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Directors Report of Snowman Logistics Ltd.

Mar 31, 2015

Dear Members,

The Board of Directors presents the Annual Report of the Company together with the Audited Statements of Account for the financial year ended 31 March 2015.

Your Company continues to maintain its leadership in the temperature controlled logistics industry with a total warehousing capacity of 85,500 pallets comprised of 28 temperature controlled warehouses across 15 locations and operated a fleet of 501 Reefer vehicles as on 31 March 2015. The Company believes that the expanded warehousing operations coupled with the standard and quality of service that the Company offers will augment your Company's growth.

Financial Performance

(Rs. in Crores)

Particulars 2014-15 2013-14 Growth

Pallet Capacity 85,500 61,700 39%

Fleet Strength 501 370 35%

Revenue From Operations 202.93 153.41 32%

Growth%

Other Income 4.65 1.83 155%

Total Income 207.59 155.23 34%

EBITDA 47.02 38.01 24%

EBITDA% 23% 25%

PBT 14.73 13.69 8%

PBT% 7% 9%

PAT 24.75 22.48 10%

PAT% 12% 14%

Initial Public Offering

During the year, the Company had completed its highly successful Initial Public Offering of 42,006,038 Equity Shares of Rs. 10/- each at a premium of Rs. 37/- per Equity Share aggregating to Rs. 47/- per Equity Share. The total size of the issue was Rs. 1,974,283,786. The Initial Public Offer was oversubscribed to the extent ~60 times.

The bid / issue was opened on 26 August 2014 and closed on 28 August 2014. Subsequently, the prospectus dated 30 August 2014 was filed with the jurisdictional Registrar of Companies. The Equity shares of the Company have been listed on both National Stock Exchange of India Limited and BSE Limited since 12 September 2014.

Utilisation of the IPO Proceeds

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

(Rs. In Lacs)

particulars

Issue Proceeds 19,742.84

Less: Issue expenses 1,384.40

Net proceeds from IPO 18,358.44

Amount utilised 12,038.98

Funds to be utilised (remain invested 6,319.46 in bank current account and deposits)

Share Capital

The paid-up share capital of your Company increased from 124,105,857 equity shares of Rs. 10/- each to 166,676,495 equity shares of Rs. 10 each during the year due to the allotment of 564,600 equity shares on exercise of stock options by the eligible employees under Snowman ESOP Scheme 2012 and 42,006,038 equity shares under Initial Public Offering.

Dividend

The Board of Directors has recommended a final dividend of 5% which works out to Rs. 0.50/- per equity share of Rs. 10 each subject to the approval of the shareholders at the Annual General Meeting.

Board of Directors

As on date, the Board of Directors of the Company comprises nine Directors of which five are Non Executive Independent Directors in terms of Clause 49 of the Listing Agreement and Section 149(6) of the Companies Act, 2013.

The Board recommends the reappointment of Mr. Gopinath Pillai Chairman and Mr. Prem Kishan Gupta who are liable to retire by rotation and being eligible seek re-appointment pursuant to Section 152 of the Companies Act, 2013.

Further the Board recommends the appointment of Mrs. Chitra Gouri Lal who was appointed as an Additional Director with effect from 30 March 2015 and holds office upto the forth coming Annual General Meeting and being eligible as Independent Director under the provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement not liable to retire by rotation and to hold office for the period stated in the resolution and explanatory statement forming part of the Notice calling the Annual General Meeting.

The Board also recommends the appointment of Mr Tomoyuki Masuda who was appointed as an Additional Director with effect from 28 April 2015 and holds office upto the forthcoming Annual General Meeting and being eligible as a Director of the Company under the provisions of Companies Act, 2013 liable to retire by rotation.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

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

Remuneration Policy

The criteria for appointment of directors as lid down by the Nomination and Remuneration Committee includes(a) qualifications (degree/specialist), (b) experience (management in a diverse organisation / in accounting and finance, administration, corporate and strategic planning or fund management / Demonstrable ability to work effectively with a Board of Directors) , (c) skills (Excellent interpersonal, communication and representational skills/ Demonstrable leadership skills / Extensive team building and management skills / Strong influencing and negotiating skills/ Having continuous professional development to refresh knowledge and skills ), (d) abilities and other attributes (Commitment to high standards of ethics, personal integrity and probity / Commitment to the promotion of equal opportunities, community cohesion and health and safety in the work place and (e) independence [(i) Person of integrity and possesses relevant expertise and experience,(ii) Not a promoter of the Company or its holding, subsidiary or associate company (iii) Not related to promoters or directors in the Company, its holding, subsidiary or associate company, (iv) No pecuniary relationship with the Company, its holding, subsidiary or associate company, or their promoters, or directors, during current & immediately preceding 2 financial years,(v) Relatives do not have pecuniary relationship or transaction with the Company, its holding, subsidiary or associate company, or their promoters, or directors, exceeding the lower amount of 2% or more of total income or Rs. 50 Lacs or prescribed amount during current & immediately preceding 2 financial years , (vi) Neither person nor relatives hold position of key managerial personnel or employee of the Company or its holding, subsidiary or associate company in any of the 3 financial years immediately preceding the financial year of proposed appointment, (vii) Not an employee or proprietor or a partner,in any of the 3 financial years immediately preceding the financial year of proposed appointment of a firm of auditors or company secretaries in practice or cost auditors of the Company or its holding, subsidiary or associate company or any legal or a consulting firm that has or had any transaction with the Company its holding, subsidiary or associate company amounting to 10%. or more of the gross turnover of such firm,(viii) not holds together with relatives 2%. or more of the total voting power of the Company; or is a Chief Executive or director, by whatever name called,of any nonprofit organisation that receives 25% or more of its receipts from the Company any of its promoters,directors or its holding,subsidiary or associate company or that holds 2% or more of the total voting power of the Company and (ix) such other prescribed qualifications.

The Company's policy on remuneration of Directors, Key Managerial Personnel and other employees has been approved by the Nomination and Remuneration Committee. Base Compensation must be competitive and reflective of the individual's role, responsibility and experience in relation to performance of day-to-day activities, usually reviewed on an annual basis; (includes salary, allowances and other statutory/non-statutory benefits which are normal part of remuneration package in line with market practices). Variable salary must be based on the performance of the Company and the employees, annual bonus will be paid to the employees, normally equal to one month's salary. Retirement Benefits includes Contribution to Provident fund, Gratuity etc as per Company rules and statutory requirements. Directors remuneration includes remuneration by way of a fee to a director for attending meetings of the Board of Directors and Committee meetings or for any other purpose as may be decided by the Board. The total managerial remuneration payable by the Company to its directors, including managing director and whole time director, and its manager in respect of any financial year shall not exceed 11% of the net profits of the Company computed in the manner laid down in Section 198 of the Companies Act. The Company with the approval of the Shareholders and Central Government may authorise the payment of remuneration exceeding 11% of the net profits of the Company, subject to the provisions of Schedule V to the Companies Act, 2013. The Company may with the approval of the shareholders authorise the payment of remuneration up to 5% of the net profits of the Company to its any one Managing Director/Whole Time Director/Manager and 10% in case of more than one such official. The Company may pay remuneration to its directors, other than Managing Director and Whole Time Director up to 1% of the net profits of the Company if there is a managing director or whole time director or manager and 3% of the net profits in any other case.The net profits for the purpose of the above remuneration shall be computed in the manner referred to in Section 198 of the Companies Act, 2013. The Independent Directors shall not be entitled to any stock option and may receive remuneration by way of fee for attending meetings of the Board or Committee thereof or for any other purpose as may be decided by the Board and profit related commission as may be approved by the members. The sitting fee to the Independent Directors shall not be less than the sitting fee payable to other directors subject to provisions of section 197 of the Companies Act and the rules made there under. The remuneration payable to the Directors shall be as per the Company's policy and shall be valued as per the Income Tax Rules.The remuneration payable to the Key Managerial Personnel and the Senior Management shall be as may be decided by the Board having regard to their experience, leadership abilities,initiative taking abilities and knowledge base and determined keeping in view the industry benchmark, the relative performance of the Company to the industry performance and review on remuneration packages of other organisations.

Details of Familiarisation Programme for Independent Directors and criteria for making payments to Non-Executive Directors can be accessed on our website: www.snowman.in

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Meetings

During the year 7 (Seven) Board Meetings and 4 (Four) Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period stipulated under the Companies Act, 2013.

Directors' Responsibility Statement

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

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

Auditors

Statutory auditors

M/s. Price Waterhouse, Firm Registration Number: 301112E, Chartered Accountants, Kolkata, Statutory Auditors of the Company who have been appointed by the members of the Company cease their office at the ensuing Annual General Meeting. Being eligible they have offered themselves to be reappointed as the Statutory Auditors of the Company. The Board of Directors upon the recommendation of the Audit Committee proposes the re-appointment of Price Waterhouse as the statutory auditors of the Company subject to the approval of the members at the Annual General Meeting. Their comments on the accounts and notes to the accounts are self-explanatory. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for reappointment of Statutory Auditors of the Company.

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, the Company has appointed Mr. Nagendra D Rao, Practising Company Secretary to undertake the Secretarial Audit of the Company.The report is annexed herewith as "Annexure A"

Corporate Governance

As per Clause 49 of the Listing Agreement with the Stock Exchanges, a detailed report on corporate governance practices followed by the Company together with the certificate from the Company's Statutory Auditors confirming compliance forms part of this report as "Annexure B"

Insider Trading Regulations

Based on the requirements under SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended from time to time, the code of conduct for prohibition of insider trading, as approved by the Board is in force by the Company. The Company also adopts the concept of Trading Window Closure, to prevent its Directors, Officers, designated employees and other employees from trading in the securities of the Company at the time when there is unpublished price sensitive information. The Board has appointed Mr. A. M. Sundar, Chief Financial Officer and Company Secretary as the Compliance Officer under the Code.

Corporate Social Responsibility

During the year 2015, as a part of its Corporate Social Responsibility, the Company has contributed Rs. 25,77,000 to the Prime Ministers National Relief Fund in accordance with the Schedule VII of the Companies Act 2013 and Corporate Social Responsibility Policy of the Company. The Annual Report on CSR activities is annexed herewith as "Annexure C".

Internal Control and Internal Audit

The Company has in place adequate systems of Internal Control to ensure compliance with policies and procedures. The Company has a system of carrying out internal audit, covering all business processes to review the internal control systems. The internal control system and mechanism is reviewed periodically by the Audit Committee to make it robust so as to meet the challenges of the business.

Vigil Mechanism

The Company has a vigil mechanism in place named as Whistle Blower Policy to report concerns to the management about unethical behavior, actual or suspected fraud or violation of the Codes of conduct. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

Related Party Transactions

The related party transactions per the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year ended March 31,2015 are given below. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements.

Reimbursement of expenses- Travelling : Gateway Distriparks Limited : INR 247,187

Remuneration to KMP :Mr Ravi Kannan : INR 9,711,516 & Mr A M Sundar : INR 4,994,628

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure D".

Employee Stock Option Scheme

The details of stock options as on 31 March 2015 under the Snowman ESOP Scheme 2012 is set out in the Annexure E to the Directors' Report.

Human Resources

The Company is committed to provide a healthy environment to all employees and thus does not tolerate any discrimination and/or harassment in any form. The Company has in place a Prevention of Sexual Harassment (POSH) policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No complaints were received by the Company during the period under review.

Headcount

The total number as on 31 March 2015 was 408 as against 383 as on 31 March 2014.

Particulars of Employees

Information in accordance with Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the employees of the Company is annexed herewith as "Annexure E".

In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being send to all shareholders of the Company excluding the aforesaid information. Any shareholders interested in obtaining such particulars may write to the Company Secretary and Compliance Officer at the Registered Office of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars on energy conservation, technology absorption and foreign exchange earnings and outgo in terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as "Annexure F"

Risk Management Policy

The Board of Directors has put in place a Risk Management policy for the Company which includes industry risks,quality risks, project risks and financial/ interest rate / liquidity risks and the structure, infrastructure, processes,awareness and risk assessment / minimization procedures. The elements of the risk, which in severe form can threaten Company's existence, have been identified by the Board of Directors.

Acknowledgements

The Board of Directors thank all the stakeholders of the Company including its customers, shareholders, bankers, vendors for their continued support and assistance and look forward to having the same support in our future endeavours. The Directors also place on record, their sincere appreciation for significant contributions made by the employees towards the success and growth of the Company

For and on behalf of the Board of Directors

Place: New Delhi Gopinath Pillai Date: April 28, 2015 Chairman

 
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