Privacy_policies/Pdf-132024539827384008.pdf

STATUTORY AUDITORS AND AUDITORS REPORT:

In terms of the provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, M/s. Hitesh Shah & Associates, Chartered Accountants, Firm Registration No. 103716W were appointed as statutory auditors of the Company to hold office for one term of 5 years commenced from conclusion of the 55th Annual General Meeting upto the 60th Annual General Meeting of the Company to be held in calendar year 2022. The Company has received a certificate from the proposed Statutory Auditors to the effect that their appointment, shall be in compliance with the provisions of Section 139 and 141 of the Companies Act, 2013.

The Auditors Report for the financial year 2018-19 is unmodified i.e. it does not contain any qualification(s), reservation(s) or adverse remark(s) and forms part of this Annual Report.

In accordance with the Companies (Amendment) Act, 2017, Ministry of Corporate affairs as per the notification dated 7th May, 2018 have done away with the provision relating to ratification of appointment of statutory auditors by members at every Annual General Meeting.

SECRETARIAL AUDIT REPORT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed DM & Associates Company Secretaries LLP, Company Secretaries, to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year ended 31st March, 2019 is set out as "Annexure [III]" to this Report.

SECRETARIAL STANDARDS:

The Institute of Company Secretaries of India had revised the Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2) with effect from October 1,2017. The Company is in compliance with the provisions of the same.

DISCLOSURE REQUIREMENTS:

To comply with conditions of Corporate Governance, pursuant to regulation 34 read with schedule V of SEBI (Listing Obligations and Disclosures Requirements) Regulation, 2015, a Management Discussion and Analysis Report, Corporate Governance Report and Auditors Certificate on the compliance of conditions of Corporate Governance are included in this Annual Report.

A Business Responsibility Report as required under Regulation 34 of SEBI (Listing Obligations and Disclosures Requirements) Regulation, 2015 is not applicable to the Company as the same is applicable for top 500 listed entities based on market capitalization.

Dividend Distribution Policy as required under Regulation 43A of SEBI (Listing Obligations and Disclosures Requirements) Regulation, 2015 is not applicable to the Company.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in Form MGT- 9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as "Annexure [IV]" to this Report.

The same has been placed on the website of the Company www.patel-india.com

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

As stipulated under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014.

(A) CONSERVATION OF ENERGY:

(i) The steps taken or impact on conservation : of energy The operations of your Company are not energy intensive. However all efforts are made to conserve and optimize use of energy with continuous monitoring, improvement in Maintenance systems and through improved operational techniques.
(ii) The steps taken by the Company for utilizing alternate sources of energy
(iii) The capital investment on energy conservation equipments The Company continues its in-house programme of enlightening and educating its commercial vehicle drivers for greater fuel efficiencies. All the vehicles owned by the Company undergo an intensive Planned Preventive Maintenance (PPM) drill to keep the vehicles in top running condition with special emphasis on fuel conservation. More and more CNG vehicles are included in the fleet.
All new vehicles were purchased in compliance with all regulations relating to pollution control.
The Company has on going process to conserve the energy by replacement of old electronic devices and installation of new efficient power saving devices whenever required.
No material capital investment incurred by the Company during the year 2018-19.
(B) TECHNOLOGY ABSORPTION:
(i) The efforts made towards technology absorption : Updating of Technology is a Continuous process; appropriate technology is implemented and adapted by the Company for innovation. Efforts are continuously made to develop new products required in the Transport and Logistics Industry.
(ii) The benefits derived : The Company is steadily delivering on its promise of providing the swift service Investment in IT and state-of-the art tracking systems.
(iii) Imported Technology : There is no technology imported during the last three years.
(iv) The expenditure incurred on Research and Development : No expenditure is incurred on Research and Development by the Company during the year 2018-19.

(C) FOREIGN EXCHANGE EARNINGS AND OUTGO:

Year ended 31s1 March, 2019 Year ended 31s1 March, 2018
Earnings in Foreign Exchange
Air Freight Billing and other expenses (Net) Nil Nil
TOTAL ... Nil Nil
Expenditure in Foreign Currency
Membership and Subscription Fees 0.41 0.37
Travelling (excluding air fare) 2.65 1.63
TOTAL ... 3.06 2.00

MAINTENANCE OF COST RECORDS:

The maintenance of cost records as specified by the Central Government under sub section (1) of section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Rules 2014 is not applicable to the Company.

PARTICULARS OF EMPLOYEES:

The Directors sincerely appreciate efforts put in by employees of the Company at all levels and thank them for their contribution in achieving the overall results during the year.

Disclosure pertaining to the remuneration and other details as required under Section 197(2) of the Companies Act, 2013 and Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as "Annexure [V]" to this report.

The information required pursuant to Section 197 read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding this information which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has in place Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has complied with provisions relating to the constitution of internal complaint committee under the said Act to redress complaints received regarding sexual harassment. All employees are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed off during the financial year 2018-19:

No. of Complaints received Nil
No. of Complaints disposed off Nil

DIRECTORS RESPONSIBILITY STATEMENT:

The Directors would like to inform the Members that the Audited Accounts for the financial year ended 31st March, 2019 are in full conformity with the requirement of the Companies Act, 2013. The Financial Accounts are audited by the Statutory Auditors, M/s Hitesh Shah & Associates.

In terms of Section 134(3)(c) of the Companies Act, 2013, the Directors based on the representation received from the Operating Management confirm that:

1) in the preparation of the annual accounts, for the year ended 31st March, 2019, the applicable accounting standards and Schedule III of the Companies Act, 2013 have been followed and there are no material departures from the same;

2) the Directors have selected such accounting policies and applied them consistently and made judgment 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 31st March, 2019 and of the profits of the Company for the financial year ended 31st March, 2019;

3) the proper and sufficient care has been taken 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;

4) the Directors have prepared the Annual Accounts of the Company on a going concern basis;

5) the Company has proper internal financial controls in place. However, the Company continues to develop better controls for implementation in current financial year.

6) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

APPRECIATION:

Your Directors place on the record their appreciation of the contribution made by the employees at all levels who, through their competence, diligence, solidarity, co-operation and support have enabled the Company to achieve the desired results during the year.

The Board of Directors gratefully acknowledge the continued assistance and support received from the Bankers, Clients, Stakeholders and Fixed Deposit Holders in the endeavors of the Company.

For and on behalf of the Board of Directors
Registered Office : SYED K. HUSAIN P. S. G. NAIR
Patel House, 5th Floor, Plot No. 48, DIN: 03010306 DIN: 00074494
Gazdar Bandh, North Avenue Road, Vice Chairman Director
Santacruz (West) Mumbai - 400 054.
Mumbai, dated 20th August, 2019