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Directors Report of VRL Logistics Ltd.

Mar 31, 2017

Dear Members,

The Directors are pleased to present the Thirty Fourth Annual Report of your Company together with the Audited Financial Statements for the financial year ended 31st March 2017.

1. SUMMARY OF FINANCIAL RESULTS

(Rs. in lakhs)

Particulars

Year Ended 31st March, 2017

Year Ended 31st March, 2016

Total Income

1,81,238.33

1,73,120.09

Profit Before Finance Charges and Depreciation

22,748.13

27,932.10

Finance Charges

2,400.21

3,162.79

Provision for Depreciation

9,817.85

8,969.54

Net Profit Before Tax (incl. exceptional income )

10,530.07

15,799.77

Tax Expense

3,482.81

5,375.68

Net Profit After Tax

7,047.26

10,424.09

Other comprehensive income

75.98

(301.58)

Interim Dividend on Equity Shares

(3,649.74)

(4,562.17)

Tax on Interim Dividend

(743.00)

(928.75)

Transfer to General Reserve

(704.73)

(1,023.13)

Surplus carried to Balance Sheet

2,025.77

3,608.46

2. OPERATING HIGHLIGHTS / STATE OF COMPANY’S AFFAIRS

The Company has prepared the Financial Statements under Indian Accounting Standards (Ind AS) for the first time. The details of various adjustments to the Financial Statement necessitated from such implementation have been covered in the Notes to the Financial Statements.

During the year under consideration, your Company had a gross income of Rs.1,81,238.33 lakhs as against previous year''s gross income Rs.1,73,120.09 lakhs depicting a growth rate of 4.69%. The Company has earned a Profit Before Tax (PBT) of Rs.10,530.07 lakhs as against the Profit Before Tax of Rs.15,799.77 lakhs in the previous year.

The Company''s Goods Transport Division achieved a turnover of Rs.1,42,615.26 lakhs thereby registering a growth rate of 5% as compared to the previous year. The growth in other verticals including bus operations was marginal. However, the dip in Net profits as compared to the previous year was mainly due to unhealthy competition in passenger transport, marked increase in diesel cost and non availability of bio diesel which resulted in erosion of margins. During the year the Company earned a net profit of Rs.7,047.26 lakhs. The Company has initiated cost cutting and other remedial measures to arrest this decline.

3. SHARE CAPITAL

The Paid Up Equity Share Capital as at 31st March 2017 stood at Rs.9,124.35 Lakhs. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or sweat equity. As on 31st March 2017, none of the Directors of the Company hold instruments convertible into equity shares of the Company.

4. CHANGE IN THE NATURE OF BUSINESS

There is no change in nature of business of the Company. Your Company continues to be one of the leading Logistics service providers in the country. The service offering of the Company in the Logistics space are Goods transport, Passenger transport and Courier services apart from Transport of passengers by air and Wind Power Generation verticals.

5. CAPITAL EXPENDITURE

During the Financial Year 2016-17, the company has incurred a capital expenditure of Rs.7,856.14 lakhs. Out of the same, an amount of Rs.6,157.01 lakhs was invested on fleet addition. Other capex components included the cost incurred on additions to Buildings, Plant & Equipment, Office Equipment, Leasehold Improvements and Furniture & Fittings.

6. DIVIDEND

During the Financial year 2016-17, your directors declared Interim Dividend at the rate of 40% translating to Rs.4.00 per equity share. The Board recommends no further dividend and proposes that the interim dividend so declared and paid be treated as the final dividend for the financial year 2016-17.

7. TRANSFER OF UNPAID AND UNCLAIMED AMOUNT TO IEPF

During the year under consideration, no amount was due for transfer to IEPF as per section 125 of the Companies Act, 2013.

The details of unclaimed dividend and IPO share application money along with their due dates for transfer to IEPF is provided in the Corporate Governance Report which forms part of this Annual Report.

8.TRANSFER TO RESERVES

The Company has transferred an amount of Rs.704.73 lakhs to the General Reserve out of current year''s profits.

9. SUBSIDIARY COMPANIES

The Company does not have any subsidiary.

10. FIXED DEPOSITS

The Company has not accepted any deposits during the year within the meaning of Section 73 of the Companies Act, 2013 and the Rules made there under.

11. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013.

Details of investments made by the Company are given in the notes to the Financial Statements.

12. MANAGEMENT’S DISCUSSION AND ANALYSIS REPORT

Management''s Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter called as SEBI Listing Regulations) read with Schedule V thereto, is presented in a separate section forming part of this Annual Report.

13. BUSINESS RESPONSIBILITY REPORT

Securities Exchange Board of India vide its notification no. SEBI/LAD-NRO/GN/2015-16/27 dated 22nd December 2015 has amended the SEBI Listing Regulations mandating the top five hundred listed companies to include a report on business responsibility. The same forms part of this Annual Report.

14. CORPORATE GOVERNANCE

The Company is committed to maintain the steady standards of corporate governance and adhere to the corporate governance requirements set out under extant law. The report on corporate governance as stipulated under Regulation 34 of the SEBI Listing Regulations read with Schedule V thereto forms part of this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Regulations, as also the related certificate from CEO/ CFO are attached to the report on corporate governance.

15. BOARD’S COMPOSITION AND INDEPENDENCE

The composition of the Board is in conformity with Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI Listing Regulations, which stipulates that the Board should have optimum combination of executive and non-executive directors with at least one woman director and at least 50% of the Board should consist of independent directors, as the Chairman of our Board is an executive director.

As on 31st March 2017, the Board comprised of twelve Directors. Out of these, two are Executive Directors - Chairman & Managing Director and Managing Director, who are also the Promoters of the Company.

Of the ten Non-Executive Directors, six are Independent Directors including one Woman Director who is an Independent Director. All the Directors possess the requisite qualifications, expertise and experience in general corporate management, finance, banking, laws and other allied fields enabling them to contribute effectively in their capacity as Directors of the Company.

None of the Directors of the Company are related to each other except Dr. Vijay Sankeshwar, Chairman & Managing Director (CMD) and Mr. Anand Sankeshwar, Managing Director (MD).

All Independent Directors have given due declarations that they meet the criteria of independence as laid down under Section 149(7) of the Companies Act, 2013 and under extant provisions of the SEBI Listing Regulations.

16. NUMBER OF MEETINGS OF THE BOARD

During the year four board meetings were held, details of which are provided in the Corporate Governance Report. The intervening gap between the meetings was in compliance with the related provisions of the Companies Act, 2013.

17. DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

a) Inductions

There was no change in Directors during the year under consideration. During the current year Mr. K N Umesh was appointed as an Additional Director who holds office upto the date of Annual General Meeting (AGM). He was also appointed as a Whole Time Director subject to the approval of members. A Notice has been received from a member for his appointment as a Director at the AGM. The Board recommends his appointment as a Whole Time Director at the AGM. The said appointment was made in compliance with Regulation 17 of SEBI Listing Regulations with respect to composition of Board as Mr. S R Prabhu has resigned from his office as a Director w.e.f. 19th May 2017.

b) Retirement/Re-appointment

The tenure of Dr. Vijay Sankeshwar, Chairman & Managing Director concluded on 31st December 2016 and pursuant to recommendation by Nomination and Remuneration committee, the Board of Directors at their meeting held on 27th October

2016 re-appointed him as the Chairman and Managing Director of the Company w.e.f. 1st January 2017 for a period of 5 years. The said re-appointment needs approval of Shareholders at the 34th AGM of the Company. Accordingly a resolution along with explanatory statement as required under the extant provisions of the Companies Act, 2013 is provided in Notice of the 34th AGM. Board recommends the re-appointment of Dr. Vijay Sankeshwar as the Chairman and Managing Director of the Company.

Dr. Ashok Shettar, Non-Executive Director, retires by rotation owing to his tenure being the longest amongst retiring directors and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

Mr. Ramesh Shetty, Non-Executive Director, though being eligible has expressed unwillingness to continue as Director of the Company. Board is in receipt of a notice under Section 160 of the Companies Act, 2013 along with the requisite deposit from a member of the Company proposing the candidature of Mr. L R Bhat for the office of Director. Board recommends the appointment of Mr. L R Bhat as a Whole Time Director, liable to retire by rotation.

None of the Independent Directors will retire at the ensuing AGM.

c) Resignation

The Company was in receipt of resignation letter dated 04th May 2015 wherein Mr. S R Prabhu, Non-Executive Director of the Company had requested the Board to relieve him from duties as Director of the Company w.e.f. 19th May 2017. The Board at the meeting held on 19th May 2017 accepted the resignation and placed on record its appreciation for his support as well as his valuable contribution for the functioning of the Board.

18. STATUTORY DISCLOSURES

None of the Directors of your Company are disqualified as per provisions of Section 164(2) of the Companies Act, 2013. Your Directors have made necessary disclosures, as required under various provisions of the Companies Act, 2013 and SEBI Listing Regulations.

19. COMMITTEES OF THE BOARD

The Board has the following committees:

a. Audit Committee

b. Nomination and Remuneration Committee

c. Corporate Social Responsibility Committee

d. Stakeholders Relationship Committee

e. Risk Management Committee

f. Administration Committee

g. Share Transfer Committee

h. Finance Committee

Details such as terms of reference, powers, functions, meetings, membership of committee, attendance of Directors etc. are dealt with in Corporate Governance Report forming part of this Annual Report.

Board has accepted all the recommendations made by the Audit Committee during the year.

20. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, the Board has carried out an evaluation of its own performance, the Directors (including Independent Non Executive and Executive Directors) individually, the performance of its Chairman as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report which forms part of this Annual Report.

21. BOARD DIVERSITY

A diverse Board enables efficient functioning through differences in perspective and skill and also fosters differentiated thought processes at the back of varied industrial and management expertise, gender and knowledge. The Board recognizes the importance of a diverse composition and has adopted a Board Diversity policy which sets out the approach to diversity.

The said policy can be accessed thru the following link.

http://vrlgroup.in/vrljnvestor_desk.aspxRs.display=policies

22. DIRECTOR’S RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

i) In the preparation of the annual accounts, the applicable accounting standards (IndAS) have been followed along with proper explanation relating to material departures.

ii) 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 at the end of the Financial Year and of the profit or loss of the Company for that period.

iii) The directors have 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.

iv) The directors have prepared the annual accounts on a going concern basis.

v) The directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

vi) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

Based on the framework of internal financial controls established and maintained by the Company, reviews performed by the Management in concurrence with the Audit Committee, your Board is of the opinion that the Company''s internal controls were adequate and effective as on 31st March 2017.

23. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the Financial Year were on arm''s length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large.

All related party transactions pre-cleared by the Audit Committee and these are placed before the Audit Committee as also to the Board for approval. Omnibus approval was obtained semi annually for transactions which are of recurring nature. A statement containing details of all transactions entered into pursuant to omnibus approval are placed before the Audit Committee and the Board for review and approval on a quarterly basis.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board of Directors of the Company can be viewed on the website of the Company thru the following link.

http://vrlgroup.in/investor_download/RPT%20Policy.pdf

There were no material significant related party transactions entered between the Company, Directors, Key Managerial Personnel or their relatives. All the contracts/arrangements/transactions entered into by the Company with the related parties during the Financial Year 2016-17 were in the ordinary course of business and on an arm''s length basis. In our opinion there were no “material” transactions that warrant a disclosure in this report.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form a part of this report.

24. NOMINATION AND 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 including criteria for determining qualifications, positive attributes and other matters provided under sub section (3) of section 178 of the Companies Act, 2013. The Remuneration Policy is stated in the Corporate Governance Report and also annexed to this report as Annexure A. The said policy alternatively can also be accessed on the website of the Company at the following link:

http://vrlgroup.in/investor_download/Nomination_Remuneration%20Policy.pdf

25. CODE OF CONDUCT

The Board of Directors have approved a Code of Conduct which is applicable to the members of the Board and specified employees in the course of day to day business operations of the Company. The Company believes in “Zero Tolerance” against bribery, corruption and unethical dealings / behavior in any form and the Board has laid down directives to counter such acts. The code of conduct has also been placed on the Company''s website. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance on the expected behaviour from an employee in a given situation and the reporting structure. All the Board Members and the Senior Management personnel have confirmed compliance with the Code.

26. VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a Vigil Mechanism Policy to deal with instances of fraud and mismanagement, if any. Staying true to our core values being committed to high standards of Corporate Governance and stakeholder responsibility, the said policy ensures that strict confidentiality is maintained in respect of whistle blowers whilst dealing with concerns and also specified that no discrimination will be meted out to any person for a genuinely raised concern and also provides a direct access to the Chairman of the Audit Committee. During the year under review none of the personnel have been denied access to the Chairman of Audit Committee.

The Vigil Mechanism policy is available on the website of the Company and can be accessed at the following link. http://vrlgroup.in/investor_download/vigil_Mechanism.pdf

27. PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders with a view to regulate trading in securities by the Directors and certain designated employees of the Company. The Code requires pre-clearance for dealing in the Company''s shares and prohibits the purchase or sale of Company shares by the Directors and designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the trading window is closed. The Board is responsible for implementation of the Code.

The said code is available on the website of the Company and can be accessed at the following link.

http://vrlgroup.in/vrl_investor_desk.aspxRs.display=policies

28. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an internal control system, commensurate with the size, scale and complexity of its operations. The Board of the Company had laid down policies, guidelines, procedures and structure to enable implementation of appropriate internal financial controls across the Company. These control processes enable and ensure the orderly and efficient conduct of Company''s business, including safeguarding of assets, prevention and detection of frauds and errors, the accuracy and completeness of the Accounting records and timely preparation & disclosure of financial statements. These controls also identify the risks and provides for means to minimize / mitigate the risks affecting the business of the Company as a whole. Auditors, as required under the Companies Act, 2013, have also certified that these internal financial controls are in order and effective in mitigating the risks.

The Company''s internal audit department enables the management to mitigate the risks and prevent non-compliance of laws which would affect the financial position of the Company. The scope and authority of the Internal Audit function is well defined and to maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board as well as directly to the Chairman & Managing Director. The internal audit department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the internal audit report from time to time, the management undertakes corrective actions in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee.

29. BUSINESS RISK MANAGEMENT:

Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Regulation 21 of the SEBI Listing Regulations, the Company has constituted a risk management committee. The details of the committee and its terms of reference are set out in the corporate governance report forming part of this Annual Report. The material risks affecting Company are identified along with related mitigation measures and elaborated in the risk management policy of the Company which has also been hosted on the website of the Company and can be accessed at the following link.

http://vrlgroup.in/investor_download/Risk%20Management%20Policy.pdf

30. SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

The Company''s Equity Shares are listed on the BSE and NSE and has paid its annual listing fees to these stock exchanges for the Financial Year 2017-2018. The Company has formulated the following policies as required under SEBI Listing Regulations:

1. ‘Policy for Preservation of Documents'' under Regulation 9 of SEBI Listing Regulations. The said policy can be accessed at the following link:

http://vrlg roup. in/vrl_investor_desk.aspxRs.display=policies

2. ‘Policy on Criteria for determining Materiality of Events/Information'' under Regulation 30 of SEBI Listing Regulations. The said policy can be accessed thru the following link:

http://vrlg roup. in/vrl_investor_desk.aspxRs.display=policies

3. Dividend distribution policy under Regulation 43A of SEBI Listing Regulations. The said policy can be accessed at the following link:

http://vrlg roup. in/vrl_investor_desk.aspxRs.display=policies

31. AUDITORS & AUDIT REPORTS

a) Statutory Auditors & Audit Report:

In accordance with Section 139 of the Companies Act, 2013 and Rules made there under, members at the 32nd AGM of the Company approved the appointment of Statutory Auditors, M/s Walker Chandiok and Co., Chartered Accountants, LLP Mumbai for a period of 5 years. The said appointment was subject to ratification by members every year.

M/s Walker Chandiok and Co, Chartered Accountants, LLP have expressed their eligibility and willingness to continue as the Statutory Auditors of the Company. Board recommends the ratification of their appointment as required under Section 139 of the Companies Act, 2013.

M/s. H. K. Veerbhaddrappa & Co, Chartered Accountants, Hubballi, one of the joint statutory auditors of the Company resigned during the year and subsequently were appointed as the Internal Auditors of the Company.

There are no qualifications, reservations or adverse remarks made by the Statutory Auditors in their report for the financial year ended 31st March 2017. Pursuant to provisions of section 143 (12) of the Companies Act, 2013, the Statutory Auditors have not reported any incident of fraud to the Audit Committee during the year under review.

b) Cost Auditors & Cost Audit Report:

Section 148 of the Companies Act, 2013 read with Rules made thereunder mandates every Company belonging to the category prescribed in the Rules to undertake a Cost Audit. In our opinion Cost Records of Wind Power Division of the Company need to be audited as it is covered in the category prescribed. In compliance with said provision, Company had appointed M/s S.K. Tikare & Co., Cost Accountants, Dharwad to audit the cost records for FY 2016-17. The Cost Auditor has submitted the Cost Audit report for FY 2016-17 and the same is annexed as Annexure B to this report.

There are no qualifications, reservations or adverse remarks made by the Cost Auditors in their report for the financial year ended 31st March 2017.

Pursuant to the recommendation of the Audit Committee, the Board of Directors have re-appointed M/s S K Tikare & Co., Cost Accountants, Dharwad as the Cost Auditors for FY 2017-18 at a fixed remuneration of Rs.60,000/- subject to ratification by the members at the ensuing AGM of the Company.

Board recommends the ratification of the said remuneration payable to the Cost Auditor in accordance with Section 148 of the Companies Act, 2013 and the Rules made there under.

c) Secretarial Auditor & Secretarial Audit Report:

Pursuant to 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. R Parthasarathi, Company Secretary in Practice to undertake the Secretarial Audit of the Company for FY 2016-17. The Secretarial Audit report is annexed herewith as Annexure C.

There are no qualifications, reservations or adverse remarks made by the Secretarial Auditor in his report for the financial year ended 31st March 2017. Response to the comment made by the Secretarial Auditor in respect of the Company not fully expending the requisite quantum of CSR spend during the year as required under Section 135 of the Companies Act, 2013 is given in Annual Report on CSR activities - Annexure D

Pursuant to the recommendation of the Audit Committee, the Board of Directors have re-appointed Mr. R Parthasarathi, Company Secretary in Practice to conduct the Secretarial Audit for FY 2017-18 at its meeting held on 19th May 2017.

32. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

As required under the provisions of the Section 135 of the Companies Act, 2013, the Board has constituted the Corporate Social Responsibility Committee which monitors and oversees various CSR initiatives and activities of the Company. The CSR Committee comprises of four Directors, three of whom are Independent Directors. The CSR Committee met two times during the year. Further details such as composition, terms, functions, meetings and attendance of directors of the said committee are provided in the Corporate Governance report forming part of this Annual Report.

The Company has set up a trust - VRL Foundation for implementing CSR activities with a focus on Healthcare and Education. A detailed report containing details of CSR activities & contents of CSR policy is annexed as Annexure D.

CSR policy of the Company is available on the Company''s website and can be accessed through the following link.

http://vrlgroup.in/investor_download/CSR%20POLICYpdf

33. EXTRACT OF ANNUAL RETURN:

Extract of the Annual Return in form MGT-9 is annexed herewith as Annexure E.

34. DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and expenditure are annexed hereto as Annexure F and forms part of this Report.

35. PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms part of this report and is annexed herewith as Annexure G.

A statement containing remuneration details of the top ten employees and the names of every employee who is in employment of the Company throughout the year and is in receipt of annual remuneration of Rs.102 Lakhs or more or employed for a part of year and in receipt of Rs.8.5 lakhs or more per month needs to be disclosed in the Board''s report. As such, the information is included as a part of Annexure G to this report.

36. MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments that occurred subsequent to the end of the financial year till the date of this report, which affects the financial position of the Company.

37. INDUSTRIAL RELATIONS

During the year under review, your Company experienced cordial relationship with workers and employees at all levels, throughout the year.

38. SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the regulators or courts or tribunals impacting going concern status and company''s operations for a foreseeable future.

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

The Company has in place a Policy for Prevention, Prohibition and Punishment of Sexual Harassment of Women at Work place in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy. 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.

40. ACKNOWLEDGMENTS AND APPRECIATION

Your Directors take this opportunity to thank the Company''s Customers, Shareholders, Investors, Suppliers, Bankers, Financial Institutions and Central & State Governments for their consistent support to the Company. The Directors also wish to place on record their appreciation to the employees at all levels for their hard work, dedication and commitment.

For and on behalf of the Board

Dr. Vijay Sankeshwar

Chairman & Managing Director

DIN: 00217714

Place: Hubballi

Date: 19th May 2017


Mar 31, 2016

Dear Members,

The Directors are pleased to present the thirty third annual report of your Company together with the audited financial statements for the financial year ended 31st March 2016.

SUMMARY FINANCIAL RESULTS

(Rs. in Lakhs)

Year Ended Year Ended Particulars 31st March, 2016 31st March, 2015

Total Income 172942.98 167886.10

EBITDA 27462.91 28044.59

Finance Costs 3069.32 5859.98

Depreciation and amortisation expense 8995.04 8766.03

Net Profit Before Tax (incl. exceptional income item) 15398.55 13790.21

Tax Expense 5167.20 4667.87

Net Profit After Tax 10231.35 9122.34

Balance of Profit brought forward 11484.12 7416.58

Balance available for appropriation

Interim Dividend on Equity Shares 4562.17 3421.45

Tax on Interim Dividend 928.75 614.82

Transfer to General Reserve 1023.13 912.23

Transitional Adjustment on account of change in Depreciation method - 106.30

Surplus carried to Balance Sheet 15201.42 11484.12

OPERATING HIGHLIGHTS:

During the last year your Company earned revenues of Rs. 172942.98 lakhs as against previous year''s revenues of Rs. 167886.10 lakhs depicting a growth rate of 3.01 ACU- and earned Profit before tax (PBT) of Rs. 15398.55 lakhs. The corresponding PBT for the earlier year was Rs. 13790.21 Lakhs. Profit after Tax (PAT) for the year was Rs.10231.35 lakhs as against Rs.9122.34 of the previous year.

The Company''s Goods Transport Division achieved revenues of Rs.135626.19 lakhs registering a growth rate of 5.08 ACU- as compared to previous year. The Company earned revenues of Rs.31760.97 lakhs from bus division and Rs. 2139.42 lakhs from the sale of power generated through the windmills owned by the Company.

CHANGE IN NATURE OF BUSINESS OF THE COMPANY:

There is no change in nature of business of the Company. Your Company continues to be one of the leading Logistics service providers in the country. The service offering of the Company in the Logistics space are Goods transport, Passenger transport and Courier services apart from Air Chartering and Wind Power Generation business.

MATERIAL CHANGES AND COMMITMENTS

There were no material changes and commitments that occurred subsequent to the end of the financial year till the date of this report, which affects the financial position of the Company.

CAPITAL EXPENDITURE:

During the Financial year 2015-16, the company has undertaken a capital expenditure of Rs.10,127.75 lakhs. Out of the same, a sum of Rs.7754.75 lakhs was invested for fleet addition. Other capex components included a sum of Rs.1382.38 lakhs towards Plant ACY- Office Equipments and Furniture / Fittings, Rs.524 lakhs towards freehold land and Rs.202.26 lakhs towards Building improvement costs,. The said capex also included a sum of Rs.264.36 lakhs expended on leasehold improvements.

DIVIDEND:

During the Financial year 2015-16, your directors declared an Interim Dividend at the rate of 50 ACU- amounting to Rs. 5.00 per equity share. The Board recommends no further dividend and proposes that the interim dividend so declared and paid be treated and declared as the final dividend for the financial year 2015-16.

FIXED DEPOSITS

The Company has not accepted any deposits during the year, within the meaning of Section 73 of the Companies Act 2013 and the rules made thereunder.

SUCCESSFUL INITIAL PUBLIC ISSUE

The Company has successfully completed initial public offering (IPO) during the year 2015-16 pursuant to applicable SEBI rules and Regulations. The IPO of the Company received an overwhelming response from the investors and was oversubscribed by more than 74 times thereby making this IPO a historical one. Shares of the Company have been listed with both BSE and NSE w.e.f 30th April 2015.

Consequently, the Company''s paid up capital increased from Rs.85,53,61,620/- to Rs.91,24,34,950/- and Share premium increased from Rs.10,889.32 lakhs to Rs.21313.09 lakhs. Fresh 5,707,333 equity shares of Rs.10/- each were issued at a premium of Rs. 195/- per share.

Apart from the aforementioned fresh issue of shares, NSR PE Mauritius LLC, a private equity investor offloaded 1.45.50.000 equity shares and the promoters offered 25.66.000 equity shares held by them as a part of the said public offering.

The company has utilised the issue proceeds as per the objects stated in the prospectus and as of March 31, 2016 a sum of Rs. 2922.19 lakhs remain unutilised which is expected to be fully utilised in the coming year.

CLOSURE OF NEPAL BRANCH:

Company had extended its business operations to Kathmandu, Nepal by incorporating a branch under the extant provisions of the Laws prevailing in Nepal with a view to provide quality logistics services to the customers. However, owing to the disturbances and uncertain conditions prevalent in Nepal, Management has decided to close its operations in the said country. Requisite legal formalities to close the branch office have been initiated and are expected to be completed soon.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013.

Details of investments made by the company are given in the notes to the financial statements.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Board of the Company had laid down policies, guidelines, procedures and structure to enable implementation of appropriate internal financial controls across the Company. These control processes enable and ensure the orderly and efficient conduct of Company''s business, including safeguarding of assets, prevention and detection of frauds and errors, the accuracy and completeness of the Accounting records and timely preparation ACY- disclosure of financial statements. These controls also identify the risks and provides for means to minimize / mitigate the risks affecting the business of the Company as a whole. Auditors, as required under the Companies Act 2013, have also certified that these internal financial controls are in order and efficient in mitigating the risks.

The Company''s internal audit department enables the Management to mitigate the risks or prevent the non compliances of laws which would affect the financial position of the Company. The scope and authority of the Internal Audit function is well defined and to maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board as well as directly to the Chairman ACY- Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

As required under the provisions of the section 135 of the Companies Act 2013, the Company has constituted the Corporate Social Responsibility Committee which monitors and oversees various CSR initiatives and activities of the Company. Composition, terms and functions of the said committee are provided in the Corporate Governance report forming part of this Annual Report.

The Company has set up a trust - VRL Foundation under the aegis of which the Company conducts its CSR activities. Amongst others Health and Education are the focus areas for the trust. A detailed report of CSR activities including the amount spent / unspent for CSR activities is annexed to this report as Annexure A to this report.

CSR policy of the Company is available on the Company''s website and can be accessed thru the following link.

http://vrlgroup.in/investor AF8-download/CSR ACU-20POLICY.pdf TRANSFER TO RESERVES:

The Company has transferred an amount of Rs.1023.13 lakhs to the General Reserve out of current year''s profits.

TRANSFER OF UNPAID AND UNCLAIMED AMOUNT TO IEPF:

Pursuant to section 125 of the Companies Act 2013, dividend and refund of Share Application Money due for refund which remains unpaid for seven years from the date of its transfer to unpaid dividend / unclaimed account is required to be transferred by the Company to Investor Education and Protection Fund (IEPF) established by the Government. During the year, no amount was due for transfer to IEPF.

INDUSTRIAL RELATIONS:

During the year under review, your Company experienced cordial relationship with employees at all levels, throughout the year.

SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

During the year, your Company executed the Uniform Listing Agreement in accordance with the requirements of SEBI Circular DCS/ COMP/12/2015-16 dated October 13, 2015, with BSE Limited and National Stock Exchange of India Limited (NSE). The Company''s Equity Shares are listed on the BSE and NSE and it has paid its Annual listing fee to these stock exchanges for the Financial Year 2016- 2017. The Company has formulated the following Policies as required under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015:

1. ''Policy for Preservation of Documents'' under Regulation 9 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The said policy can be accessed at the following link:

http://vrlgroup.in/vrl AF8-investor AF8-desk.aspx7display policies

2. ''Policy on Criteria for determining Materiality of Events/Information'' under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

The said policy can be accessed thru the following link: http://vrlgroup.in/vrl AF8-investor AF8-desk.aspx?display AD0- policies

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Number of Meetings of the Board:

During the year five Board Meetings were convened and held, details of which are provided in the Corporate Governance Report. The intervening gap between the Meetings was in compliance with the provisions contained in the Companies Act, 2013.

Nomination and Remuneration Policy

The Board has, on the recommendation of the Nomination ACY- Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes and other matters provided under sub section (3) of section 178 of the Companies Act 2013. The Remuneration Policy is stated in the Corporate Governance Report and also annexed to this report as Annexure B. The said policy alternatively can be accessed on the website of the Company at the following link:

http://vrlgroup.in/investor AF8-download/Nomination AF8-

Remuneration ACU-20Policy.pdf

Declaration by Independent Directors

All independent directors have given due declarations that they meet the criteria of independence as laid down under section 149(7) of the Companies Act, 2013 and under extant provisions of the SEBI (Listing Obligations and Disclosure) Requirements) Regulations 2015.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure) Requirements) Regulations 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Board Diversity

A diverse Board enables efficient functioning through differences in perspective and skill and also fosters differentiated thought processes at the back of varied industrial and management expertise, gender and knowledge. The Board recognizes the importance of a diverse composition and has adopted a Board Diversity policy which sets out the approach to diversity. The said policy can be accessed thru the following link.

http://vrlgroup.in/vrl AF8-investor AF8-desk.aspx?display AD0-policies

Inductions

Dr. Ashok Shettar, was appointed as Non-Executive Director in the AGM held on 8th August, 2015, in the place of Retiring Director, Mr. Darius Pandole (the representive of NSR) who had not sought reappointment from the Board. The Board wishes to place on record, the immense contribution made by Mr. Darius Pandole in his capacity as a Director.

Retirement/Re-appointment

Mr. S R Prabhu, Non-Executive Director and Mr. Raghottam Akamanchi, Non-Executive Director, retire by rotation and being eligible, offer themselves for reappointment.

DIRECTOR''S RESPONSIBILITY STATEMENT:

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

ii) 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 at the end of the financial year and of the profit or loss of the Company for that period.

iii) The directors have 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.

iv) The directors have prepared the annual accounts on a going concern basis.

v) 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.

vi) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

Based on the framework of internal financial controls established and maintained by the Company, reviews performed by the Management in concurrence with the Audit Committee, your Board is of the opinion that the Company''s internal controls were adequate and effective as on March 31, 2016.

RELATED PARTY TRANSACTIONS:

All related party transactions that were entered into during the financial year were on arm''s length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board of Directors of the Company can be viewed on the website of the Company thru the following link.

http://vrlgroup.in/investor AF8-download/RPT ACU-20Policy.pdf

There were no material significan trelated party transactions entered between the Company, Directors, management, or their relatives except for those disclosed in the financial statements. All the contracts/arrangements/transactions entered into by the Company with the related parties during the financial year 2015-16 were in the ordinary course of business and on an arm''s length basis. In our opinion there were no ACI-material ACI- transactions that warrant a disclosure in this report.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form a part of this report.

SUBSIDIARY COMPANIES:

The Company does not have any subsidiary.

CODE OF CONDUCT:

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and specified employees in the course of day to day business operations of the company. The Company believes in ACI-Zero Tolerance ACI- against bribery, corruption and unethical dealings / behaviour in any form and the Board has laid down certain directives to counter such acts. Such code of conduct has also been placed on the Company''s website. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance on the expected behaviour from an employee in a given situation and the reporting structure. All the Board Members and the Senior Management personnel have confirmed compliance with the Code.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has a Vigil Mechanism Policy to deal with instances of fraud and mismanagement, if any. Staying true to our core values being committed to high standards of Corporate Governance and stakeholder responsibility, the said policy ensures that strict confidentiality is maintained in respect of whistle blowers whilst dealing with concerns and also specified that no discrimination will be meted out to any person for a genuinely raised concern and also provides a direct access to the Chairman of the Audit Committee. During the year under review none of the personnel has been denied access to the Chairman of Audit Committee.

The Vigil Mechanism policy is available on the website of the Company and can be accessed at the following link.

http://vrlgroup.in/investor AF8-download/vigil AF8-Mechanism.

pdf

PREVENTION OF INSIDER TRADING:

The Company has adopted a Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders with a view to regulate trading in securities by the Directors and certain designated employees of the Company. The Code requires pre- clearance for dealing in the Company''s shares and prohibits the purchase or sale of Company shares by the Directors and designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code.

The said code is available on the website of the Company and can be accessed at the following link.

http://vrlgroup.in/vrl AF8-investor AF8-desk.aspx?display AD0-policies

BUSINESS RISK MANAGEMENT:

Pursuant to section 134 (3) (n) of the Companies Act, 2013 ACY- Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the company has constituted a risk management committee. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Boards report. The identification of material risks affecting Company along with related mitigation measures are elaborated in the Risk Management Policy of the Company which has been hosted on the website of the Company and can be accessed at the following link.

http://vrlgroup.in/investor AF8-download/Risk ACU-20 Management ACU-20Policy.pdf

AUDIT COMMITTEE:

The Audit Committee comprises of 4 directors and all of them are Independent Directors. The Audit Committee met five times during the year. Further details such as terms of reference, powers, functions, meetings, attendance of directors etc are dealt with in Corporate Governance Report forming part of this Annual report.

Board has accepted all recommendations made by the Audit Committee during the year.

AUDITORS

Statutory Auditors:

In accordance with Section 139 of the Companies Act, 2013 and Rules made thereunder, Members at the 32nd Annual General Meeting of the Company approved the appointment of Joint Statutory Auditors, M/s Walker Chandiok ACY- Co LLP, Chartered Accountants, Mumbai and M/s H K Veerbhaddrappa ACY- Co., Chartered Accountants, Hubballi for a period of 5 years and 2 years respectively. The said appointment was subject to ratification by members every year.

The Company has received a resignation letter from M/s H K Veerbhaddrappa ACY- Co, Chartered Accountants, Hubballi, one of the Joint Statutory Auditors of the Company. The Board at the meeting held on August 01, 2016, on the recommendation of the Audit Committee, approved the same. As the said firm is associated with your Company as Statutory Auditors since inception and considering their long association as also their in-depth knowledge and expertise w.r.t. the business operations of your Company, the Board is considering their appointment as Internal Auditors of the Company to strengthen the Internal Audit functions of the Company in the days to come.

As such, M/s Walker Chandiok ACY- Co LLP, Chartered Accountants, Mumbai, the other Joint Statutory Auditor of the Company would continue as the sole Statutory Auditor till the conclusion of their tenure. Board recommends the ratification of their appointment as required under Section 139 of the Companies Act 2013, for approval by the members.

Cost Auditors:

Section 148 of the Companies Act 2013 read with Rules made thereunder mandates every Company belonging to category prescribed in the Rules to undertake a Cost Audit. Cost Records of Wind Power Division of the Company need to be audited as it is covered in the category prescribed. In compliance with said provision, Company had appointed M/s S.K. Tikare ACY- Co., Cost Accountants, Dharwad to audit the cost records for FY 2015-16. The Cost Auditor has submitted the Cost Audit report for FY 2015-16 and the same is annexed as Annexure C to this report.

Pursuant to the recommendation of the Audit Committee, the Board of Directors have re-appointed M/s S K Tikare ACY- Co., Cost Accountants, Dharwad as the Cost Auditors for FY 2016-17 at a fixed remuneration of Rs.50,000/-, the latter subject to approval by the members at the ensuing Annual General Meeting of the Company.

Board recommends the approval of the said remuneration payable to the Cost Auditor in accordance with Section 148 of the Companies Act 2013 and the Rules made thereunder.

Secretarial Auditor:

Pursuant to 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. R Parthasarathi, Company Secretary in practice to undertake the Secretarial Audit of the Company for FY 2015-16. The Secretarial Audit report is annexed herewith as Annexure D. Pursuant to the recommendation of the Audit Committee, the Board of Directors have re-appointed Mr. R Parthasarathi, Company Secretary in Practice to conduct the Secretarial Audit for FY 2016-17 at its meeting held on May 23, 2016.

BOARD''S RESPONSE ON THE REMARKS MADE BY STATUTORY AUDITORS, COST AUDITORS AND SECRETARIAL AUDITORS

There were no qualifications, reservations and adverse remarks made by the statutory auditors in their Audit Report and by the Cost Auditors in their Cost Audit Report. Response to the comment made by the secretarial auditor that the company has not fully spent the CSR expenditure as per section 135 of the Companies Act 2013 is given in Annual Report on CSR activities - Annexure A.

EXTRACT OF ANNUAL RETURN:

Extract of the Annual Return in form MGT-9 is annexed herewith as Annexure E.

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

The particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure are annexed hereto as Annexure F and forms part of this Report.

PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 read with rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms of this report and annexed herewith as Annexure G.

A statement containing the names of every employee who is in employment of the Company throughout the year and is in receipt of annual remuneration of Rs. 60 lakhs or more or employed for a part of year and in receipt of Rs.5 lakh or more per month needs to be disclosed in the Board''s report. As such the information is annexed as Annexure G to this report.

CORPORATE GOVERNANCE

The Company is committed to maintain high standards of corporate governance and adhere to the corporate governance requirements set out under extant law. The Report on corporate governance as stipulated under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 read with Schedule V thereto forms part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Regulations, as also the related certificate from CEO/ CFO are attached to the Report on corporate governance.

MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT

Management''s Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 read with Schedule V thereto, is presented in a separate section forming part of the Annual Report.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the regulators or courts or tribunals impacting going concern status and company''s operations for a foreseeable future.

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

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

STATUTORY DISCLOSURES

None of the Directors of your Company are disqualified as per provisions of Section 164(2) of the Companies Act, 2013. Your Directors have made necessary disclosures, as required under various provisions of the Companies Act, 2013 and Listing Regulations.

FRAUDS REPORTED BY AUDITORS

There were no frauds reported by the auditors under Section.143(12) of the Companies Act, 2013

ACKNOWLEDGMENTS AND APPRECIATION

The Directors take this opportunity to thank the Company''s customers, shareholders, Investors, suppliers, bankers, financial institutions and Central ACY- State Governments for their consistent support to the Company. The Directors also wish to place on record their appreciation to employees at all levels for their hard work, dedication and commitment.



For and on behalf of the Board

Dr. Vijay Sankeshwar

Chairman ACY- Managing Director

DIN:00217714

Place: Hubballi

Date: August 01, 2016


Mar 31, 2015

Dear Members,

The Directors are pleased to present the Thirty Second Annual Report of your Company together with the audited financial statements for the financial year 2014-15

FINANCIAL RESULTS (Rs. in lakhs)

PARTICULARS Year Ended Year Ended 31st March, 2015 31st March, 2014

Total Revenue 167886.10 150377.85

EBIDTA 28044.59 21658.66

Finance Charges 5859.98 5984.00

Provision for Depreciation 8766.03 8661.60

Profit Before Tax (including 13790.21 7676.78 exceptional income of Rs. 371.63 lakhs)

Provision for Tax 4667.87 975.54

Net Profit After Tax 9122.34 5701.24

Balance of Profit brought forward 7416.58 6288.43

Balance available for appropriation

Interim Dividend on Equity Shares including DDT 3421.45 3421.49

Tax on proposed Dividend 614.82 581.48

Transfer to General Reserve 912.23 570.12

Transitional Adjustment on account of 106.30 Nil change in Depreciation method

Surplus carried to Balance Sheet 11484.12 7416.58

OPERATING HIGHLIGHTS:

During the last year your Company recorded revenues of Rs.1678.86 crores as against previous year's revenues of Rs.1503.77 Crores depicting a growth rate of 11.64% and earned Profit before tax (PBT) of Rs.137.90 crores inclusive of an exceptional item of Rs.3.72 crores which represents the profit earned on the sale of land held by the Company at Bangalore, Karnataka. The corresponding PBT for the earlier year was Rs. 76.76 Crores.

The company's Goods Transport Division has achieved a growth rate of 13.88% as compared to previous year and the Bus Operations division witnessed an increase in the divisional revenues by 7.26%.

CAPITAL EXPENDITURE:

During the Financial year 2014-15, the company has incurred a capital expenditure of Rs.8964.28 lakhs. Out of the same, a sum of Rs.7517.59 lakhs was invested for fleet addition. Other capex components included a sum of Rs.469.30 lakhs towards Office Equipments, Rs.429.33 lakhs towards Plant and equipment, Rs.344.50 towards Building costs and a sum of Rs.83.07 lakhs towards Furniture and Fittings. The said capex also included a sum of Rs.120.49 expended on leasehold improvements.

DIVIDEND:

During the Financial year 2014-15, your directors declared total Interim Dividend at the rate of 40% translating to Rs. 4.00 per Equity share. The Board recommends no further dividend and proposes that the interim dividend so declared and paid be treated as the final dividend for the financial year 2014-15.

FIXED DEPOSITS

The Company has not accepted any deposits during the year, within the meaning of Section 73 of the Companies Act 2013 and the rules made thereunder.

SUCCESSFUL INITIAL PUBLIC ISSUE

The Company has successfully completed initial public offering (IPO) in the current year pursuant to applicable SEBI rules and Regulations. The IPO of the Company received an overwhelming response from the investors and the public issue was oversubscribed by more than 74 times thereby making this IPO a historical one. Shares have been listed with both BSE and NSE w.e.f 30th April 2015.

Consequently, the Company's paid up capital increased from Rs.85,53,61,620/- to Rs.91,24,34,950/-. The equity shares of Rs.10/- each were issued at a premium of Rs.195/- per share.

a) NSR PE Mauritius LLC, investor has divested its equity from 22.51% to 5.16% of paid up capital and

b) The promoters have divested their equity from 76.71% to 69.11.%.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The company has not given any loans or guarantees covered under the provisions of section 1 86 of the Companies Act, 2013.

Details of investments made by the company are given in the notes to the financial statements.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an Internal Control System, commensurate with the size, scale and nature of its operations. The scope and authority of the Internal Audit function is well defined and to maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board as well as directly to the Chairman & Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company.

Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company has not incurred any expenditure on Corporate Social Responsibility during 2014-15 as required under Section 135 of the Companies Act 2013. The total 15000 employee strength of the Company, predominantly comprising of Drivers, maintenance workers and other unskilled workers cannot exclusively benefit from the CSR spend under the extant rules which your management finds unfortunate. Given the nature of the road transport industry and the constituent workforce engaged therein, there are several areas where such fund could be utilized for the encouragement, upliftment and skill development of needy employees.

Your management is however committed to the CSR initiative and expects to incur CSR expenditure as applicable for 2014-15 during the ensuing year through the trust which has already been set up for the purpose. The Company has constituted a Corporate Social Responsibility Committee and has identified the twin areas of "Education" and "Healthcare" for utilizing the CSR spends applicable. Recently, the Company has set up a trust - VRL Foundation under the aegis of which the Company would conduct its CSR activities. Your management wants to ensure that the fund so earmarked reaches out to the needy and is in the process of outlining a program to benefit the needy local populace.

Annual report on CSR activities is enclosed as Annexure "A" to this report.

TRANSFER TO RESERVES:

The Company has transferred an amount of Rs.9.12 crores to the General Reserve put of current year's profits and the same is in compliance with the applicable provisions prescribed under the Companies Act, 2013.

INDUSTRIAL RELATIONS:

During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

DIRECTORS

Number of Meetings of the Board:

During the year Seven Board Meetings were convened and held, details of which are provided in the Corporate Governance Report. The intervening gap between the Meetings was in compliance with the Companies Act, 2013.

Nomination and 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 including criteria for determining qualifications, positive attributes and other matters provided under sub section (3) of section 178 of the Companies Act 2013. The Remuneration Policy is stated in the Corporate Governance Report and can be accessed on the website of the Company as well.

Declaration by Independent Directors

All independent directors have given declarations that they meet the criteria of independence as laid down under section 149(7) of the Companies Act, 2013 and clause 49 of the Listing Agreement.

Board Evaluation

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

Inductions

In compliance with section 149 of the Companies Act 2013 which mandates the appointment of woman director on the Board, your Company has appointed Mrs. Medha Pawar, Practicing Advocate as an independent director in the Company and such appointment was confirmed by the shareholders of your Company at the extraordinary General Meeting held on 12th December 2014.

To comply with the composition of Board as provided in clause 49 of the Listing agreement as also under Section 152 of the Companies Act, 2013, the following new Directors were appointed:-

1. Dr. Anand Pandurangi - Independent Director

2. Mr. Shankarasa Ladwa - Independent Director

3. Dr. Raghottam Akamanchi - Non-Executive Non-independent Director

4. Mr. Ramesh Shetty - Non-Executive Non-independent Director

5. Mr. S R Prabhu - Non-Executive Non-independent Director

The appointment of said directors was confirmed by the shareholders of the Company at the extra-ordinary General Meeting held on 19th February 2015.

Retirement/Re-appointment

Mr. Darius Pandole, nominee Director of NSR PE Mauritius LLC, investor, retires by rotation and in view of dilution of shareholdings by NSR PE Mauritius LLC as a part of IPO,he is not seeking re-appointment though being eligible. The Board wishes to place on record its appreciation for his valuable contribution for the growth of the Company and the support extended by NSR PE Mauritius.

The Board recommends the appointment of Dr. Ashok Shettar, in the place of the retiring Director referred above, in respect of whom a notice has received from member as required under the Companies Act 2013.

None of Independent Directors will retire at the ensuing Annual General Meeting.

Resignation

Mr. Sudhir Ghate, director resigned from the Board on June 26, 2014 due to personal reasons.

The Board hereby places on record his valuable contribution towards the growth and development of the company during his tenure as director of the Company.

DIRECTOR'S RESPONSIBILITY STATEMENT:

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed.

ii) 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 at the end of the financial year and of the profit or loss of the Company for the year under review.

iii) The directors have 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.

iv) The directors have prepared the annual accounts on a going concern basis.

v) 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.

vi) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

RELATED PARTY TRANSACTIONS:

All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board of Directors of the Company can be viewed on the website of the Company.

SUBSIDIARY COMPANIES:

The Company does not have any subsidiary.

CODE OF CONDUCT:

The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and specified employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviour in any form and the Board has laid down certain directives to counter such acts. Such code of conduct has also been placed on the Company's website. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance through examples on the expected behaviour from an employee in a given situation and the reporting structure. All the Board Members and the Senior Management personnel have confirmed compliance with the Code.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has a Vigil Mechanism Policy to deal with instances of fraud and mismanagement, if any. Staying true to our core values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility. The said Policy ensures that strict confidentiality is maintained in respect of whistle blowers whilst dealing with concerns and also specified that no discrimination will be meted out to any person for a genuinely raised concern.

PREVENTION OF INSIDER TRADING:

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and certain designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the trading window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code.

AUDIT COMMITTEE:

The Audit Committee comprises of 2 Independent Directors and a Non Executive Director. The Audit Committee met five times during the year on 25th May, 2014, 26th June, 2014, 10th October, 2014,

8th January, 2015 and 9th February, 2015. Further details relating to Audit Committee are dealt with in Corporate Governance Report forming part of this report.

AUDITORS

Statutory Auditors:

In terms of section 139 of the Companies Act, 2013 and rules framed thereunder, appointment of Statutory Auditors of the Company is subject to approval of Members, after considering the previous service, if any, in accordance with the provisions contained in the said enactment as well as rules made thereunder. The provisions further provide that firm of auditors shall be appointed for a maximum 2 terms of 5 years each, including the earlier service, if any. M/s Walker Chandiok & Co., LLP , Chartered Accountants, Mumbai and M/s H. K. Veerbhaddrappa & Co., Chartered Accountants, Hubballi, are the Joint Statutory Auditors of the Company.

M/s. H. K. Veerbhaddrappa & Company, Chartered Accountants, Hubballi, would retire at the conclusion of the forthcoming Annual General Meeting and can continue in such capacity for a maximum period of two more years subject to ratification at subsequent annual general meetings. The Company has received a letter from them to the effect that their appointment, if made, would be within the limits prescribed under the provisions and that they are not disqualified for re-appointment under Section 139 of the Companies Act, 2013.

Similarly, M/s. Walker, Chandiok & Co. LLP Chartered Accountants, Mumbai, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment for a period of further five years subject to ratification at every annual general meeting. The Company has received a letter from them to the effect that their appointment, if made, would be within the limits prescribed under the provisions and that they are not disqualified for re-appointment under Section 139 of the Companies Act, 2013.

Pursuant to the recommendations of the Audit Committee, the Board of Directors have, at their meeting held on 25th May 2015, recommended the re-appointment of Joint

Statutory Auditors for the respective tenure as stated above and the same would be subject to the approval of the shareholders of the Company, at the ensuing Annual General Meeting.

Cost Auditors:

In conformity with the rules prescribed by the Central Government, the Company has appointed M/s Sanjay Tikare & Co, Cost Accountants, Dharwad, as the Cost Auditors for audit of cost accounting records for Wind Power Division for the year ended 31.03.2015. The Cost Audit Report would need to be submitted to the Central Government before the due date i.e. 30th September, 2015. In accordance with the rules prescribed by Central Government, remuneration of cost auditor shall be ratified by members at the general meeting. Pursuant to the recommendation of the Audit Committee, the Board of Directors have re-appointed M/s Sanjay Tikare & Co, Cost Accountants, Dharwad as the Cost Auditors for FY 2015-16 at a fixed remuneration of Rs.50,000/- subject to approval by the members at the ensuing Annual General Meeting of the Company.

Secretarial Auditor:

Pursuant to 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. R Parthasarathi, Company Secretary in practice to undertake the Secretarial Audit of the Company for FY 2014-15. The Secretarial Audit report is annexed herewith as "Annexure B". The Board of Directors has re-appointed Mr. R Parthasarathi, Company Secretary in Practice to conduct Secretarial Audit for FY 2015-16 at its meeting held on 25th May 2015.

EXTRACT OF ANNUAL RETURN:

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

BUSINESS RISK MANAGEMENT:

Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49 of the listing agreement, the company has constituted a risk management committee. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Annual report. The material risks affecting Company are identified along with related mitigation measures and elaborated in the Risk Management Policy of the Company which has also been hosted on the website of the Company.

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

The particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and expenditure are annexed hereto as Annexure "D" and forms part of this Report.

PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms part of this report and annexed herewith as Annexure "E". In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, including the information on employees' particulars 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 ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the company secretary in advance.

CORPORATE GOVERNANCE

The Company is committed to maintain the steady standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has also voluntarily implemented several good corporate governance practices even before becoming listed Company. The Report on corporate governance as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, as also certificate from CEO/ CFO are attached to the Report on corporate governance.

MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, is presented in a separate section forming part of the Annual Report.

SIGNIFICANT AND MATERIAL ORDERS

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

SEXUAL HARASSMENT

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. The Company has complied with the requirement of formation of a suitable committee as required under the said act.

ACKNOWLEDGMENTS AND APPRECIATION

The Directors take this opportunity to thank the Company's customers, shareholders, investors, suppliers, bankers, financial institutions and Central & State Governments for their consistent support to the Company. The Directors also wish to place on record their appreciation to employees at all levels for their hard work, dedication and commitment.

Dr. Vijay Sankeshwar Chairman & Managing Director

(DIN: 00217714)

Place: HUBBALLI Date: 25th May 2015


Mar 31, 2014

Dear Members,

The Board of Directors is pleased to present the Thirty First Annual Report of your Company together with the audited financial statements for the financial year ended 31 March 2014.

FINANCIAL RESULTS (Rs. in crores)

Year ended Year ended 31 March 2014 31 March 2013

INCOME

Income from Services 1462.69 1292.35

Sale of Power 25.01 27.10

Sale of Certified Emission 6.08 6.04 Reduction units

Other Income 9.99 9.83

TOTAL 1503.77 1335.32

EXPENDITURE

Employee Costs 174.45 148.26 Operating Costs and 1091.17 962.65 Administration Cost

Finance Cost 59.84 59.12

Depreciation / Amortization 86.62 82.34

Other Expenses 21.56 19.37

TOTAL 1433.64 1271.74

Profit before Tax before 70.13 63.59 Exceptional Item & Tax

Exceptional Item 6.63 -

Profit before Tax 76.76 63.59

Taxation 19.75 (16.70)

Net Profit 57.01 80.29

OPERATING HIGHLIGHTS

During the last year your Company achieved record revenues of Rs.1,503.77 crores during the year as against previous year’s turnover of Rs.1,335 crores depicting a growth rate of 12.61% and earned Profit before tax (PBT) of Rs.76.76 crores inclusive of an exceptional item of Rs.6.63 crores which represents the profit earned on the sale of land held by the Company at Manesar, Haryana. The corresponding PBT for the earlier year was Rs.63.59 crores. The profitability margin during the year was under pressure owing to the adverse economic scenario as well as considering the sporadic rise in input costs which could not be passed on to the customers in entirety.

The company''s Goods Transport Division has achieved marginal growth rate of 14.22% as compared to previous year and the revenues for this division were Rs.1133.43 crores. The Bus Operations however witnessed a significant drop in margins despite 8.53% increase in the division revenues. The Company also earned revenues of Rs.31.35 crores from the sale of power generated through the windmills owned by the Company and out of the sale of certified emission reduction units.

During the year, the company has entered into the hotel business by acquiring an existing restaurant at Tumkur to provide food facility to its Bus passengers and earned revenue of Rs.1.02 crore during the year from the said operation. The said facility is intended to complement its Bus Operations division by providing good quality food to passengers at reasonable rates.

CAPITAL EXPENDITURE

During the Financial year 2013-14, the company has made significant investment in fixed assets. The summary of the same is as under:

* Purchase of vehicles for sum of Rs.88.14 crores for expansion of Vehicle fleet comprising of Lorries and buses as also cost incurred for refurbishment of existing vehicles.

* The Company incurred a sum of Rs.12.09 crores for expansion of aviation business by purchase of a second hand aircraft from M/s Force Motors Ltd, Pune.

* Purchase of land at Bellary worth Rs.2.51 crores for construction of transshipment hub.

* Acquisition of an existing restaurant at Tumkur at a cost of Rs.2.54 crores for providing food facilities to passengers of Travels business. The said cost also includes additional work done subsequent to such acquisition for setting up critical passenger facilities.

DIVIDEND

During the Financial year 2013-14, Your Directors declared first Interim Dividend on 08 November 2013 at the rate of 20% translating to Rs.2/- per Equity share as well as proportionate dividend on the 0.001% Compulsory Convertible Participatory Preference Shares (CCPPS) based on the provisional financial statements for the half year ended 30 September 2013. The company also made the payment of the applicable preference dividend on CCPPS upto the date of conversion thereof.

The Company also declared second Interim Dividend on 30 March 2014 at the rate of 20% translating to Rs.2/- per Equity share based on the Provisional Financial Statements dated 28 February 2014.

The directors recommend that the interim dividend so declared and paid be the final dividend for the financial year 2013-14.

TRANSFER TO RESERVES

The Company has transferred an amount of Rs.5.71 crores to the General Reserve put of current year''s profits and the same is in compliance with the provisions prescribed under the Companies (Transfer of Profits to Reserves) Rules, 1975.

FIXED DEPOSITS

Your Company has not accepted any deposits from the Public during the current year. During the current year, the Company has refunded entire deposits of Rs.2.59 Crores, which were outstanding as at the end of the financial year 2012-13.

Your Company has complied with the provisions stipulated under the Companies Act, 1956, as applicable to public deposits.

DIRECTORS

In accordance with the provisions of new Companies Act, 2013, and the Articles of Association of the Company, Mr. J.S. Korlahalli and Dr. Prabhakar Kore retire by rotation owing to their present tenure as directors being the longest and being eligible, they offer themselves for re- appointment at the ensuing Annual General Meeting. The Board recommends their reappointment for consideration of the shareholders. As per the provision of section 149(4) of the Companies Act, 2013, the company needs to appoint at least two directors as independent directors on Board of the Company. In compliance with the said provision, the Board proposes to re appoint Mr. J.S. Korlahalli, Dr. Prabhakar Kore as an Independent Directors of the Company who have submitted the declaration of Independence as required under the Act.

Considering the imminent IPO plans of the Company in the medium term and in order to comply with the provisions of listing agreement as applicable to listed companies, the Board recommends to the shareholders the appointment of Mr. C. Karunakara Shetty, existing independent director, as an Independent Director of the Company as per Companies Act 2013, who has submitted a declaration of independence as required under the Act. As required under the said act, the Company is also in the process of appointing a woman director on the Board and has initiated work towards obtaining the Security Clearance in her respect from the Ministry of Civil Aviation, which is mandatory for a Board appointment owing to the Company owning aircrafts.

AUDIT COMMITTEE

The Audit Committee comprises of four numbers of NonExecutive Directors. Mr. Sudhir Ghate, is the Chairman of the Committee and Mr. J.S. Korlahalli, Mr. C. Karunakara Shetty and Mr. Darius Pandole are other members of the Committee. The Audit Committee met five times during the year on 27 May 2013, 10 July 2013, 07 August 2013, 08 November 2013 and 03 February 2013.

STATUTORY AUDITORS

In terms of section 139 of the Companies Act, 2013 and rules framed thereunder, appointment of Statutory Auditors of the Company is subject to rotation as determined considering the previous service, if any, in accordance with the provisions contained in the Act as well as rules made thereunder. The provisions further provide that firm of auditors shall be appointed for a maximum period of 10 years including the earlier service, if any.

Accordingly M/s H.K. Veerbhaddrappa & Company, Chartered Accountants, Hubballi, the Joint Statutory Auditors of the Company would retire at the conclusion of the forthcoming Annual General Meeting and can continue in such capacity for a maximum period of three more years subject to ratification at every annual general meeting. The Company has received a letter from them to the effect that their appointment, if made, would be within the provision prescribed limit and that they are not disqualified for re-appointment under Section 139 of the Companies Act, 2013.

Similarly, M/s Walker Chandiok & Co. LLP, Chartered Accountants, Mumbai, Joint Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment as such for a period of another six years subject to ratification at every annual general meeting. The Company has received a letter from them to the effect that their appointment, if made, would be within the provision prescribed and that they are not disqualified for re-appointment under Section 139 of the Companies Act, 2013.

Pursuant to the recommendations of the Audit Committee, the Board of Directors have, at their meeting held on 26 June 2014, recommended the reappointment of Joint Statutory Auditors and the same is subject to the approval of the shareholders of the Company, at the ensuing Annual General Meeting. The Company would propose the appointment of the two Joint Statutory Auditors for a period of one year at a time.

COST AUDITORS

In conformity with the Circulars issued by the Central Government, the Company has appointed M/s S.K. Tikare & Co., Cost Accountants, Dharwad, as the Cost Auditors for audit of cost accounting records for Wind Power Division for the year ended 31 March 2014. The Cost Audit Report would need to be submitted to the Central Government before the due date i.e. 30 September 2014.

DETAILS PURSUANT TO COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

The particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange. Earnings and Expenditure are annexed hereto as Annexure "A" and forms part of this Report.

PARTICULARS OF EMPLOYEES

The particulars of employees of the company, in terms of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, are given in Annexure "B" to this report.

DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

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

c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) They have prepared the annual accounts on a going concern basis.

ACKNOWLEDGMENTS AND APPRECIATION

The Directors take this opportunity to thank the Company''s customers, shareholders, Investors, suppliers, bankers, financial institutions and Central & State Governments for their consistent support to the Company. The Directors also wish to place on record their appreciation to employees at all levels for their hard work, dedication and commitment.

For and on behalf of the Board

Dr. Vijay Sankeshwar Chairman & Managing Director

Place: Hubballi Date: 26 June 2014


Mar 31, 2013

Dear Members,

We take pleasure in presenting the Thirtieth Annual Report of the Company together with the Audited Accounts for the year ended 31st March 2013

(Rs. in lakhs)

PARTICULARS Year Ended Year Ended 31.03.2013 31.03.2012

INCOME

Income from Services 128134.25 108558.95

Sale of Power 2710.65 2538.90

Sale of Certified Emission Reduction units 603.65 1014.49

Other Income 2083.78 1415.49

Total 133532.33 113527.83

EXPENDITURE

Employee Costs 14825.51 12891.87

Operating Costs 96264.71 79111.86

Finance Cost 5912.30 6514.17

Depreciation / Amortisation 8233.59 6959.86

Other Expenses 1937.47 1843.58

Total 127173.58 107321.34

Profit before Tax 6358.75 6206.49

Taxation (1670.48) 2100.61

Net Profit 8029.23 4105.88

1. DIVIDEND

During the financial year 2012-13, your Directors declared an interim dividend at the rate of 26% translating to Rs.2.60 per equity share as well as proportionate dividend to the Compulsorily Convertible Participating Preference Shareholders (CCPPS) based on the provisional unaudited financial statements for the nine month period ended 31st December 2012. Based on the Company''s performance, the directors are pleased to recommend, for the approval of the members, a further Dividend at the rate of 38% to Equity Shareholders as well as a proportionate dividend on the Compulsorily Convertible Participatory Preference Shares (CCPPS) for the financial year 2012-13 as a final dividend for the year. Record date for the dividend would be 10th July 2013.

2. TRANSFER TO RESERVES

The Company has transferred an amount of Rs.802.92 lakhs to the General Reserve out of the current year''s profits in compliance with the provisions prescribed under the Companies (Transfer of Profits to Reserves) Rules, 1975.

3. COMPANY PERFORMANCE

During the year under review, company has achieved turnover of Rs.133532.33 lakhs as against Rs.113527.83 lakhs in the previous year depicting a growth rate of 17.62% and earned a net profit of Rs.8029.23 lakhs during the financial year 2012-13 as against Rs.4105.88 lakhs in the previous year.

The goods transport division witnessed growth compared to the earlier year at a rate of 15 %. The margins however was under pressure owing to the inflationary trend in cost variables such as fuel price, toll charges, driver costs, etc. which could not be passed on to the customers in entirety, to remain competitive.

Propelled by the substantial recent capex in the Bus fleet, a significant revenue growth was seen in the Passenger transportation division with the Company recording revenues of Rs.28483.77 lakhs vis-a-vis a revenue of Rs.21781.19 lakhs for the corresponding previous fiscal. Company invested in the purchase of Volvo, Multi Axle buses for meeting the needs of the customers. Company expanded its services in several new routes including the service of Bangalore to Jodhpur which is one of the longest route in India introduced by a private sector industry player.

4. CAPITAL EXPENDITURE

Financial year 2012-13 witnessed significant capital expenditure in your Company. A summary of the same is as under:

* Purchase of 25 goods transport vehicles for a sum of Rs.525.80 lakhs

* Purchase of 21 Multi-axle Volvo buses at a cost of Rs.2093.12 lakhs

* Purchase of 38 Non-Volvo Sleeper / Seater buses at a cost of Rs.1054.01 lakhs.

Apart from the above, the Company has purchased a new Godown at Bhiwandi, Mumbai at a cost of Rs.3683.86 lakhs as well as invested certain amounts in the improvement of properties situated at Varur, Hubballi, Mysore, Chitradurga and Bijapur.

5. FIXED DEPOSITS

Your Company has not accepted any deposits from the Public during the current year. Deposits accepted which have matured and are unclaimed are being reflected under the head "Unclaimed Matured Deposits" in Note 9, Other Current Liabilities. Interest due on these deposits is also disclosed separately. Fixed Deposits of the Company stood at Rs.259.62 lakhs as at the end of the financial year 2012-13, out of which Rs.8.45 lakhs have matured and are unclaimed. There were no overdue deposits. Your Company has complied with the provisions stipulated under the Companies Act, 1956, as applicable to such deposits.

6. DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Sudhir Ghate and Mr. C. Karunakara Shetty retire by rotation owing to their present tenure as directors being the longest and being eligible, they offer themselves for re-appointment at the ensuing Annual General Meeting. The Board recommends their reappointment for consideration of the shareholders.

7. JOINT STATUTORY AUDITORS

M/S H.K. Veerbhaddrappa & Co., Chartered Accountants, Hubballi and M/s Walker, Chandiok & Co., Chartered Accountants, Mumbai, Joint Statutory Auditors of the company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. The company has received letters from them to the effect that their reappointment, if made, would be within the prescribed limits u/s 224(1B) of the Companies Act, 1956 and that they are not disqualified for reappointment u/s 226 of the Companies Act, 1956. Pursuant to the recommendations of the Audit Committee, the Board of Directors have, at their meeting held on 10 July 2013, recommended the reappointment of the Joint Statutory Auditors and the same is subject to the approval of the shareholders of the Company, at the ensuing Annual General Meeting.

8. COST AUDITOR

In conformity with the circulars issued by the Central Government, the Company has appointed S.K. Tikare & Co., Cost Accountants, Dharwad, as the Cost Auditors for our Wind Power business for the year ending 31 March 2013. Pursuant to the recommendation of the Audit Committee, the Board at its meeting held on 10 July 2013 has retained their services for the financial year 2013-14.

9. DETAILS PURSUANT TO COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

The particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange earnings and expenditure are annexed hereto as Annexure "A" and form part of this Report.

10. PARTICULARS OF EMPLOYEES

The particulars of employees of the company, in terms of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, are given in Annexure "B" to this report.

11. DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

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

c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) They have prepared the annual accounts on a going concern basis.

12. ACKNOWLEDGMENTS AND APPRECIATION

The Directors take this opportunity to thank the Company''s customers, fixed deposit holders, shareholders, suppliers, bankers, financial institutions and Central & State Governments for their consistent support to the Company. The Directors also wish to place on record their appreciation to employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to maintain its position in the industry in the face of a difficult economic scenario.

For and on behalf of the Board Vijay Sankeshwar Chairman & Managing Director Place: Hubballi Date: 10 July 2013


Mar 31, 2012

Dear Members,

The Directors have pleasure in presenting the Twenty Ninth Annual Report together with the Audited Accounts of the Company for the year ended 31 March 2012.

(Rs. in lacs)

PARTICULARS Year Ended Year Ended 31.03.2012 31.03.2011

INCOME

Income from Services 108558.95 85849.65

Sale of Power 2538.90 2346.73

Sale of Certified Emission 1014.49 - Reduction units

Other Income 1415.49 1095.16

Total 113527.83 89291.54

EXPENDITURE

Costs of Materials Consumed 6654.30 5228.13

Employee Costs 12891.87 10448.23

Other Operating Costs 74189.33 56602.42

Finance Cost 6625.98 4874.64

Depreciation / Amortisation 6959.86 5093.32

Total 107321.34 82246.74

Profit before Tax 6206.49 7044.80

Taxation 2100.60 1947.11

Net Profit 4105.88 5097.68

1. DIVIDEND

During the financial year 2011-12, your Directors declared an interim dividend at the rate of 21% translating to Rs.2.10 per equity share of Rs.10/- each based on the provisional unaudited financial statement states for the half year ended 30 September 2011. You directors recommend a further Final Dividend at the rate of 6% to Equity Shareholders as well as proportionate dividend on the Compulsorily Convertible Participatory Preference Share holders (CCPPS) for the financial year 2011-12. Record date for the dividend would be 10 July 2012.

2 TRANSFER TO RESERVES

The Company has transferred an amount of Rs.410.59 lakhs to the General Reserve out of the current year''s profits in compliance with the provisions prescribed under the Companies (Transfer of Profits to Reserves) Rules 1975.

3. REVIEW OF OPERATIONS

Your Company has achieved a very healthy growth rate in terms of revenues. Your Company has achieved a turnover of Rs. 113527.83 lacs depicting an increase of over 27% and earned a net profit of Rs.4105.88 lacs during the financial year 2011-12.

The profitability margins were however under pressure owing to significant increase in operating and employee costs as also increase finance costs owing to significant capital expenditure incurred during the year. The aggressive fleet increase in the passenger travel division also resulted in pressure on the margins as deployment of new vehicles and the stabilization of new routes involves an element of gestation till profitable operations can be sustained.

The Goods Transportation division clocked revenues of Rs.85850.63 lacs as against a corresponding revenue of Rs.71541.07 lacs for the previous year at a growth rate of 20%. The margins in this division were fairly stable. The Courier and Air Chartering divisions of the Company recorded revenues of Rs.449.80 lacs and Rs.477.33 lacs respectively.

The Passenger travel segment contributed Rs.21871.19 lacs as revenues during the year as against corresponding revenues of Rs.13441.68 lacs for the previous year at a growth rate of over 62%. The same was enabled by a significant addition to the vehicle fleet. However, the operating costs for this division were significantly higher and these could not be entirely passed on the customers owing to the initial focus on setting up new routes and optimal deployment of buses, which would be critical for stabilization of operations at such increased level. Barring the addition of a few buses, the envisaged capital expenditure for this division is nearly complete and these are expected to boost the revenues and profits in the upcoming months.

Considerable capital expenditure has been incurred during the year which has enabled the growth in revenues and the Company expects to further post a healthy growth year on year on the strength of such fleet increase and infrastructure growth.

4. PRIVATE EQUITY INVESTMENT

The asset ownership business model of your Company is capital intensive requiring significant financial resources from time to time. Over a period, these requirements were being met through a combination of internal accruals and borrowings from Banks / Financial Institutions. In order to supplement the funding needs of the company and to maintain a prudent capital structure, your Company raised a sizeable quantum of funds for, inter alia, acquisition of additional fleet (Goods vehicles and Passenger Vehicles), purchase of land for construction of transshipment yards & godowns, repayment of high cost debts as also general corporate purposes from NSR PE Mauritius LLC, (NSR), a Private Equity Fund of repute.

Your Company, on 15 December 2011, had entered into a binding Share Subscription & Purchase Agreement as also a binding Shareholders Agreement to raise the funds through private Equity Investment from NSR.

The said transaction involves an investment of Rs.12500 lacs, by way of 11046875 nos. of 0.001% Compulsory Convertible Participatory Preference Shares (CCPPS) having face value of Rs.100/- each being issued at a price of Rs.113.15/- per share. Further, 4418750 existing Equity Shares held by Mr. Anand Sankeshwar, were also purchased by NSR as a part of the said PE transaction. The CCPPS issued by the Company would be converted into equity shares by way of an agreed upon conversion mechanism which would be based upon the financial statements of the Company as of 31 March 2013.

The said Private Equity transaction has been given effect to during the month of April 2012.

The Company would have a balanced capital structure pursuant to the said transaction. Also, the PE partner is expected to add significant value to the business processes of the Company and your directors expect the Company to benefit from the experience and expertise of the NSR team. Your Company aims to achieve new heights in business by working hand in hand with NSR in the years to come.

5. CHANGES TO SHARE CAPITAL

To accommodate the issuance of CCPPS to the PE Investor, it was necessary to effect a change in the authorized capital of the Company. The change in Authorised Share Capital was effected at the Extraordinary General Meeting of the Company during April 2012.

CHANGES TO AUTHORIZED SHARE CAPITAL The Authorised Share Capital of the Company has been increased from Rs.125 crores to Rs.237 crores comprising of 125000000 (Twelve Crores Fifty Lakhs) Equity Shares of Rs.10/- (Rupees Ten) each and 11200000 (One Crore Twelve Lakhs) compulsorily and mandatorily convertible participatory preference shares of Rs.100/- each.

CHANGES IN PAID-UP SHARE CAPITAL

In terms of the Shareholders'' Agreement & Share Purchase & Subscription Agreement inter alia entered into between the Company and New Silk Route, the Company allotted 11046875 Compulsorily Convertible Participatory Preference Shares (CCPPS) of Rs.100/-each to NSR PE Mauritius LLC on 18 April 2012 at a premium of Rs.13.15/- per share.

6. CAPITAL EXPENDITURE

Financial year 2011-12 witnessed significant capital expenditure in your Company. A summary of the same is as under:

* Purchase of 343 goods transport vehicles

* Purchase of 102 Car Carrying vehicles

* Purchase of 20 Tankers for liquid / chemical transportation.

* Purchase of 60 Multi-axle Volvo buses

* Purchase of 74 Sleeper / Seater buses

* Purchase of properties for Goods transportation business at Bangalore, Belgaum and Raichur in the State of Karnataka

* Expansion of Vehicle Maintenance facility at Varur, Hubli

7. FIXED DEPOSITS

Your Company has not accepted any deposits from the Public during the current year. Deposits accepted which have matured and are unclaimed are being reflected under the head "Unclaimed Matured Deposits" in Note 9, Other Current Liabilities. Interest due on these deposits is also disclosed separately. Fixed Deposits of the Company stood at Rs.866.95 lacs as at the end of the financial year 2011-12, out of which Rs.15.55 lacs have matured and are unclaimed.

There were no overdue deposits. Your Company has complied with the provisions stipulated under the Companies Act, 1956, as applicable to such deposits.

8. DIRECTORS

a. Re-appointment

* Mr. Vijay Sankeshwar, Chairman & Managing Director of the Company was reappointed by the members at the Extraordinary General Meeting held on 31 January 2012 for further period of 5 years w.e.f. 01 January 2012.

* In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. J.S. Korlahalli and Dr. Prabhakar Kore retire by rotation owing to their tenure as directors being the longest and being eligible, they have offered themselves for re-appointment at the ensuing Annual General Meeting. The Board recommends their reappointment for consideration of the shareholders.

b. Appointment

Mr. Darius Pandole was inducted by the Board of Directors with the prior security clearance from Director General Civil Aviation on 21st April 2012. Pursuant to the provisions of the Section 260 of the Companies Act, 1956, Mr. Darius Pandole will hold office as such only upto conclusion of this ensuing Annual General Meeting. Mr. Darius Pandole is eligible for re-appointment as a Nominee Director of the Company liable to retire by rotation.. The company has received a notice along requisite fee from a member under Section 257 of the Companies Act, 1956, proposing the candidature of Mr. Darius Pandole as Director of the company.

9. JOINT STATUTORY AUDITORS

M/S H.K. Veerbhaddrappa & Co., Chartered Accountants, Hubli & M/s Walker, Chandiok & Co., Chartered Accountants, Mumbai, Joint Statutory Auditors of the company, hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The company has received letters from them to the effect that their reappointment, if made, would be within the prescribed limits u/s 224(1 B) of the Companies Act, 1956 and that they are not disqualified for reappointment u/s 226 of the Companies Act, 1956.

Pursuant to the recommendations of the Audit Committee, the Board of Directors have, at their meeting held on 10 July 2012, recommended the re-appointment of the Joint Statutory Auditors and the same is subject to the approval of the shareholders of the Company, at the ensuing Annual General Meeting.

10. COST AUDITOR

In conformity with the circulars issued by the Central Government, the Company has appointed S.K. Tikare & Co., Cost Accountants, Dharwad, as the Cost Auditors for our Wind Power business for the year ending 31 March 2012. Pursuant to the recommendation of the Audit Committee, the Board at its meeting held on 10 July 2012 has retained his services for the financial year 2012-13.

11. RECONSTITUTION OF COMMITTEES

Pursuant to NSR''s right to appoint a Director on the Board and Sub-Committees of the Board, the Audit Committee and Remuneration Committee was reconstituted by inducting therein Mr. Darius Pandole, NSR''s nominee as a member and similarly other committees of the Board also have been suitably reconstituted to include therein Mr. Darius Pandole. The details of these two committees are as under:

a. Audit Committee

The following Directors are the members of the Audit Committee.

1. Mr. Sudhir Ghate - Chairman

2. Mr. C. Karunakara Shetty - Member

3. Mr. J.S. Korlahalli - Member

4. Mr. Darius Pandole - Member

In compliance with the provisions of Section 292A of the Companies Act, 1956, the members of the Audit possess significant knowledge, experience and expertise in Finance.

b. Remuneration Committee:

The following Directors are the members of the Remuneration Committees:

1. Mr. J.S. Korlahalli - Chairman

2. Mr. Sudhir Ghate - Member

3. Mr. Karunakara Shetty - Member

4. Mr. Darius Pandole - Member

12. DETAILS PURSUANT TO COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

The particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange earnings and expenditure are annexed hereto as Annexure "A" and forms part of this Report.

13. PARTICULARS OF EMPLOYEES

The particulars of employees of the company, in terms of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, are given in Annexure "B" to this report.

14. DIRECTORS RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

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

c) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) They have prepared the annual accounts on a going concern basis.

15. ACKNOWLEDGMENTS AND APPRECIATION

The Directors take this opportunity to thank the Company''s customers, fixed deposit holders, shareholders, suppliers, bankers, financial institutions and Central & State Governments for their consistent support to the Company. The Directors also wish to place on record their appreciation to employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to maintain its position in the industry in spite of increased competition.

For and on behalf of the Board

Vjay Sankeshwar Chairman & Managing Director

Place: HUBLI Date: 10 July 2012

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