GATI Directors Report

Dear Members,

The Directors have great pleasure in presenting the report of the Business and Operations of your Company (''''the Company'''' or ''''Gati''''), along with the audited financial statements, for the financial year ended March 31, 2017. The Consolidated Performance of your Company and its subsidiaries has been referred to wherever required.

Financial Highlights

(Rs. in mn)





2015-16 B



Total Income





Profit before Finance Cost, Depreciation & Amortization, Taxation & Exceptional item





Less: Finance cost





Depreciation and Amortization Expenses





Profit before tax & Exceptional items





Less: Exceptional items





Profit before tax





Less: Tax expenses





Profit before Minority Interest





Less: Minority Interest





Profit after tax






Your Directors have recommended dividend of 40% (Rs. 0.80 per share) for the financial year ended March 31, 2017 (previous year 50%), which upon approval by the shareholders at the ensuing Annual General Meeting will be out of the free reserves of the Company.

Review of Operations

During the year under review, at consolidated level, your Company achieved a revenue of Rs. 17,041 mn, EBITDA of Rs. 1,250 mn, PBT of Rs. 502 mn and PAT of Rs. 373 mn as against a revenue of 16,818 mn, EBITDA of Rs. 1,456 mn, PBT of Rs. 648 mn and PAT of Rs. 492 mn respectively in the previous year.

At standalone level, your Company recorded a revenue of Rs. 5263 mn, EBITDA of Rs. 597 mn, PBT of Rs. 329 mn and PAT of Rs. 298 mn as against a revenue of Rs. 4,980 mn, EBITDA of Rs. 560 mn, PBT of Rs. 223 mn and PAT of Rs. 198 mn in the previous year.

Emphasis of matter to Independent Auditor''''s report

Independent Auditor has drawn attention in their report for emphasis of matter read along with notes to financial statements Nos. 28, 31 and 32 which is self explanatory.

Gati Standalone e-Commerce Performance

FY2016-17 for the e-Commerce industry proved to be quite the opposite of every long term forecast that had been projected just a year earlier. What was seen as a norm over the previous few years, incoming fund flows into the industry experienced a sharp drop. Consequently, the pace of growth of established e-tailers tempered significantly, and the industry was abuzz with talk of industry consolidation. Demonetization further added to the decline, since Cash-On-Delivery (COD) constitutes a significant share of total e-Commerce orders. The estimated industry growth for FY2016-17 was close to 15%.

In such context, Gati e-Connect the e-Commerce division of your company, delivered a package volume growth of 14% between FY2015-16 and FY2016-17, with substantial share of growth (in excess of 50%) coming in the lower-weight segment. During the year under review, Gati e-Connect has recorded a revenue of INR 2,140 million as against INR 2,078 million in the previous period. While demonetization reforms during second-half of FY2017 negatively affected the COD packages, the move has given an unprecedented push to online transactions, with the government itself advocating a move towards a digital, cashless economy.

More recent growth forecasts for the domestic e-Commerce market point to a CAGR of around 30% over the next five years. The moderated growth indicates signs of maturity in the industry, moving from a period of frenzied valuation towards a more sustainable market ecosystem. The e-Commerce industry, nevertheless, continues to be the most exciting and fastest growing sectors, domestically.

In November, 2016, your company invested in BrownTape, a cloud-based software solutions company, aimed at building capacity and capability in the e-Commerce arena. The acquisition forms an important part of your company''''s future growth strategy. Gati Fulfillment Services (GFS) is a new service offering targeted at the vast vendor base in the e-Commerce ecosystem. GFS provides a unique single-window solution to online sellers by integrating Browntape''''s order management platform with your company''''s pan-India logistics network. Your company is happy to report that the integrated platform went live in the last quarter of FY2016-17.


Gati-Kintetsu Express Pvt Ltd. (GKEPL)

GKEPL offers solutions in Express Distribution - Surface, Rail and Air; Transport Solutions for bulk transportation; Warehousing and end-to-end Supply Chain Solutions across the logistics value chain. In Financial Year 2016-17, your flagship subsidiary, GKEPL contributed 65% to the consolidated business of your Company.

During the year under review, GKEPL recorded a revenue of Rs. 11,117 mn, EBITDA of Rs. 798 mn and PAT of Rs. 329 mn against a revenue of Rs. 11,416 mn, EBITDA of Rs. 953 mn and PAT of Rs. 440 mn in the previous year.

FY16-17 started with quite some turbulence as your company had just pressed into action its ambitious Shopfloor Automation (SFA) project for using Barcode Scans on each and every package across the pan-India network operations. The older system of manual docket data entry and network routing was sought to be replaced with a state-of-the-art automation technology. There were stiff challenges to be overcome during the initial phase of learning and stabilization of the new technology across many operating units. As a responsible service provider, your company was in continuous touch with the entire customer franchise, so that the technology transition was best managed without putting the customers to undue hardship. The new technology rollout was completely stabilized by mid Q2 and with this your company is now the sole B2B Express Distribution service provider which proudly and confidently asserts to a hundred per cent visibility at an individual package level for enroute track-n-trace. Our investment in SFA is now a significant competitive advantage for Gati in terms of providing differentiated & enhanced customer experience. We can now extend SFA tool further for direct digital interface with our esteemed customers. This will help automate the booking process and thereby, ensure error-free transactions in a digitized GST India.

The technology introduction resulted in a short term pain of impacting H1 business volumes in both Express (Surface) and Premium (Air) verticals; albeit the new capability is sure to deliver a long term competitive advantage, thereby enhancing future growth prospects. The lingering after-effects of demonetization further affected business volumes in H2, especially in the consumer facing sectors of White goods, Apparel, and FMCG. In summary, the core Express Distribution business had a tough year in FY2016-17, although it emerged stronger with new operations capability critical for fulfilling customer expectations in near future.

The Transport Solutions business registered a modest growth of near 5%. The re-tendering for a parcel train operation in the west-east corridor is still awaited and as this happens in the near future, your company is confident of re-establishing dominance in rail parcel business.

Your company intensified its focus on the Warehousing business by creating a strong pipeline of customers needing 3PL services. These efforts are critical in a post GST era, where the customers are expected to migrate from unorganized to organized service providers and similarly from individual services providers to integrated logistics solutions providers.

Going forward, your company is encouraged by a number of factors that will contribute to the long-term growth of the GKEPL portfolio. The GST roll-out will help unlock the much needed efficiencies in the way businesses operate today and your company is distinctively positioned with the pan-India network and technology to support this transition. Your company continues to evolve its relationships with its customers and is working closely with key accounts to solve the supply chain needs of a post-GST environment.

Gati Kausar India Ltd. (GKIL)

India''''s cold chain sector forms the backbone of the food processing and food service industry, providing cold storage and refrigerated transportation for a range of businesses including Packaged Foods, Quick Service Restaurants, Pharmaceuticals, Animal Protein, Fresh Fruit and Vegetables. Increasing consumer demand for quality processed food; stringent regulations for food safety and focus on Good Distribution Practices (GDP) in pharmaceuticals have all helped generate greater need for high-quality cold supply chain solutions. Gati Kausar already has a visible presence in refrigerated transportation and serves many a number of popular brands.

During the year under review, Gati Kausar recorded a revenue of Rs. 441 mn, EBITDA loss of Rs. 1 mn and Loss of Rs. 104 mn against a revenue of Rs. 494 mn, EBITDA of Rs. 47 mn and Loss of Rs. 40 mn in the previous period.

Going forward, your company endeavours to disrupt the Cold Chain market with such quality design and differentiated services, to build a proud Cold chain business. A network of Refrigerated Express Distribution Centers across the country will help your company provide differentiated, end-to-end Cold Chain solutions to customers, by providing time-definite cold chain delivery services.

Consolidated Financial Statements (CFS)

During the year, the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, your company has prepared the consolidated financial statements of the company, which forms part of this Annual Report in compliance with applicable provisions of the Companies Act, 2013, read with the Rules issued there under, applicable accounting standards and the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the “Listing Regulations"). The consolidated financial statements have been prepared on the basis of audited financial statements of your Company, its subsidiaries, as approved by the respective Board of Directors.

Further, the statement containing the salient features of the financial statement of our subsidiaries in prescribed format is attached to the consolidated financial statement of the Company. The statement also provides the details of performance and financial position of each of the subsidiaries.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the company and audited accounts of each of its subsidiaries, are available on our website, These documents will also be available for inspection till the date of AGM during business hours at our registered office.

Abridged Annual Accounts

Pursuant to the provisions of the first proviso to Section 136(1) of the Act and Rule 10 of Companies (Accounts) Rules, 2014, the abridged annual accounts are being sent to all shareholders whose e-mail id''''s are not registered with the Company. The full annual report is available on the website of your Company at and available for inspection at the registered office of the Company during working hours. Any member interested in obtaining the full annual report may write to the Company Secretary and the same will be furnished on request.

Air India and Gati Arbitration

In the year 2009, your Company discontinued Freighter Aircraft operations as per the arrangement with National Aviation Company of India Ltd (NACIL) (erstwhile Indian Airlines Ltd.,) and now Air India (AI), due to continuous failure and defaults by NACIL. The Learned Arbitral Tribunal adjudicating on the disputes between your Company and Air India Limited in respect of the discontinued freighter operations of the Company, has passed its Award dated September 17, 2013, whereby, it has inter alia directed Air India Limited to pay an amount of Rs. 26.82 crores to your Company against which an amount of Rs. 26.59 crores is included in the Loans and Advances being the difference between the amount of bank guarantee invoked by NACIL and claims acknowledged by the Company. Further, the Learned Tribunal has directed Air India Limited to pay interest @ 18% per annum on the awarded amount.

Air India Limited took up the matter before the Honorable High Court of Delhi by filing an application for setting aside the award, in which the High Court has upheld the Arbitral Tribunal award except the claim for damages of Rs. 4.97 crores. Both Air India and your Company have filed cross appeals before the division bench of the Honourable High Court of Delhi. The Honourable High Court has directed Air India to deposit Rs. 22.00 crores. Air India has since deposited the amount with the Court pending adjudication of appeals filed by Air India and your company. Appeals are also scheduled for hearing shortly. Pending disposal of the said appeals, the said amount of Rs. 22.00 crores having been deposited in the court has been made over to your company pursuant to the direction of the division bench of the Honorable High Court of Delhi.

Future Prospects

Your company''''s unique portfolio of services makes it stand tall as a fully integrated multi-modal logistics player with a comprehensive pan-India network, thus giving it a viable edge in a post GST domestic market. Looking into the longer term, your company will continue to further expand its value-driven logistics offering in response to emerging customer supply chain requirements and other market trends.

Global Macroeconomics

Clearly, global business optimism is back in full force, and this augurs well for the next two to three years. The uptick in global merchandise trade volumes has sustained through the second half of FY2016-17 and is evident in the rising cross-border air freight and ocean container throughputs.

World Bank''''s global outlook specifies that despite substantial policy uncertainty, global growth is projected at a respectable 2.7 per cent in 2017 before strengthening further to 2.9 per cent in 2018-19. Although protectionist sentiments and associated trade restrictions could pose a risk to this fragile revival, there is mounting evidence of greater business activity in multiple large Emerging Market Economies and a clear easing of recessionary trends in most Advanced Economies.

India Outlook

The optimism around global growth will play a pivotal role in sustaining the domestic economy. Two recent surveys covering India''''s Industrial Outlook and Consumer Confidence suggest a much improved ''''general economic situation'''' with an expansion in domestic economic activity over the next one year.

The Reserve Bank of India (RBI), in its most recent monetary policy statement, pegs the real GVA growth forecast for 2017-18 at 7.3 per cent. An identified downside risk to this growth projection is the uncertain geo-political atmosphere in India''''s trade partners. There are other lingering concerns with respect to credit growth, private investment, capital formation and Non-Performing Assets (NPAs) in the banking sector, which together constitute a drag on the economy. However, government spending remains healthy and is expected to mitigate the effect of inactivity in other growth components. The monsoon forecast has also created optimism for the second consecutive year in terms of agricultural production and rural economy.

The start of the GST era is already upon us with the law coming into effect from July 1, 2017 onwards. This consumption based indirect tax reform will catalyze compliance in every business chain and expand the tax base in a transparent and efficient manner, while reducing the overall tax burden. There are likely to be initial hiccups for a few months as large corporate and SME business across industry sectors adapt to this change. However, these pain points will be short lived as the companies are expected to settle in very quickly into the new GST era.

India Logistics Sector

Over the last several years, many key trends have been reshaping the domestic logistics sector and have influenced your company''''s product portfolio and competitive position. By far, introduction of GST tax reforms will have the most far-reaching ramification in terms of growth of organized logistics in India. Case in point, the top-three players in the Domestic express market of the United States of America command over 90% market share, and the top-five Third-Party Logistics (3PL) players in USA command over 25% of the overall Contract Logistics market in USA. By contrast, Indian Logistics market is much too fragmented as of today. With the introduction of GST reform in India, such growth and consolidation is a real possibility in the Indian logistics sector. India is likely to witness increased Foreign Direct Investment (FDI) and Initial Public Offering (IPO) in the logistics sector within the short to medium term. Thus, the competitive intensity is set to increase amongst organized logistics service providers and your company is uniquely positioned and well prepared to compete and grow in such a context.

The GST is already proving to be a significant trigger for the Indian industry to migrate from legacy supply chain models designed for optimizing tax considerations, to more efficient supply chain models that optimize operational considerations such as supply chain costs and lead time to market. Interstate movement of goods has become easier with reduced procedures and restrictions at state borders. This is transforming the Indian logistics landscape into one monolith of an expansive geography. Customer warehouses are beginning to consolidate into larger operations to reap benefits of scale efficiency; factories are expected to follow the same trajectory over the next two to three years. In such context, tremendous business opportunity arises for established end-to-end logistics players, such as your Company.

Through proactive actions over several months, your company will be fully prepared for the GST transition. Furthermore, your company has undertaken a comprehensive review of its pan-India distribution network and initiated necessary actions based on the expected changes in warehousing requirements, travel distances and load patterns. A combination of overall market place opportunity, rigorous business preparedness and a full portfolio of integrated logistics services gives your company the confidence of maximizing the GST potential in the immediate short term.

Omni-channel retailing is emerging as a niche growth segment with immense business potential. Customers are increasingly looking for customized, integrated supply chain solutions which help them serve varied needs covering offline and online sales, B2B and B2C channels and individual piece and bulk shipment solutions. Delivering a positive omni-channel experience requires deep Supply Chain expertise to fulfill the customer requirement. Gati is working closely with select customers to co-create and develop this capability, thereby establishing long term business partnerships with the particular customers.

Gati''''s Cold Chain subsidiary, Gati Kausar, holds immense potential for growth in the long-term. It is crucial to generate an environment of ambition and innovation, to revolutionise the cold chain sector in India. Gati Kausar endeavours to disrupt the Cold Chain market with differentiated services and pioneering quality practices. The growth strategy for cold chain operations is to complement the existing delivery capabilities with a GST relevant network of cold warehouses.

Overall, Gati''''s capabilities demonstrate years of commitment towards investing in network, technology and people for achieving its vision. The success of Gati''''s pan-India Shop Floor Automation (SFA), stands testimony to its inbuilt capabilities in effecting such industry-leading technology interventions. Your company will continue to invest in technology that improves network efficiency, delivers value to customers and increases profitability. Gatiites are constantly collaborating to innovate and provide a wider, more flexible range of customized logistics solutions. These initiatives make it simpler and easier for our customers to manage the complexities of their own supply chain and thereby to derive maximum benefit from a long-term association with Gati.

Fixed deposits (FD)

As on March 31, 2017, fixed deposits of your Company stood at Rs. 227.84 mn out of which Rs. 13.73 mn remain unclaimed and there were no overdue deposits as on that date. During the year under review, your Company has accepted deposits to the tune of Rs. 52.11 mn. There was no default in repayment of deposits or payment of interest thereon during the year and there are no deposits which are in non-compliance with the requirements of the Companies Act, 2013. The current fixed deposits carry a rating of “A Minus" issued by Credit Analysis and Research Limited (CARE).

Directors and Key Managerial Personnel (KMP)

Mr. Yoshinobu Mitsuhashi, Nominee Director resigned w.e.f November 4, 2016 and in his place Mr. Yasuhiro Kaneda was appointed w.e.f November 4, 2016. Further, Mr. Sanjeev Jain, Director-Finance resigned w.e.f October 31, 2016 and Mr. Manoj Gupta was appointed as Chief Financial Officer (CFO) of the Company effective from May 6, 2017. In the interim period, the Managing Director has overseen the financial matters of the Company. Your directors placed on record their sincere appreciation for the valuable contributions made by Mr. Sanjeev Jain and Mr. Yoshinobu Mitsuhashi during their tenure. Further, Mr. Amit Pathak, was appointed as Company Secretary w.e.f. August 4, 2016.

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Yasuhiro Kaneda, Director, who retires by rotation and being eligible, has offered himself for re-appointment.

In compliance with Regulation 36(3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, brief resume of all the Directors proposed to be appointed / re-appointed are attached along with the Notice of the ensuing Annual General Meeting.

Apart from the above, there have been no changes in Directors and KMP.

Particulars of Employees and related disclosures

The remuneration paid to your Directors is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015 (including any statutory modification(s) or re-enactment(s) for the time being in force). The salient aspects covered in the Nomination and Remuneration Policy have been outlined in the Corporate Governance Report which forms part of this report.

The information required under Section 197 (12) of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure - A.

Declaration on Independent Directors

Pursuant to sub section (6) of Section 149 of the Companies Act, 2013 and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, all the Independent Directors of your Company have given declaration that they have met the criteria of independence as required under the Act and the regulations.

Remuneration Policy

Your Directors have, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management Personnel and their remuneration. The Remuneration Policy forms part of the Corporate Governance Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015, the evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the Corporate Governance Report. The outcome of Board evaluation for financial year 2016-17 was discussed by the Nomination and Remuneration Committee and the Board at their meetings held on May 6, 2017.

Board Committees

Detailed composition of the mandatory Board committees namely Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee and Stakeholders Relationship Committee, number of meetings held during the year under review and other related details are set out in the Corporate Governance Report which forms a part of this Report.

Further, your board of directors, had at their meeting held on February 07, 2017, constituted the Foreign Currency Convertible Bonds (FCCBs) Committee of directors.

Particulars of Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, forms part of the Financial Statements.

Corporate Social Responsibility (CSR)

In terms of section 135 and Schedule VII of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 made there under, the Board of Directors of your Company have constituted a CSR Committee.

The CSR Committee has framed a CSR Policy which forms part of the Annual Report on CSR, annexed as Annexure - B to this report.

Gati Ltd had earmarked a budget of Rs. 1.72 mn (i.e. 2% of average net profits of the previous 3 years) for FY2016-17 and spent Rs. 0.42 mn during the year towards CSR activities across India. An amount of Rs. 1.30 mn is unspent towards the CSR expenses for the FY2016-17.

GKEPL had earmarked a budget of Rs. 12.85 mn (i.e. 2% of average net profits of the previous 3 years) for FY2016-17 and spent Rs. 8.05 mn during the year towards CSR activities across India. An amount of Rs. 4.80 mn is unspent towards the CSR expenses for the FY2016-17.

Gati Ltd and GKEPL were in the process of identifying and evaluating projects which are in line with the vision of company''''s CSR policy. As such, all the projects would normally go through detailed evaluation process and assessed under agreed strategy and vision. However, since the project was still under the evaluation strategy, the company could not spend the allocable amount. The company has plans for meeting out the objective and completing the identification of projects.

Related Party Transactions

Related party transactions that were entered during the financial year were on an arm''''s length basis and were in the ordinary course of business. There were no materially significant related party transactions with the Company''''s Promoters, Promoter Group, Directors, Senior Management Personnel or their relatives, which could have had a potential conflict with the interests of your Company. Accordingly, Form AOC-2 is not applicable to your Company.

Further all Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval for normal company transactions is also obtained from the Audit Committee for the related party transactions which are of repetitive nature as well as for the normal company transactions which cannot be foreseen and accordingly the required disclosures are made to the Committee on quarterly basis in terms of the approval of the Committee.

Your Directors have on the recommendation of the Audit Committee, adopted a policy to regulate transactions between your Company and its Related Parties, in compliance with the applicable provisions of the Companies Act 2013, the Rules made there under and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015.

Meetings of the Board and Committees

Six Meetings of the Board of Directors were held during the year. For further details on the meetings and the attendance of directors/ members, please refer report on Corporate Governance of this Annual Report.

Vigil Mechanism

Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 and Regulation 22 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, a Vigil Mechanism for directors and employees to report genuine concerns about any instance of any irregularity, unethical practice and/or misconduct has been established. Further, the details as aforesaid is available on the website of your company at

Familiarization Programme for Independent Directors

Pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, the Company shall familiarize the Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc., through various programmes.

Accordingly, your Company arranged a technical session on February 7, 2017 to familiarize the Independent Directors, the details of which are disclosed on the website of the company at http://www.gati. com/investor-relations/familiarization-programmes/

Directors'''' Responsibility Statement

Pursuant to the requirement under section 134(5) of the Companies Act, 2013, with respect to the Directors'''' Responsibility Statement relating to the Company (Standalone), it is hereby confirmed:

1. That in the preparation of the Accounts for the financial year ended March 31, 2017, the applicable accounting standards and schedule III of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force), have been followed and there is no material departure;

2. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profit and loss of the Company for the financial year ended March 31, 2017;

3. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) for the time being in force), for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. That the accounts have been prepared on ''''going concern'''' basis, for the financial year ended March 31, 2017;

5. That the Company, had laid down internal financial controls and that such internal financial controls are adequate and were operating effectively;

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

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 Companies (Management and Administration) Rules, 2014, is annexed as Annexure - C.

Development and Implementation of Risk Management Policy

Your Company has an elaborate risk Management process and has adopted systematic approach to mitigate risk associated with accomplishment of objectives, operations and revenues etc. The details of Risk Management as practiced by your company is provided as part of Management Discussion and Analysis Report which forms part of this Annual Report.

Internal Financial Controls

Your Company has established and maintained a framework of internal financial controls and compliance systems. Based on the same and the work performed by the internal auditors, statutory auditors and the reviews performed by Top Management team and the Audit Committee, your Directors are of the opinion that your Company''''s Internal Financial Controls were adequate and effective during the financial year 2016-17.

Further, the statutory auditors of your company have also issued an attestation report on internal control over financial reporting (as defined in section 143 of Companies Act, 2013) for the financial year ended March 31, 2017, which forms part to the Statutory Auditors Report.

Transfer of unclaimed dividend

Pursuant to the provisions of Companies Act, 1956/2013, the unclaimed dividend amount pertaining to the financial year 2009-10 is due for transfer to Investor Education and Protection Fund (IEPF).


a) Statutory Auditors

M/s. R S Agarwala & Co., Chartered Accountants (Firm Registration No. 304045E) were appointed as statutory auditors of the company, since inception. Currently, they are holding office of the auditors up to the conclusion of the 22nd AGM.

As per second proviso to Section 139(2) of the Companies Act, 2013, (the Act), a transition period of three years from the commencement of the Act is provided to appoint a new auditor if the existing auditor''''s firm has completed two terms of five consecutive years.

Accordingly, as per the said requirements of the Act, M/s. Singhi & Co., Chartered Accountants (Firm Registration No. 302049E) are proposed to be appointed as auditors for a period of 5 years commencing from the conclusion of 22nd AGM till the conclusion of the 27th AGM, subject to ratification by shareholders every year, as may be applicable, in place of M/s. R S Agarwala & Co., Chartered Accountants (Firm Registration No. 304045E).

M/s. Singhi & Co., Chartered Accountants (Firm Registration No. 302049E), have consented to the said appointment and confirmed that their appointment, if made, would be within the limits specified under Section 141(3)(g) of the Act. They have further confirmed that they are not disqualified to be appointed as statutory auditors in terms of the provisions of the proviso to Section 139(1), Section 141(2) and Section 141(3) of the Act and the provisions of the Companies (Audit and Auditors) Rules, 2014.

The Audit Committee and the Board of Directors have recommended the appointment of M/s. Singhi & Co., Chartered Accountants (Firm Registration No. 302049E), as statutory auditors of the Company from the conclusion of the 22nd AGM till the conclusion of 27th AGM, to the shareholders.

b) Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s. dvmgopal & Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of your Company. The Report of the Secretarial Audit is annexed as Annexure - D.

Further, M/s. dvmgopal & Associates, Practicing Company Secretaries, carries out Reconciliation of Share Capital Audit every quarter and the report thereon is submitted to the Stock Exchanges.

Further, the present secretarial auditor M/s. dvmgopal & Associates, a proprietorship concern has extended their business wing and formed a new partnership firm i.e. M/s. DVM & Associates LLP.

Accordingly, your Directors at their meeting held on May 6, 2017 have approved, the appointment of M/s. DVM & Associates LLP, as the secretarial auditors for the FY2017-18.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo

The above information as required under the Companies Act, 2013, is annexed as Annexure - E.

Employees Stock Option Scheme

Details of the shares issued under Employee Stock Option Scheme (ESOS), as also the disclosures, in compliance with Section 62 of the Companies Act, 2013 and Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 as on March 31, 2017, is annexed as Annexure - F to this Report.

Further the details as aforesaid is available on the website of your company at

Change in Capital Structure and Listing at Stock Exchanges

The equity shares of your Company continue to be listed and traded on the BSE Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). During the financial year under review, 4,59,117 equity shares were allotted on exercise of the options vested under the Employee

Stock Option Scheme and admitted for trading on NSE and BSE. Consequently, the Equity Share Capital of your Company increased from 8,77,22,937 equity shares of Rs. 2/- each to 8,81,82,054 equity shares of Rs. 2/- each as on March 31, 2017.

Corporate Governance

Your Company is committed to maintain the high standards of corporate governance and adhere to the corporate governance requirements set out by Securities and Exchange Board of India. The Report on corporate governance as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, forms part of the Annual Report and is annexed as Annexure - G. The requisite certificate from the Practicing Company Secretary confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Regulations forms part of this report.

Management Discussion and Analysis (MD&A)

MD & A Report for the financial year under review, as stipulated under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, is presented in a separate section and forms of the Annual Report.


Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the financial year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of your Company under any scheme save and except ESOS referred to in this Report.

3. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''''s operations in future.

4. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

5. During the period under review, there were no frauds reported by the auditors under provisions of the Companies Act, 2013.

6. There were no material changes commitments affecting the financial position of your Company between the end of financial year (March 31, 2017) and the date of the report (May 6, 2017).


Your Directors thank various departments of Central and State Government, Organizations and Agencies for the continued help and co-operation extended by them to your company. Your Directors also gratefully acknowledge all stakeholders of the Company viz. members, customers, dealers, vendors, Financial Institutions, banks and other business partners for the excellent support received from them during the year. Your Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.

For and on behalf of the Board

K L Chugh

Place: Hyderabad Chairman

Date: May 6, 2017 DIN: 00140124

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at

  • Download our Mobile App
  • Available on Google Play
  • Available on App Store
  • RSS