DIRECTORS’ REPORT

 Your  Directors  present their  Ninth  Report  together with the  audited financial  statements of your  Company for the  year  ended 31st  March,  2016.

 No  material   changes and  commitments have  occurred  after the  closure of the  year  under review till the  date  of this report which  would  affect the  financial  position of your Company.

 OPERATIONS:

Your  company recorded  gross  income of  Rs.2,027.35 crores for   the   year   under  review   as   against   gross   income  of Rs. 1,924.18 crores in the  previous year  registering a growth  of  5.36%.   
The  net  profit  after  tax  (after  accounting of  deferred tax  income of  Rs. 1.89  crores) is  Rs. 37.30  crores as  compared to  Rs. 41.09  crores (after  accounting of deferred tax  income  of Rs. 1.36 crores) registering a decline of 9.22%.  

The  slowdown in the  automotive industry  which  is one  of the major  industry  segment which  your  company serves resulted in  subdued  revenue growth   and   resultant pressure  on  the margins. In  line  with  Company’s strategy  of  building   world class 3PL business, the Company engaged a global  consulting firm which is helping  the Company to achieve operational and execution excellence. The significant  investment made by the Company towards this initiative also  impacted the  profitability of the  Company. The  company hopes to reap  the  benefits  of this initiative in the  years to come. As a part  of the  continued diversification  of industry  verticals  served, the  Company has successfully established a significant  ecommerce logistics business during  the  year  and  is in the  process of establishing itself in pharma logistics  as well. Several  world class processes and  practices – like transportation control  towers, warehouse model   accounts and   clean   sheet  costing tools  –  have   also been established and  a strong focus  on digitization of business processeshas  been undertaken.

The  Non-Mahindra Group   Supply  Chain  business continues to grow  year  after  year  and  grew  by  over 40%  in the  current year.  The company grew  its supply chain  business by winning new   customer accounts  as   well  as   by  way  of  penetration in  major  supply chain   management customers in  the  focus industry  verticals  served. In all verticals  marque customers are served by  the  company and  business  relationship with each has  widened and  enhanced significantly  in the  period.

The  consolidated gross  income of  the  year  is  at  Rs. 2,096.67 crores with a net  profit of Rs. 36.44  crores.

DIVIDEND:

Your  Directors   have  not  recommended  dividend with a  view to conserve resources for the  future  growth  of your Company.

SUBSIDIARIES:

1) Lords  Freight  (India)  Private  Limited (‘Lords’)

Lords   has    recorded  gross  income  of   Rs. 75.02   crores for  the  year   under review  as   against  gross  income  of Rs. 69.46  crores in the previous year  registering a growth  of 8.00%.  The net loss  after tax (after accounting of deferred tax  income  of  Rs. 0.08  crores) stood  at  Rs. 1.37  crores as compared to  Rs. 2.71  crores (after  accounting of deferred tax  expense of  Rs. 0.18  crores)  registering a  decrease  in loss  by 49.45%  over  previous year.

The  gross margin  in Air Export  business increased significantly  by 22% over last year,  in spite  of reduction in revenue by 6.4%, due  to focus  on working  with profitable assignments. The Air import  business was  another major contributor to  growth,   growing   76%  over  previous year. With the focus  on working with profitable  assignments, the company hopes to  improve  its performance  significantly in the  coming years.

 2)    2X2 Logistics Private  Limited (‘2X2’)

During  the  year  2X2 has  purchased 86  car  carriers and also  engaged market   vehicles to  increase the  business in   automotive   logistics    services.   2X2   has    recorded gross income of Rs. 16.00  crores and  Net  loss  after  Tax of Rs. 0.07    crores   for    the    year     under   review.    Higher depreciation burden  due   to  acquisition  of  car   carriers throughout the  year  resulted in  minor  loss  for  the  year and   company hopes  to  turn  profitable   during   the  next financial  year. 

CONSOLIDATED FINANCIAL STATEMENT:

In accordance with Section 134(7) of the Companies Act, 2013 and  Accounting Standard (AS) - 21, the  audited consolidated financial   statement  of   your   Company  forms   part   of   this Annual Report.

 A Report  on  the  performance and  financial  position of each of the subsidiaries included in the Consolidated Financial Statement is provided in Form  AOC-1 and  forms  part  of this Annual Report.

 SHARE CAPITAL:

The authorized share capital  of your Company is Rupees One hundred and  five crores. The paid-up share capital  of your Company as  on 31st  March, 2016   stood  at   Rs. 100,70,80,151/-  divided    into   6,12,77,860 Equity  sharesof  the  face   value  of  Rs. 10/-  each  aggregating  Rs. 59,82,20,951  and   81,77,184  Non-cumulative  Compulsorily Convertible Preference Shares of the face  value  of Rs. 50/- each, aggregating Rs. 40,88,59,200.

BOARD OF DIRECTORS

Compositionof Board:

 Mr. Ruzbeh Irani and  Mr. K Chandrasekar retire  by rotation  at the  forthcoming Annual  General Meeting,  and  being  eligible, have  offered  themselves for re-appointment.

 Mr. Ajay Mehta  and  Ms. Neelam Deo has  given declarations to the  effect  that  they  meet  the  criteria  of independence as  laid down  under Section 149(6)  of the  Companies Act, 2013.

 NUMBER OF BOARD MEETINGS:

The  Board  met  Five  times  during  the  year  under review,  i.e. on   30th     April,  2015,   4th     August,   2015,   26th     October,  2015, 3rd   February, 2016  and  22nd  March,  2016.

 DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant  to  Section  134(5)   of  the   Companies  Act,  2013, your  Directors, based  on  representation from  the  operating management and  after due  enquiry,  confirm  that: 

(a)   in the  preparation of the  annual financial  statements for the year ended 31st March, 2016 the applicable accounting standards have  beenfollowed; 

(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 a true  and fair view of the  state of affairs of the  Company at the  end of the  financial  year  on  31st  March,  2016  and  of the  profit of the Company for the financial  Year ended on that date; 

(c)   they   have  taken    proper  and    sufficient   care  for   the maintenance  of    adequate  accounting    records  in accordance with  the  provisions  of  the  Companies Act, 2013  for safeguarding the  assets of the  Company and  for preventing and  detecting fraud  and  other  irregularities; 

(d)   they   have   prepared  the   annual  accounts  on   a  going concern basis; and  

(e)   they  have  devised proper systems to ensure compliance with the  provisions of all applicable laws  and  that  such systems were  adequate and  operating effectively.

 FRAUDS REPORTED BY AUDITORS

During   the   year   under  review,   the   Statutory  Auditors   and Secretarial Auditor have  not  reported any  instances of frauds committed in  the  Company by  its  officers  or employees  to the  Board/Audit  Committee under Section 143(12)  of the Companies Act 2013,  details  of which  needs to be  mentioned in this report.

 EVALUATION OF PERFORMANCE:

The  Board   of  Directors  has   adopted a  process for  annual evaluation of its own  performance and  that  of itscommittees and  individual  Directors. Questionnaires/Feedback templates for annual evaluation, based  on  the  criteria  approved by  the Board,  were  circulated to each Board  member and  responses were submitted to the Chairman of the Board  for facilitating the formal annual evaluation.

CODES OF CONDUCT:

Your Company has  in place Codes of Conduct for Corporate Governance (“the Codes”) for its Directors  and  Senior Management Personnel and  Employees. The Codes enunciate the underlying principles governing the conduct of your Company’s business  and   seek to  reiterate the  fundamental precept that  good governance must  and  would  always  be  an integral  part  of your Company’s ethos.

Your Company has  for the year under review, received declarations under the Codes from the Board  of Directors  and the  Senior   Management Personnel and  Employees  affirming compliance with the  respective Codes.

 KEY MANAGERIAL PERSONNEL:

Pursuant to provisions of Section 2(51) and  Section 203 of the Companies Act, 2013  read  with the  Companies (Appointment and  Remuneration of Managerial Personnel) Rules,  2014,  Key Managerial Personnel of your Company are  as  below:

-  Mr. Pirojshaw Sarkari appointed as Chief Executive Officer of the  Company w.e.f. 25th   July,  2014

-  Mr.  Nikhil  Nayak  appointed  as  Chief  Financial  Officer  of the  Company w.e.f. 1st   April, 2014

-  Mr. Vilas Chaubal appointed as Company Secretary of the Company w.e.f. 25th   July,  2014 

COMMITTEES OF THE BOARD: Audit Committee  (AC)

The Composition of Audit Committee is follows:- 

The Audit Committee met  thrice  during  year  under review,  i.e. on 30th   April, 2015,  26th   October, 2015  and  3rd   February, 2016.

 Nomination and  Remuneration Committee (NRC)

The composition of Nomination and  Remuneration Committee is follows:

The   Nomination  and   Remuneration  Committee  met   twice during  year under  review,   i.e.   on   30th  April,  2015 and 26th October, 2015.

Corporate Social Responsibility  (CSR)  Committee The Composition of Corporate Social Responsibility Committee is follows:- 

 The   Corporate  Social   Responsibility  Committee  met   once during  year  under review,  i.e. on 26th   October, 2015.

 MLL Key Executives Stock  Option  (MLL KESO) Committee.

The Composition of MLL KeyExecutives Stock  Option Scheme

Committee is follows:-

 The  MLL Key  Executives Stock   Option   Scheme  Committee met  once during  year  under review, i.e. on 26th   October, 2015.

 Meeting  of the  Independent Director 
One  meeting of  the  Independent Directors   of  the  Company was  held   on  24th     December, 2015  without  the  presence  of Non-Independent Directors, Chief Executive  Officer and  Chief Financial Officer of the  Company.

 The aforesaid Meeting  was  conducted in a formal  but  flexible manner  to   enable  the   Independent  Directors    to   discuss matters  pertaining  to,  inter  alia,  review   of  performance   of Non-Independent  Directors, the  Board   as  a  whole  and   the Chairman of the  Company (taking  into  account the  views  of the   Executive   and   Non-Executive  Directors)   and   to  assess the   quality,   quantity   and   timeliness  of  flow  of  information between the  Company Management and  the  Board  which  is necessary for the  Board  to effectively and  reasonably perform their duties.

POLICY FOR  REMUNERATION OF  DIRECTORS,  KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES AND CRITERIA FOR APPOINTMENT/REMOVAL OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL:

In line with the principles of transparency and  consistency and upon   recommendation of the  Nomination and  Remuneration Committee, your Board  has  approved

-  Policy   on   the   appointment/removal  of   Directors    and Senior  Management personnel, together with the  criteria for   determining   qualifications,  positive    attributes and independence of Directors

-  Policy  on  the  remuneration  of  Directors,  Key  Managerial Personnel and  other  employees  

-  These policies  are  provided as  Annexure  I  and  form  part  of this report.

 RISK MANAGEMENT POLICY:

The  Board  has  formulated a  Risk Management Policy  for the Company which  identifies  elements of risk if  any  which  may threaten the  existence of the  Company.Implementation of the Risk Management Policy is expected to be helpful in managingthe  risks  associated with the  business of the  Company.

 STATUTORY AUDITORS:

At the Eight Annual  GeneralMeeting,  M/s. B. K. Khare  & Co., Chartered Accountants, (ICAI registration number  105102W) were  appointed as  the  Statutory Auditors  of your Company to hold  office  from  the  conclusion of the  Eight  Annual  General Meeting  till the  conclusion of Ninth Annual General Meeting.

 M/s. B. K. Khare  & Co.,  Chartered Accountants have  given  a written consent to act as  Statutory Auditor of your Company, if appointed, and  have  also  confirmed that the said  appointment would  be  in  conformity   with  the  provisions of  Sections  139 and  141 of the Companies Act, 2013 read  with the Companies (Audit and  Auditors)  Rules,  2014.

The  members are  requested to  appoint  statutory auditors  of the  Company at the  ensuing Annual  General Meeting  and  fix their remuneration. 

The Auditors’ Report  does not contain any qualification, reservation or adverse remark. 

SECRETARIAL AUDITORS:

Your   Company  has    appointed  Mr.  Umesh  Maskeri   (FCS 4831,  CP  12704),  the  practicing Company Secretary as  the Secretarial Auditor of the Company in accordance with Section 204 of Companies Act, 2013  for the  Financial  Year 2015-16.  In terms  of provisions of sub-section 1 of Section 204 of Companies Act,  2013,  the  Company has   annexed with  this Board  Report,  a secretarial audit report  given by the Secretarial Auditors,  and  the  said  secretarial report,   in prescribed  form MR 3 provided in Annexure  II, forms  part  of this report. 

The Secretarial Audit Report  does not contain any qualification, reservation or adverse remark.

CONSERVATIONOF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars relating  to the energy conservation, technology absorption  and   foreign   exchange  earnings  and   outgo, as required  under  Section  134(3)(m)   of  the   Companies   Act, 2013  read 
with the  Companies Rule  8(3)  of The  Companies (Accounts) Rules,  2014  are  provided in Annexure  III and  form part  of this report. 

PARTICULARS OF  EMPLOYEES  AS  REQUIRED  UNDER RULE 5(2)  OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL)  RULES,

2014: Being unlisted company, provisions of Rule 5 of the Companies (Appointment  and   Remuneration  of  Managerial  Personnel) Rules,  2014  are  not applicable to your Company.

 CORPORATE SOCIAL RESPONSIBILITY:

Your Board   has   approved a  Corporate Social  Responsibility Policy in accordance with the relevant  provisions of Companies Act, 2013. Report on Corporate Social Responsibility containing particulars specified in Annexure  to the Companies (Corporate Social  Responsibility Policy) Rules,  2014  is given  in Annexure IV and  forms  part  of this report.

 PARTICULARS OF PUBLIC DEPOSITS,  LOANS, GUARANTEES OR INVESTMENTS:

Your Company has  not accepted any deposits from the public, or its employees, during  the year. There were no other  deposits falling  under Rule  2(1)(c)  of the  Companies  (Acceptance  of Deposits) Rules,  2014  at the  beginning of the  year,  during  the year  and  at the  end  of the  year.  There  are  no  deposits which are not in compliance with the requirement of Chapter V of the Companies Act, 2013

 Particulars of loans  given,  investments made and  guarantees and  securities provided pursuant to Section 186 of the Companies Act, 2013  are  given  under Note  No.  IX  and  Note No. XI annexed to balance sheet and  Note No. B (10) of Notes to financial  statements and  the  same form part  of this Report.

 Your   Company  has   not   made  any   loans/advances   which are  required to  be  disclosed in  the  annual accounts of  the Company pursuant to Regulations 34(3) and  53(f) of Securities and    Exchange   Board    of   India   (Listing   Obligations and Disclosure  Requirements)  Regulations,  2015   and   Schedule V thereto applicable to  the  parent  Company, Mahindra and Mahindra Limited.

 PARTICULARS OF  TRANSACTIONS WITH RELATED PARTIES:

Particulars of contracts or  arrangements with related parties of  the   Company  referred  to  under  Section  188(1)   of  the Companies Act, 2013 are  given in Form AOC-2 as  Annexure  V and  the  same forms  part  of this report. 

EXTRACT OF ANNUAL RETURN:

Pursuant to Section 92(3) of the Companies Act, 2013 and  Rule 12(1)   of  the   Companies  (Management  and   Administration) Rules,  2014,  an extract  of the Annual Return  as  on 31st  March, 2016
in form MGT-9 is annexed as Annexure VI and forms part of this report.

 MLL KEY EXECUTIVES STOCK OPTION SCHEME (‘Scheme’):

During  the  year   under review,  the  Company has   amended the  Scheme vide  shareholders resolution dated 27th October,2015  and  granted 5,45,866 Stock  Options to  the  employeesunder the Scheme. Details of the shares vested, exercised and issued under theaforesaid Scheme, as  also  the disclosures  in compliance with Rule  12(9)  of the  Companies (Share Capital and  Debentures) Rules  2014  are  set  out  in Annexure  VII and form part  of this Report

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

During  the  year  under review,  no  complaints were  received under the Sexual  Harassment of Women  at Work Place (Prevention,   Prohibition     and     Redressal)   Act,    2013,    for prevention of sexual harassment at the  work place. 

INTERNAL FINANCIAL CONTROLS:

Pursuant to Rule 8 of the  Companies (Accounts) Rules,  2014, based on  the  representation received and  after  due  enquiry, your   Directors   confirm   that   they   have   laid   down   internal financial  controls with  reference to  the  Financial  Statements and  these controls are  adequate.

GENERAL DISCLOSURES

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

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

-  Issue   of   shares   (including   Sweat   equity   Shares)   to employees of the  Company under any  scheme.

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

-  There  were  no  Shares having voting  rights  not  exercised directly  by the  employees and  for the  purchase of which or subscription to which loan  was  given  by the Company.

ACKNOWLEDGEMENT:

Your  Directors   would   like  to  place  on  record  their  sincere thanks for  the  cooperation and   support received from  your Company’s bankers, stakeholders, business associates and various  agencies of the  Central  and  State  Governments.

ANNEXURE  I TO THE DIRECTORS’ REPORT

A POLICY ON APPOINTMENT OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL

DEFINITIONS

The  definitions   of  some of  the  key  terms   used in  this Policy are  given  below.

“Board”means Board  of Directors  of the  Company.“Company”  means Mahindra Logistics  Limited.“Employee”means  employee of the  Company including employees  in the Senior Management  Team  of the  Company. “Key Managerial  Personnel” (KMP)refers  to key managerial personnel as  defined under the  Companies Act, 2013  and  includes:

(i)  Chief Executive  Officer (CEO);

(ii)  Chief Financial  Officer (CFO); and

(iii) Company Secretary (CS).

“Nomination  and   Remuneration   Committee”  (NRC) means Nomination  and  Remuneration Committee   of Board of  Directors of  the  Company for  the  time  being in force.

“Senior  Management”means personnel of the Company who    are    members   of   its   Core  Management Team excluding Board  of Directors  comprising of all members of management including the  functional  heads. 

I.     APPOINTMENT OF DIRECTORS

The  NRC  reviews  and  assesses Board  composition and recommends the appointment of new Directors. In evaluating the  suitability  of individual  Board  member, the  NRC shall  take  into account the  following criteria regarding  qualifications, positive   attributes and independence of director:

1.  All  Board appointments   will   be based   on merit, in the context  of the skills, experience, independence and  knowledge, for the  Board  as a whole  to be  effective.

2. Ability of the  candidates to devote sufficient time and  attention to  his  professional obligations as Independent Director  for informed  and  balanced decision making.

3. Adherence to the  Code of Conduct and  highest level  of  Corporate Governance  in  letter  and   in spirit by the  Independent Directors.

 Based on recommendation of the NRC, the Board  will evaluate the candidate(s) and  decide on the selection of the  appropriate member. The  Board   through the Chairman will interact  with the new member to obtain his/her  consent for joining the Board.  Upon  receipt of the consent, the new Director will be  co-opted by the Board  in accordance with the applicable provisions of the Companies Act 2013 and  Rules made thereunder. 

REMOVAL OF DIRECTORS

If  a  Director  is  attracted with any  disqualification as mentioned in  any  of  the  applicable Act,  rules   and regulations thereunder  or  due   to non-adherence  to the   applicable policies   of  the   company,  the   NRC may recommend tothe Board  with reasons recorded in   writing,   removal    of   a   Director   subject to   the compliance of the  applicable statutory provisions.

SENIOR MANAGEMENT PERSONNEL

Senior  Management Personnel are appointed or promoted and  removed/relieved with the  authority  of CEO based on  the  business need and  the  suitability of  the   candidate.  The   details   of  the   appointment made and   the  personnel removed one   level  below the  Key Managerial Personnel  during  a  quarter shall be  presented to the  Board. 

II.   SUCCESSION  PLANNING:
Board:

The  successors for  the  Independent Directors   shall  be identified  by the NRC at least  one  quarter before expiry of the scheduled term.  In case of separation of Independent Directors    due   to   resignation  or   otherwise, successor will be  appointed at  the  earliest   but  not  later  than   the immediate next  Board  meeting or three  months from the date  of such vacancy, whichever is later.

The  NRC will accord due  consideration for the  expertise and  other  criteria  required for the  successor. The Board  may also  decide not to fill the vacancy caused at its discretion.

 Senior Management Personnel: A  good  succession-planning program  aims   to  identify high  growth  individuals,  train them  and  feed  the  pipelines with  new  talent.  It will ensure replacements for key  job incumbents in KMPs and  senior  management  positions in the  organization. We  have   a  process  of  identifying   Hi-pots   and   critical positions. Successors  are  mapped forthese positions at the  following levels:

1.    Ready  now

2.    Ready  in 1 to 2 years

3.    Ready  in 2 to 5 years

4.    Ready  in more  than  5 years

in  order   to  ensure talent   readiness as   per   a  laddered approach.

B.    Remuneration  Policy   for  Directors,  Key   Managerial Personnel and  other  Employees.
Overall  Intent of Compensation Policy

At Mahindra Logistics  Ltd. (MLL), we want  our employees to understand and  appreciate their role in providing  value to the  business. On  its part,  the  organization recognizes that  its  success depends upon   the  skills,  competencies and  performance of its employees. We also  believe  that the  way in which  we compensate, reward  and  recognize as   well  as   promote  our  employees  is  a  crucial   factor in   achieving   our    business   and    financial    objectives. Towards  achievement  of  these  objectives, we  promote an  entrepreneurial, team-based  performance and   result oriented culture.

Objectivesof the  Compensation Policy-

–      To    attract,   motivate     and    retain    employees   by compensating them  competitively, based  on periodic comparison with  other  companies in  relevant industries.

–      To provide  an  overall  package of remuneration and benefits which addresses the normal  requirements  of employees and  their families.

–      To  align  levels  of  compensation with  the  expected output of  employees in  terms   of  role  responsibility, skills and  experience.

–      To link elements of compensation with performance of each individual  as  well as  the  business.

Compensation Strategy

–      We  will regularly   track   market   trends  in  terms   of compensation levels  and   practices in  relevant industries through participation in structured surveys and  informal consultation with a select group of comparable  organizations. This  information   will be used to  internally  review  our  compensation  policies and  levels.

–      Our   package  of   remuneration   and    benefits   will be  designed to provide  a  degree of flexibility to individual  employee officers  to structure key benefits in a way that best suits  individual personal and  family requirements.

–      Recognizing  the   need  for  long-term security,  the compensation will include  all statutory and  other retirement benefits.

–      Broad     bands   of    compensation   levels    will   be equitably defined for each grade to  reflect  levels  of responsibility and  provide  a template when  recruiting new  employees.

 –      A  pre-determined  portion   of remuneration  will  be linked directly to theannual performance of each individual   and    the   business. This   proportion  will vary  for  each  grade in  keeping  with  the  levels   of responsibility.

 Compensation Structure

The  compensation  structure consists  of  two  categories of elements, summarized below.  The details of each are given  in subsequent parts

A.    Total Cost  to Company 

B.    Reimbursements & Benefits 

Current Levels & Designations

A.    Total Cost  to Company

The  first category consists of elements of compensation that are   applicable  to  every  individual  and   are   calculated on  a

‘Total Cost  to Company’ basis. 

A.1  Fixed  Pay

This consists of basic salary,  allowances and  retiral benefits

Table A

Employees can   also   opt  for  contribution to  superannuation fund,  in  that  case  Superannuation allowance will not  be  a component of monthly  salary.

 From  Flexible  benefit  allowance an  amount as  per  grade can be  declared for availing  LTA amount as  per  limits mentioned in below.

Table  B:

 A.2  Variable Pay

This consists of an annual performance incentive. The amount paid  is based on  the  individual’s  annual performance as  well as  the  performance of  the  business vertical  and   company. Each   employee is  informed   of  individual  entitlement  in  the appointment or compensation letter.

Performance pay  is applicable for Grade 07 and  above as  per below:

Table  C:

 Appraisal year is  April to  March.  Employees joined   till 31st December will beeligible  for Performance pay  provided the employee is on rolls as on 30th  June on the day of disbursement through salary.  New joiners  effective 1st   January will be eligible for performance pay  prorated in next appraisal cycle.

Employees in Sales/Business  Development Department, who are  in  Grade 07  and   above are  eligible  for  Sales  Incentive Plan  (SIP), which  is paid  on the  basis of achievement of sales targets on quarterly basis.

B.    Reimbursements & Benefits  - In addition to  the  above, the  company provides certain other  reimbursements and  benefits. These are  applicable to all or certain  grades based on  business requirements and   articulated  in  the   HR  policy   manual.  These  are, therefore, kept outside the calculation of Cost to Company. These consist of the  following:

1.    Medical  Reimbursements (For Grade 7 & Above)

2.    Group  Mediclaim  (Hospitalization) insurance  policy

3.    Group  Personal Accident  insurance policy

4.    Group  Term Life policy

5.    Workmen  Compensation  policy

6.    Mobile Reimbursement policy

7.    Cellular  phone handset policy

8.    Laptops and  data  card  policy

9.    Transfer  Relocation allowance policy

Hiring Process:

For  hiring  talent   from  the   market,  MLL has   an   Employee Requisition process  which  has  the  Job  description, candidate profile, grade and  the  Budgeted CTC. The candidate is givenan  offer as  per  the  Table  A with a maximum increase of 20% on  present  CTC  of  the   candidate.  Any  increase proposed above 20% of CTC an  approval is taken  from CEO.

Payment of Salary:

Salaries  are   credited  to  (company  nominated)  employee’s salary  bank   account. A salary  slip  detailing   the  total  of pay and  the various  deductions made is also  provided. Salary  gets credited to  the  bank  on  or  before 7th   day  of the  subsequent month.

 Annual Increments/Promotions

Based on  annual performance appraisals, competency evaluation  and  Bell  curve  guidelines,   the  permanent employees are  given ratings  on a 5 point scale and  applicable increment percentage  on   CTC  is  applicable  to  derive   the revised compensation.  Promotion criteria  is based movement to a higher  responsibility and  consistently rated  Expectations Surpassed/Superior. For  promotions an  additional increment is also  added.

Appraisal    year    is   April  to   March.    Employees  joined    till  1st      February  are   eligible   for   Annual   increments   effective 1st   August  and  new  joinees from 2nd  February will be  eligible for increments prorated in the  next appraisal cycle. 

Fixed  Term Contract  (FTC) Employees

Based   on    Customer   requirement,   Fixed    Term    Contract (FTC) employees are recruited mainly for Operations. The Employment Term  of  these employees is  for  one   year  and it is  renewed based on  the  Customer Agreement for further period. In case of closure of the  Customer Agreement, we try to accommodate these employees in other  projects based on the  requirement else  their  services are  terminated as  per  the clause mentioned in their appointment letter.

Compensation  structure  and   components  of  compensation for FTC employees depends on  the  Location  and  Customer requirement.

Basic  Salary,  Provident Fund  and  Bonus are  the  mandatory components of the  compensation structure, whereas House Rent Allowance,  Conveyance Allowance,  Child Education Allowance,   Supplementary  Allowance,   Canteen   Allowance, Skill Allowance,  Attendance Bonus, Production Incentive  are paid   on   the   basis  of  available   budgets  for  the   respective customer.

 FTC employees are  covered under:

1.    Employee State Insurance (ESI) or Workmen Compensation (WC) based on the  location.

2.    Group  Mediclaim  (Hospitalization) insurance  policy.

3.    Group  Personal Accident  insurance policy.

4.    Group  Term Life policy.

 For  annual increments for FTC’s we  have  2 cycles of annual increment  –  1st  October  and   1st  April  depending  on   the customer agreement contracts.

 Policy  for Non-Executive Directors including Independent

Directors:

The Nomination and   Remuneration  Committee shall  decide the  basis for determining the  compensation, both  fixed  and variable,  to the Non-ExecutiveDirectors  including Independent Directors  whether as commission or otherwise. The Committee shall  take  into consideration various factors  such as  director’s participation  in  Board   and   Committee meetings  during   the year,  other  responsibilities undertaken, such as  membership or chairmanship of committees, time spent in carrying  out their duties, role  and   functions as  envisaged in  Companies   Act, 2013  and  such other  factors  as  the  committee may  consider deem fit for determining the  compensation. The  Board  shall determine the compensation to Non-Executive Directors  within the  overall limits specified in the  shareholders resolution.

ANNEXURE  II TO THE DIRECTORS’ REPORT

Form No. MR-3

SECRETARIAL AUDIT REPORT

For the Financial  Year ended March 31, 2016

Pursuant to Section 204(1) of the Companies Act, 2013 and  Rule 9 of the Companies

(Appointment and  Remuneration of Managerial Personnel) Rules, 2014

 To,

The Members,

Mahindra Logistics  Limited

Mahindra Towers  Limited P K Kurne Chowk,  Worli Mumbai  400 018

I  have  conducted the  secretarial audit  of the  compliance  of applicable  statutory provisions and   the  adherence to  good corporate practices by Mahindra Logistics  Limited (hereinafter called  the  company) incorporated on  August  24, 2007  having CIN U63000MH2007PLC173466 and  Registered Office at Mahindra Towers  Limited,  P  K Kurne  Chowk,  Worli, Mumbai - 400018.  Secretarial Audit was  conducted in a  manner that provided me  a  reasonable basis for evaluating the  corporate conducts/statutory compliances and   expressing my  opinion thereon. 

Based  on   my   verification   of   the   books, papers,   minute books, forms  and  returns filed and  other  records maintained by   Mahindra  Logistics    Limited   and    also    the   information provided by the  Company, its officers,  agents and  authorized representatives   during    the    conduct   of   secretarial   audit, I hereby report  that in my opinion,  the company has,  during  the audit  period covering the  financial  year  ended on  March  31, 2016  complied with the  statutory provisions listed  hereunder and  also  that  the  Company has  proper Board-processes and compliance-mechanism in place to the  extent,  in the  manner and  subject to the  reporting made hereinafter:  

I   have   examined  the   books, papers,  minute   books,  forms and  returns filed and  other  records maintained by  Mahindra Logistics  Limited (“the Company”) for the financial year  ended on March  31, 2016  according to the  provisions of:

(i)    The Companies Act, 2013  (“the Act”) and  the  rules  made thereunder;

(ii)   The  Securities Contracts (Regulation) Act, 1956  (‘SCRA’) and  the rules made there  under; Not applicable during  the year

(iii) The Depositories Act, 1996  and  the  Regulations and  Bye- laws framed  thereunder; Not applicable

(iv)  Foreign Exchange Management Act, 1999  and  the  rules and  regulations made thereunder to the  extent  of Foreign Direct  Investment, Overseas  Direct  Investment and External  Commercial  Borrowings; Not  applicable during the  year

(v)   The   following   Regulations  and    Guidelines prescribed under the  Securities and   Exchange Board   of  India  Act,

1992  (‘SEBI Act’):- (a)   The    Securities   and     Exchange   Board     of    India (Substantial Acquisition  of Shares and  Takeovers) Regulations, 2011;  Not applicable during  the  year

(b)   The    Securities   and     Exchange   Board     of    India (Prohibition  of Insider Trading)  Regulations, 1992; Not applicable

(c)   The  Securities and  Exchange Board  of India  (Issue of Capital  and  Disclosure Requirements) Regulations, 2009;  Not applicable

(d)   The    Securities   and     Exchange   Board     of    India (Employee  Stock    Option   Scheme  and   Employee Stock  Purchase Scheme)Guidelines, 1999;

(e)   The  Securities and  Exchange Board  of India  (Issue and  Listing of Debt Securities) Regulations, 2008; Not applicable

(f)   The    Securities   and     Exchange   Board     of    India (Registrars to Issue and  Share Transfer  Agents) Regulations, 1993  regarding the  Companies Act and dealing with client; Not applicable

(g)   The Securities and  Exchange Board  of India (Delisting of Equity Shares) Regulations, 2009;  Not applicable

(h)   The Securities and  Exchange Board  of India (Buyback of Securities) Regulations, 1998: Not applicable

We have  relied  on  the  representation made by the Company and  its  officers  for the  systems and  the  mechanism  formed by  the  Company for  the compliances under the  applicable Acts/laws  and  regulations to  the  Company. The  list of major head/groups of  Acts/laws   and   regulations applicable  to  the Company is enclosed and  marked as  Annexure  A.

 I have  also  examined compliance with the  applicable clauses of the  following:

(i)    Secretarial Standards issued by The Institute  of Company Secretaries of India  : Applicable with effect  from  July  1, 2015

(ii)   The Listing Agreements entered into by the Company with Stock  Exchanges : Not applicable as  the  securities of the Company are  not listed.

During  the  period under review  the  Company has  complied with the  provisions of the  Act, Rules,  Regulations, Guidelines, Standards, etc.  mentioned above.

I further  report  that:

Adequate  notice   is  given   to  all  directors  to  schedule  the Board  Meetings, agenda and  detailed notes on  agenda were sent  at  least  seven days  in advance, and  a system exists  for seeking  and   obtaining  further  information   and   clarifications on  the  agenda items  before the  meeting and  for meaningful participation at the  meeting.

 Majority decision is carried through while the dissenting members’ views  are  captured and   recorded as  part  of  the minutes-All the  resolutions were  passed unanimously-.

 I further report  that based on review of compliance mechanism established by the Company and on the basis of the Compliance Certificate(s) issued by the  Company Secretary and  taken  on record by  the  Board  of Directors  at  their meeting(s), we  are of the  opinion  that  the  Company has  adequate systems and processes in the  company commensurate with the  size  and operations of the company to monitor  and  ensure compliance with applicable laws,  rules,  regulations and  guidelines.

We further report  that during  the audit  period the shareholders of the  company at  the  Extra  Ordinary  General Meeting  held on  October 27, 2015  approved the  amendment the  “MLL Key executives stock  options scheme. 

Umesh P Maskeri 
Practicing Company Secretary
FCS  No.: 4831
COP No.: 12704

Place: Mumbai
Date:  27th   April, 2016

 Note:  This  report  is  to  be  read  with  our  letter  of  even   date which  is annexed as  ANNEXURE II  and  forms  an integral  part of this report.

ANNEXURE A

 ANNEXURE B

To

The Members

Mahindra Logistics  Limited

Mahindra Towers  Limited P K Kurne Chowk,  Worli Mumbai-400 018

Our report  of even  date  is to be  read  along  with this letter:

 1.Maintenance of secretarial records is the  responsibility  of the  management of the  Company. Our responsibility is to express an opinion  on these secretarial records based on our audit.

 2. We  have  followed  the  audit  practices and  processes as were  appropriate to  obtain   reasonable assurance about the  correctness of the  contents of the  secretarial records. The  verification  was  done on  test basis to  ensure  that correct  facts   are   reflected  in Secretarial  records.  We believe   that the   processes and   practices,  we  followed provide  a reasonable basis for our opinion.

 3. We have  not verified the correctness and appropriateness of   financial   records  and    Books    of   Accounts  of   the Company.

4. Wherever required,  we  have   obtained the  management representation about the  compliance of laws,  rules  and regulations and  happening of events etc.

5.      The   compliance  of the   provisions  of   corporate  and other   applicable  laws,   rules,   regulations,  standards   is the  responsibility of management. Our  examination was limited to the  verification of procedures on test  basis. 

6.    The Secretarial Audit Report  is neither  an assurance as  to the  future  viability of the  Company nor  of the  efficacy  or effectiveness with which  the  management has  conducted the  affairs of the  Company.

UMESH P MASKERI 
PRACTICING COMPANY SECRETARY
FCS  No. : 4831
COP No. : 12704 

Place: Mumbai
Date:  27th   April, 2016

ANNEXURE III TO THE DIRECTORS’ REPORT 

PARTICULARS AS PER THE COMPANIES (ACCOUNTS) RULES, 2014 AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31STMARCH, 2016.

 A.    CONSERVATION OF ENERGY

(a)   the  steps taken  or impact  on conservation of energy: The  operations of your  Company are  not  energy – intensive.  However   adequate measures have been initiated  to reduce energy consumption.

(b)   the steps taken  by the Company for utilizing alternate sources of energy: Not applicable

(c) the  capital  investment on energy conservation equipment’s: Nil

 B.    TECHNOLOGY ABSORPTION

(a)   the efforts made towards technology absorption – Nil

(b)   the benefits   derived    like   product   improvement, cost  reduction, product development or import substitution: Not applicable

(c)   in case of imported technology (imported during  the last  three  years reckoned from  the  beginning of the financial  year)  – Not applicable

(i)    the  details  of technology imported:

(ii)   the  year  of import:

(iii) whether the  technology been fully absorbed:

(iv)  if not fully absorbed, areas where  absorption has not taken  place, and  the  reasons thereof:

(d)   The  expenditure  incurred    on  Research   and Development: Nil  

C.    FOREIGN    EXCHANGE   EARNINGS    AND    OUTGO: (in terms  of actual  inflow  and  outflow)

(Rupees in Lakhs) 

 ANNEXURE  IV TO THE DIRECTORS’ REPORT

 FORMAT FOR THE ANNUAL REPORT ON CSR ACTIVITIES TO BE INCLUDED IN THE BOARD’S REPORT

(1)   Mahindra  Logistics    Limited   (MLL)  is   a   subsidiary   of Mahindra & Mahindra Limited.  The  CSR  vision  of MLL is to serve  and  give back  to the  communities within which  it works.  From April 2014,  in line with Companies Act, 2013, MLL pledges 2% of average net  profits  made during  the three   immediately preceding  financial  years  specifically towards CSR  initiatives.  The  commitment to CSR  will be manifested by investing  resources in the  following areas:

Community Welfare   Program  –   Under    privileged Children  Scholarships, Rest  Room  Facilities,  Medical Insurance for the  underprivileged.

Village   Adoption   –   Infrastructure,   Education   and Health. 

MLL employees have  been encouraged to volunteer for various  CSR  projects in the  areas of education, health and  environment through Employees Social Options program (ESOPS). Some of the  projects to which  employees have   extended their  volunteering efforts are skill development of youth,  HIV/AIDS awareness, health  camps, donations to  orphanages and homes for the  senior  citizens  etc. Web-link tothe  CSR policy -http://www.mahindralogistics.com/csr.html  

(2)   The Composition of the  CSR Committee.  

The   CSR   Committee of  the   Board   comprises  of  the following Board  members:  

Mr. Ajay Mehta  (Independent  Director) Mr. Ruzbeh Irani Mr. Sanjeev Aga 

(3)   Average  net  profit of the  company for last  three  financial years. Rs. 5,087.53 Lacs 

(4)   Prescribed CSR Expenditure (two per  cent.  of the amount as  in item 3 above) Rs. 101.75  lacs 

(5)   Details  of CSR spent during  the  financial  year. 

(a)   Total amount spent for the financial year: Rs. 102.74  lacs 

(b)   Amount  unspent, if any:  Nil 

(c)   Manner  in which the amount spent during  the financial year  is detailed below

* Project  Nanhi  Kali, is implemented and  executed through K. C. Mahindra Education Trust.

Address: 3rd   Floor, Cecil Court,  Mahakavi  Bhushan Marg, Mumbai  – 400 001. 

(6)   In case the company has  failed to spend the two per cent  of the average net profit of the last three  financial years or any part thereof, the  company shall  provide  the  reasons for not  spending the  amount in its Board  report  - N.A, since  the  Company believes that  the  above projects and  activities  fall within the  purview  of Schedule VII of the  Companies Act, 2013.

 (7)   A responsibility statement of the CSR Committee that the implementation and  monitoring of CSR Policy, is in compliance  with CSR objectives and  Policy of the  company. 

The implementation and  monitoring of CSR Policy is in compliance with CSR objectives and  Policy of the  Company. 

ANNEXURE V TO THE DIRECTORS’ REPORT FORM NO. AOC-2

(Pursuant to clause (h) of Sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.) 

Form  for Disclosure of particulars of contracts/arrangements entered into by the  company with related parties referred to in Sub section (1) of Section 188 of the  Companies Act, 2013  including certain  arms  length  transaction under third proviso  thereto. 

1.    Details of contracts or arrangements or transactions not at arm’s length  basis- Nil 

2.    Details of material  contracts or arrangements or transactions at arm’s length  basis. 

Note: Contracts/transactions for rendering of services for an amount exceeding 10% of turnover of the  Company or Rupees fifty crore, whichever is lower is considered as  material  for the  purpose of this disclosure.

ANNEXURE  VITO THE DIRECTORS’ REPORT 

Form No.  MGT-9

Extract of Annual Return as on  the  financial  year  ended on 31st  March, 2016

[Pursuant to Section 92(3) of the  Companies Act, 2013  and  rule 12(1) of the  Companies

(Management and  Administration) Rules,  2014]

I.     REGISTRATION AND OTHER DETAILS:

II.   PRINCIPAL BUSINESS  ACTIVITIES OF THE COMPANY:

All the  business activities  contributing 10% or more  of the  total turnover of the  company:-

Ill.   PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:

IV.    SHARE HOLDING PATTERN(Equity Share Capital  Breakup as  percentage of Total Equity)

i.     Category-wise Share Holding:

ii.    Shareholding of Promoters:

*      The joint shareholders  with Mahindra and Mahindra Limited are employees of Mahindra and Mahindra Limited and their name has been added for complying with the statutory provisions.

iii.   Change in Promoters’ Shareholding

iv.    Shareholding Pattern of top  ten  Shareholders (other  than  Directors, Promoters and  Holders of GDRs and  ADRs): 

v.Shareholding of Directors  and  Key Managerial Personnel:

V.    INDEBTEDNESS

Indebtedness of the  Company including interest outstanding/accrued  but  not due  for payment

(Rs. In Crores)

 VI.  REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL  

A.    Remuneration to Managing Director,  Whole-Time  Directors  and/or Manager: 

B.    Remuneration of other  directors:

I.     Independent Directors:-

* inclusive  of service tax

II.     Other  Non-Executive Directors:

 C    Remuneration to Key Managerial Personnel Other  than  MD/Manager/WTD:

VII. PENALTIES/PUNISHMENT/COMPOUNDING  OF OFFENCES (Under  the  Companies  Act):

A.    COMPANY

B.    DIRECTORS

C.    OTHER OFFICERS IN DEFAULT 

 ANNEXUREVIITO THE DIRECTORS’ REPORT

DIRECTORS’ REPORT 

Your  Directors  present their  Ninth  Report  together with the  audited financial  statements of your  Company for the  year  ended 31st March,  2016.
                                                                                                     

                                                                                                                                                                        (Rs. in Crores)

No  material   changes and  commitments have  occurred  after the  closure of the  year  under review till the  date  of this report which  would  affect the  financial  position of your Company.

ANNEXURE III TO THE DIRECTORS’ REPORT

PARTICULARS AS PER THE COMPANIES (ACCOUNTS) RULES, 2014

AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 31ST MARCH, 2016.

(Rupees in Lakhs)