Directors' Report Dear Members, Your Directors have pleasure in presenting the Twenty Second Annual Report of the Company together with the Audited Annual Accounts for the year ended 31st March, 2015. b. Operations: The total sales of the Company for the year increased to Rs. 3533.04 Crores. Though the exports have declined to Rs. 395.55 Crores in comparison to Rs. 473.20 Crores in 2013-14, the domestic sales was higher by 31.21% from Rs. 2285.87 Crores to Rs. 2999.32 Crores. The net loss for the year has come down to Rs. 78.74 Crores for the year in comparison to Rs. 409.87 Crores for the year 2013-14. c. Report on Performance of Subsidiaries: A report on the performance and financial position of each of the subsidiaries for the year ended 31st March 2015 is provided as Annexure - I and forms part of this report. None of the Company's Subsidiaries ceased to be a subsidiary during the year under report. Additional information on Subsidiary companies: (i) Bombay Rayon Holdings Limited (BRHL). BRHL holds 100% Equity of foreign subsidiaries BRFL Europe B.V., Netherlands & BRFL Italia S.r.l., Italy. BRHL has registered a Net Profit of Rs. 1.82 crores for the year ended March 31, 2015. (ii) DPJ Clothing Ltd, U.K. DPJ Clothing Limited is engaged in business of wholesale marketing and distribution of clothing products. The said subsidiary is assisting in getting many mid-size retailers of Europe by providing the services either by direct import or by import and delivery basis. DPJ Clothing Ltd has registered loss of Rs. 1.73 crores for the year ended March 31, 2015. (iii) BRFL Europe B.V., Netherlands. BRFL Europe B.V. at Netherlands curtailed its operations to save costs and most of the larger customers are directly dealt from well-established service facilities from India offices. BRFL Europe B.V. has registered a loss of Rs. 0.04 crores for the year ended March 31, 2015. (iv) BRFL Italia S.r.l, Italy. The Company owns the popular 'GURU' brand and is into the business of retailing of ready-made garments as well as other accessories in Europe. The retail operations being not viable in the current prevailing economic scenario, are totally closed and the brand 'GURU' is put on license model for various popular products. BRFL Italia S.r.l, Italy has registered a net loss of Rs. 4935.26 lacs of for the year ended December 31, 2014. (v) STI India Limited (STI). The Company is running the unit of STI on job work basis for the manufacturing of yarn and knitted fabric. The part of manufactured yarn is used for captive consumption and balance is sold. STI has incurred a net Loss of Rs. 4.78 crores for the year ended March 31, 2015. (vi) BRFL Bangladesh Private Limited (BRFL Bangladesh). The Company has not taken up any operations yet. d. Dividend: Considering the loss incurred in the current financial year, your Directors have not recommended any dividend for the financial year ended March 31, 2015. 2. DISCLOSURE OF INTERNAL FINANCIAL CONTROLS: The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the InternalAuditors of the Company for inefficiency or inadequacy of such controls. 3. PARTICULAR OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES: All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. None of the transactions entered in to by the Company with related party were material in nature exceeding the limit 10% of annual standalone/consolidated turnover of the company. The particulars of contracts or arrangements with related parties are forming part of notes to Accounts in this Annual Report. All Related party transactions are placed before the Audit Committee and subsequently before the Board for its approval. Omnibus approval is obtained on a yearly basis for transactions which are of repetitive nature as per the policy on Materiality of and Dealing with Related Party Transactions. The policy on related party transactions as approved by the Board of Directors has been uploaded on the website of the Company. 4. INCREASE OF BORROWING LIMITS AND LIMITS FOR PLEDGE/HYPOTHECATION/ MORTGAGE OF COMPANY'S ASSETS/PROPERTIES: With a view to accommodate the need for long term/short term borrowings for working capital requirement for the business the Company proposes to increase its borrowing limits and consequently the limits for pledge/hypothecation/ mortgage of its assets/properties upto R 7000 crores pursuant to the provisions of Section 180(1) (a) and Section 180(1) (c) of the Companies Act, 2013 by seeking your approval by way of passing the Special Resolution at the ensuing Annual General Meeting of the Company. 5. INCREASE IN AUTHORISED CAPITAL: In order to keep the provision for issue of new shares as may be required to meet the requirement of minimum public shareholding, it is proposed to increase Authorised Capital of the Company from the present, Rs. 150,00,00,000 (Rupees One Hundred Fifty Crores only) divided into 15,00,00,000 (Fifteen Crores) Equity Shares of Rs. 10/- each to Rs. 200,00,00,000 (Rupees Two Hundred Crores only) divided into 20,00,00,000 (Twenty Crores) Equity Shares of Rs. 10/,ranking pari passu with the existing shares in the Company 6. PAYMENT TO BANKERS AND STATUTORY AUTHORITIES: During the year under review, there were delays in payment of dues to Bankers as well as to statutory authorities. 7. MATTERS RELATED TO CHANGE IN DIRECTORS AND KEY MANAGERIAL PERSONNEL AND DECLARATION BY INDEPENDENT DIRECTORS: a. Changes in Board of Directors & Key Managerial Personnel: I. Vacation of Office A. Directors - During the Financial Year 2014-2015 following nominee directors vacated the office due to withdrawal of nomination:- (i) Mr. Mukul Sarkar with effect from 28th November, 2014 on account of withdrawal of his nomination by Export-Import Bank of India; (ii) Mr. Babu Nambiar with effect from 30th January, 2015 on account of withdrawal of his nomination by IDBI Bank Limited. B. Company Secretary Ms. Shivangi Sharma was appointed as the Company Secretary & Compliance Officer of the Company with effect from 12th February, 2015, and subsequently tendered her resignation on 20th March, 2015. II. Appointments (i) Mr. John Mathew (DIN: 01632626), appointed as an Additional Director (Independent category) on the Board with effect from 22nd May, 2015 to hold office upto the date of ensuing Annual General Meeting; (ii) Ms. Prachi Deshpande (DIN: 0295271) was appointed as an additional Director on the Board designated as Director - Secretarial & Corporate Affairs with effect from 1st June, 2015 to hold office upto the date of ensuing Annual General Meeting. Ms. Prachi Deshpande was also appointed as the Company Secretary & Compliance Officer of the Company, Pursuant to the provisions of Section 203 (1) (ii) of the Companies Act, 2013. The Company has received notices from shareholders along with requisite deposit proposing the candidature of Mr. John Mathew and Ms. Prachi Deshpande for their appointment as Directors at the ensuing Annual General Meeting. III. Directors Retiring by Rotation Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Janardhan Agrawal and Mr. A. R. Mundra will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, have offered themselves for re-appointment. In accordance with the provisions of the Act, none of the Independent Directors is liable to retire by rotation. IV. Application to Central Government The Company is in the process of submitting application as required pursuant to Section 197 read with Schedule V of the Companies Act, 2013 with regard to remuneration payable to Mr. Aman Agrawal & Mr. Prashant Agrawal. b. Declaration by Independent Directors: The Company has received and taken on record the declarations received from all the Independent Directors of the Company in accordance to Section 149(6) of the Companies Act, 2013 confirming their independence vis-avis the Company. 8. DISCLOSURES RELATED TO BOARD,COMMITTEES AND POLICIES: a. Board Meetings: Four meetings of Board of Directors were convened during the financial year under review i.e. on 5th June, 2014, 30th July, 2014, 11th November, 2014, and 12th February, 2015. b. Director's Responsibility Statement: In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited Annual Financial Statements of the Company for the year ended 31st March, 2015, the Board of Directors hereby confirms that: a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. such accounting policies have been selected and applied consistently and the Directors 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 as at 31st March, 2015, and of the loss of the Company for that year; c. proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. the annual accounts of the Company have been prepared on a going concern basis; e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. c. Committees : (I) Audit Committee: The Audit Committee of Directors was constituted pursuant to the provisions of Section 177 of the Companies Act, 2013 read with Clause 49(III)(A) of the Listing Agreement. The composition of the Audit Committee is in conformity with the provisions of the said section. The Audit Committee comprises of: 1. Mr. A. Arumugham, Chairman, Independent Director 2. Mr. Suresh Vishwasrao, Independent Director 3. Mr. Naseer Ahmed, Independent Director* 4. Mr. A. R. Mundra, Executive Director- Finance 5. Mr. John Mathew, Independent Director** * till 22nd May, 2015 ** Appointed on 22nd May, 2015 The scope and terms of reference of the Audit Committee have been amended in accordance with the Act and the Listing Agreement entered into with the Stock Exchanges. During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Committee. (II) Nomination and Remuneration Committee: The Nomination and Remuneration Committee of Directors as constituted by the Board of Directors of the Company is in accordance with the requirements of Section 178 of the Act. The composition of the committee is as under: 1. Mr. Naseer Ahmed,Chairman, Independent Director 2. Mr. Suresh Vishwasrao, Independent Director 3. Mr. A. Arumugham, Independent Director 4. Mr. John Mathew, Independent Director* * Appointed on 22nd May, 2015 The Board, on recommendation of the Nomination and Remuneration Committee, has approved a policy setting out the criteria for review of responsibilities of the Directors positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and other employees in accordance with the provisions of Section 178 of the Act. (III) Stakeholders Relationship Committee: The Stakeholder Relationship Committee of Directors was constituted pursuant to the provisions of Section 178 of the Companies Act, 2013. The composition of the committee is as under: 1. Mr. Janardhan Agrawal, Chairman 2. Mr. Prashant Agrawal, Managing Director 3. Mr. A.R. Mundra, Executive Director- Finance The Company Secretary acts as the Secretary of the Stakeholders' Relationship Committee. (I) Vigil Mechanism Policy: In compliance of the requirements of section 177 of the companies Act, 2013, Clause 49 of the listing Agreement and as measure of good Corporate Governance practice, the Board has formulated a Vigil Mechanism Policy. The policy comprehensively provides an opportunity for any employee/ Director of the Company to raise any issue concerning breaches, accounting policies or any act resulting in financial or reputation loss and misuse of office or suspected or actual fraud. The policy is a adequate safeguard against victimization. The Board of Directors of the Company has, pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Vigil Mechanism Policy" for Directors and Employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc. and the same is also hosted on the website of the Company. The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. (II) Risk Management Policy: The Board of Directors of the Company has designed Risk Management Policy and Guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Company's businesses, and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. (III) Corporate Social Responsibility Policy: As per the provisions of Section 135 of the Act read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee as under: 1. Mr. Suresh Vishwasrao - Independent Director (Chairman) 2. Mr. A. Arumugham- Independent Director 3. Mr. A. R. Mundra - Executive Director The Company has drafted the Corporate Social Responsibility Policy which may be accessed on the web-site of the Company i.e. www.bombayrayon.com . Since, the Company has incurred losses in FY 2013-14 & FY 2014-15, the Company has not spent any amount towards Corporate Social Responsibility activities. e. Annual Evaluation of Directors, Committee and Board: Independent Directors had reviewed the performance of the Chairman and Executive Directors considering the performance of the Company during the FY 2014-15. Board of Directors in their meeting has reviewed the contribution made by each Independent Director in the performance of the Company by way of their timely advice. Due to losses for FY 2014-15 there is no change in the remuneration payable to the Directors for next FY 2015-16 neither the Chairman will receive any commission. f. Details with Respect to the Programme for Familiarisation of Independent Directors: The details of programme for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company. g. Internal Control Systems: Adequate internal control systems commensurate with the nature of the Company's business and size and complexity of its operations are in place has been operating satisfactorily. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected. 9. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES: Pursuant to the Provisions of section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the requisite details are annexed herewith vide Annexure II and are also available at the Registered Office of Company for inspection during its working hours and any member interested in obtaining such information may directly write to the Company Secretary of Company and the same shall be provided on such request. 10. AUDITORS AND REPORTS: a. Statutory Auditors: The observations made by the Statutory Auditors in their Report read with the relevant notes as given in the Notes to Accounts for the year ended March 31, 2015, are self-explanatory and therefore do not call for any further comments under Section 134(3) of the Companies Act, 2013. The Auditors' Report does not contain any qualification, reservation and adverse remark. Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, M/s. V.K. Beswal & Associates, Chartered Accountants, Mumbai (Firm Registration Number: 101083W),the Statutory Auditors of the Company, hold office upto the conclusion of the ensuing Annual General Meeting. The consent of the Auditors along with certificate under Section 139 of the Act have been obtained from the Auditors to the effect that their appointment, if made, shall be in accordance with the prescribed conditions and that they are eligible to hold the office of Auditors of the Company. The Board recommends the appointment of M/s. V.K. Beswal & Associates, Chartered Accountants, Mumbai (Firm Registration Number: 101083W), as the Statutory Auditors of the Company for the financial year 2015-2016. Necessary resolution for appointment of the said Auditors is included in the Notice of Annual General Meeting for seeking approval of members. b. Secretarial Audit Report for the year ended 31st March, 2015: The Board had appointed Rathi & Associates, Company Secretaries as Secretarial auditors for the financial year 201415. Secretarial Audit Report issued by Rathi & Associates in form MR-3 for the FY 2014-15 forms part of this report and marked as Annexure III. As mentioned hereinabove in this report the Company is in the process of submitting application as required pursuant to Section 197 read with Schedule V of the Companies Act, 2013 with regard to remuneration payable to Vice Chairman & Managing Director. The company and the promoters are in the process to take action to comply with the regulations of Securities and Exchange Board of India related to Minimum public Shareholding (MPS) to increase the public shareholding to 25%. c. Cost Auditors: Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Notifications/Circulars issued by the Ministry of Corporate Affairs from time to time, as per the recommendation of the Audit Committee, the Board of Directors at their meeting dated 22nd May, 2015, appointed M/s. K. S. Kamalakara & Company, Cost Accountants as the Cost Auditors of the Company for the financial year 2015-16 at annual audit fee of Rs. 5,00,000/- . d. Internal Audit and Control: M/s Venkatram & Co., Firm Registration No. 004656S, Chartered Accountants, Internal Auditors of the Company have carried out internal audit and the findings of the Internal Auditors in their reports are discussed on an on-going basis in the meetings of the Audit Committee and corrective actions are taken as per the directions of the Audit Committee. 11. OTHER DISCLOSURES: Other disclosures as per provisions of Section 134 of the Act read with Companies (Accounts) Rules, 2014 are furnished as under: a. Extract of Annual Return: Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended 31st March, 2015 made under the provisions of Section 92(3) of the Act is attached as Annexure IV which forms part of this Report. b. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo: The particulars as required under the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure V which forms part of this Report. c. Corporate Governace and Management Discussion & Analysis Reports: The Company is committed to maintain the high standards of Corporate Governance and adheres to its requisites set out by the respective authorities. The report on Corporate Governance as stipulated under the Listing Agreement is annexed vide Annexure VI and forms an integral part of this Annual Report. Requisite certificate from the Auditors of the Company M/s V. K. Beswal & Associates, Chartered Accountants,(Firm Registration Number: 101083W), confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 of Listing Agreement is appended herewith vide Annexure VI(A) and forms an integral part of this Annual Report. Certificate issued by Managing Director and Executive Director of Company with regard to certification on Audited Financial Statement of the Company for F.Y. 2014-15 is also annexed herewith vide Annexure VI (B) and forms an integral part of this Annual Report. The Company has suitably laid down the Code of Conduct for all Board Members and Senior Management personnel of the Company. The declaration by CEO i.e. Managing Director of company related to the compliance of aforesaid Code of Conduct is also attached herewith vide Annexure VI(C) and forms an integral part of this Annual Report. Management Discussion and Analysis Report for the year under review, as required pursuant to the provisions of Clause 49 of the Listing Agreement, is annexed herewith vide Annexure VII and forms part of this Annual Report. d. General Disclosures: Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions pertaining to these matters during F.Y. 2014-15: a. Details relating to acceptance of deposits covered under Chapter V of the Companies Act, 2013. b. Issue of equity shares with differential rights as to dividend, voting or otherwise. c. Issue of shares (including sweat equity shares and ESOS) to employees of the Company under any scheme. d. Instances with respect to voting rights not exercised directly by employees of the Company. e. There was no revision of the financial statements for the year under review. f. During the financial year company has neither provided any loans and guarantees nor made any investments. Your Directors further state that: g. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of the subsidiary Company. h. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. i. Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position, have occurred between the end of the financial year of the Company and date of this Annual Report. j. There was no change in the nature of business of company during F.Y. 2014-15. k. Pursuant to the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, no case pertaining to sexual harassment at workplace has been reported to company during F.Y. 2014-15. 12. ACKNOWLEDGEMENTS AND APPRECIATION: Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/ associates, financial institutions and Central and State Governments for their consistent support and encouragement to the Company. Your Directors records with sincere appreciation the valuable contribution made by employees at all levels and looks forward to their continued commitment to achieve further growth and take up more challenges that the Company has set for the future. For and on behalf of the Board of Directors Janardhan Agrawal Chairman DIN:00019497 Place: Mumbai Date: August 14, 2015 Registered Office Address: D 1st Floor, Oberoi Garden Estates, Chandivali Farms, Chandivali, Andheri (East), Mumbai - 400072 CIN:L17120MH1992PLC066880 TEL No:+91 22 39858800 Fax No : 39858700 Mail:investors@bombayrayon.com Website: www.bombayrayon.com |