TO THE SHAREHOLDERS
Your Directors have pleasure in presenting their Twenty Fourth Annual Report togetherwith the Audited Financial Statements of the Company for the year ended March 312016.
SUMMARY OF FINANCIAL RESULTS & STATE OF COMPANYS AFFAIRS
| ||2015-16 ||2014-15 |
| ||(Rs. in lacs) ||(Rs. in lacs) |
|Revenue from operations (gross) ||27314.58 ||28914.00 |
|Other income ||266.29 ||372.74 |
|The years working shows a - ||27580.87 ||29286.74 |
|Profit before Depreciation Exceptional Item and Tax ||2253.13 ||2444.40 |
|Less : Depreciation and Amortisation Expense ||717.01 ||597.52 |
|: Exceptional Item ||477.52 ||- |
|Profit before Tax ||1058.60 ||1846.88 |
|Less : Tax Expense/(Credit): || || |
|-Current Tax/Minimum Alternate Tax (MAT) ||65.60 ||565.28 |
|(Net of MAT Credit Entitlement if any) || || |
|-Deferred Tax charge ||145.00 ||32.00 |
|Net Profit for the year ||848.00 ||1249.60 |
GENERAL & CORPORATE MATTERS
During the year under review the Companys revenue from operations decreased toRs.27314.58 lacs from Rs.28914.00 lacs in the previous year (a decrease of about 5.53%).The decline in sales was mainly because of non-release of orders by Bharat BroadbandNetwork Ltd.(BBNL) and less than expected orders received from other customers. The profit(before depreciation exceptional item and tax) for the year decreased to Rs.2253.13 lacsas against Rs.2444.40 lacs in the previous year. The slight fall in profit was mainly dueto decrease in turnover during the year under review.
Despite non-release of orders by BBNL the coming years look to be promising as thesecond phase of the Optical Fibre Cable roll-out is expected to take place soon as bulkcable orders are going to be released. This will definitely help the company to show goodperformance by way of supplying optical fibre cables in high volumes.
Although there is a marginal decrease in revenue as compared to the previous year theCompany has developed innovative Optical Fibre Cable products for FTTH (Fibre-to-the-Home)segment and supplying these micro cables to various customers both in domestic and exportmarkets. As the broadband connectivity for the masses is the need of the hour it isbeing catered to by not only telecom operators but also by various Internet ServiceProviders. This trend is well acknowledged by the Company and supplies of structuredcopper cable products and solutions have picked up and good increase in market share isachieved.
The penetration of smartphones in India is seeing a huge surge as the masses are usingthese for all their daily needs and India is going to be the biggest user of smartphonesin the world by 2018. As data is consumed in a big way by the usage of smartphones fibreis only medium which can provide huge bandwidth requirements at high speed based on thelatest 3G and 4g networks. All telecom service providers are augmenting their datadelivery capabilities especially meant for high speed applications using optical fibrecables across their entire telecom network. The Company is well positioned to reap thebenefits by way of offering innovative and cost effective optical fibre cable solutionssuiting to the varied requirements of all telecom service providers steps for which aretaken at the plant level by continuous improvement drives.
As the hunger for data is a never ending phenomenon now-a-days the old copper cablenetworks are getting replaced by optical fibre cables and it is being done on a continuousbasis by all the telecom operators in India. Even power utility and energy companies havealready started using optical fibre cables based on advanced technology platforms withcustomized designs of optical fibre cables. As the Company is very well prepared toaddress these requirements using its strong R & D activities the growth opportunitiesare brighter and it will help the Company to generate more traction using thisdevelopment.
Export segment is picking up very well as the company is able to cater to the variedrequirements of all its customers by way of using innovative process technologies and atthe same time cost competitive as well. This will greatly enhance the visibility of theCompany in the global market and further drive up the exports which are already doingwell.
After considering the Companys profitability free cash flow and overallfinancial performance the Board of Directors of the Company is pleased to recommend aDividend of Re.1/- (previous year Re.1/-) per equity share of face value Rs.10/- each(i.e.10%) for the financial year ended on March 31 2016. The distribution of Dividend onequity shares if approved by the Members at the ensuing Annual General Meeting willresult in payout of Rs.300.00 lacs excluding Tax on Dividend and Surcharge/Education Cessthereon.
Your Company has not accepted any public deposits during the year within the meaning ofSection(s) 73 to 76 of the Companies Act 2013 and the Companies (Acceptance of Deposits)Rules 2014 and as such no amount on account of principal or interest on public depositswas outstanding as on the date of the Balance Sheet.
Your Company continued to optimise bank borrowings during the year by focusing on cashflows and working capital management. By availing alternate funding options like issuanceof Buyers Credit and Suppliers Credit your Company ensured efficiency in itsborrowing costs.
Pursuant to Regulation 34(3) read with Para C of Schedule V of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Management Discussion& Analysis Report on Corporate Governance and a certification by the Chief ExecutiveOfficer (CEO) confirming compliance by all the Board Members and Senior ManagementPersonnel with Companys Code of Conduct and Auditors Certificate regardingcompliance of conditions of Corporate Governance are made a part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
As a part of its initiative under Corporate Social Responsibility (CSR) the Companyhas undertaken CSR activities in the areas of (i) promoting education and employmentenhancing skills; (ii) ensuring environment sustainability "green beltdevelopment" and (iii) conservation of natural resources in the area where theCompany operates. These activities are largely in accordance with Schedule VII of theCompanies Act 2013 read with the Companies (Corporate Social Responsibility Policy)Rules 2014 and the Companys CSR Policy. The CSR activities during the year wereimplemented through Madhav Prasad Priyamvada Birla Apex Charitable Trust a registeredtrust under Section 12A of the Income Tax Act 1961.
The Annual Report on CSR activities is given in Annexure-I which is attached heretoand forms a part of the Directors Report. The Corporate Social Responsibility Policyof the Company is available on the website of the Company i.e. www.birlaericsson.com.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013 :
that in the preparation of the annual financial statements for the year endedMarch 312016 the applicable accounting standards read with requirements set out underSchedule III to the Companies Act 2013 have been followed and there are no materialdepartures from the same;
that such accounting policies as mentioned in Notes to the Financial Statementshave been selected and applied consistently and judgment and estimates have been made thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company as at 31st March 2016 and the profit of the Company for the year ended onthat date;
that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
that the annual financial statements have been prepared on a going concernbasis;
that proper internal financial controls were in place and that the financialcontrols were adequate and were operating effectively;
that system to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
RISK MANAGEMENT AND ADEQUACY OF INTERNAL CONTROL SYSTEMS
The Companys system of financial and compliance controls with reference to thefinancial statements and risk management is embedded in the business process by which theCompany pursues its objectives. Additionally the Audit Committee and the Board ofDirectors assess the implementation of risk management and risk mitigation measuresthrough their review of potential risks which could negatively impact the operations theproposed budget and plan the Companys strategic framework besides inherent risksassociated with the products/goods dealt with by the Company. Your Companys approachto address business risks is comprehensive and includes periodic review of such risks anda framework for mitigating and reporting mechanism of such risks. In the view of the Boardof Directors there are no material risks which may threaten the existence of theCompany.
The Board of Directors of the Company has laid down the policies and procedures forinternal financial controls to be followed by the Company for ensuring the orderly andefficient conduct of its business in order to achieve the strategic operational andother objectives over a long period and that its exposure to risks are within acceptablelimits decided by the Board. In addition the policies and procedures have been designedwith an intent to ensure safeguarding of Companys assets the prevention anddetection of frauds and errors the accuracy in completeness of the accounting records andthe timely preparation of reliable financial information.
The management is committed to ensure effective internal financial controlsenvironment which provides assurance on the efficiency of its business operations coupledwith adherence to its established policies safety/security of its assets besides orderlyand legitimate conduct of Companys business in the circumstances which mayreasonably be foreseen. The Company has defined organisation structure authority levelsdelegated powers internal procedures rules and guidelines for conducting businesstransactions. The Companys system and process relating to internal controls andprocedures for financial reporting have been designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with Generally Accepted AccountingPrinciples (GAAP) in India the Companies Act 2013 and rules framed thereunder and allother applicable regulatory / statutory guidelines etc. for disclosure with reference tofinancial statements.
Your Companys internal control systems are supplemented by an extensive programof internal audit by an independent firm of Chartered Accountants. Internal audits areconducted at regular intervals and a summary of the observations and recommendations ofsuch audits are placed before the Audit Committee. The Internal Auditors the AuditCommittee as well as the Board of Directors conduct an evaluation of the adequacy andeffectiveness of the system of internal financial controls system on an ongoing basis.
INDUSTRIAL RELATIONS AND SAFETY
Industrial relations remained cordial throughout the year. Your Directors recognize andappreciate the sincere and hard work loyalty dedicated efforts and contribution of allthe employees in the growth and performance of the Company during the year.
The Company continues to accord a very high priority to both industrial safety andenvironmental protection and these are ongoing process at the Companys plant andfacilities to maintain high awareness levels. The Company is conscious of the importanceof environmentally clean and safe operations so as to ensure safety of all concerned andcompliance of applicable environmental regulations. The Company as a policy re-evaluatessafety standards and practices from time to time in order to raise the bar of safetystandards for its people as well as users and customers.
The Companys manufacturing facilities continue to remain certified by independentand reputed external agency as being compliant as well as aligned with the externalstandards for Quality System IS/ISO 9001:2008 ISO TS 16949:2009 and EnvironmentalManagement Standards IS/ISO 14001:2004 and Occupational Health and Safety ManagementSystem OHSAS 18001:2007. During the year the audits for these Certifications establishedcontinuous improvement in performance against these standards.
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompanys Articles of Association Mr. D.R. Bansal [DIN: 00050612] Director shallretire by rotation at the ensuing Annual General Meeting and being eligible has offeredhimself for re-appointment. The Board recommends his re-appointment for the considerationof the members of the Company at the ensuing Annual General Meeting.
The brief resume and other details of Director seeking re-appointment as required underRegulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is given in the Notice of the ensuing Annual General Meeting which isbeing sent to the shareholders along with Annual Report.
During the year under review there was no change in the Board of Directors of theCompany.
KEY MANAGERIAL PERSONNEL
Mr. R Sridharan Manager and Chief Executive Officer and Mr. Somesh Laddha Dy. GeneralManager (Finance and Accounts) & Secretary are the Key Managerial Personnel of theCompany. During the year under review there was no change in the Key Managerial Personnelof the Company.
DECLARATION BY INDEPENDENT DIRECTORS
All Independent Directors of your Company viz. Mr. R.C.Tapuriah Dr.Aravind SrinivasanMr.Arun Kishore Mr. K.Raghuraman and Mrs. Archana Capoor have individually and severallygiven a declaration pursuant to Section 149(7) of the Companies Act 2013 affirmingcompliance to the criteria of Independence as laid down under Section 149(6) of theCompanies Act 2013. Based on the declaration(s) of Independent Directors the Board ofDirectors recorded its opinion that all Independent Directors are independent of theManagement and have fulfilled the conditions as specified in the Companies Act 2013rules made thereunder as well as applicable provisions of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015.
MEETINGS OF BOARD AND COMPOSITION OF COMMITTEES
During the year under review the Board met four times viz. May 15 2015 August 102015 November 05 2015 and February 10 2016.
As required under Section 177(8) read with Section 134(3) of the Companies Act 2013and the rules framed thereunder the composition and meetings of the Audit Committee werein line with the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 details of which alongwith composition numberof meetings of all other Board Committees held during the year under review and attendanceat the meetings are provided in the Report on Corporate Governance forming a part of theAnnual Report. During the year under review all the recommendations of the AuditCommittee were accepted by the Board of Directors.
PERFORMANCE EVALUATION OF BOARD COMMITTEES AND DIRECTORS
Pursuant to the Provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors of the Company carriedout the formal annual evaluation of its own performance and that of its Committees andindividual Directors interalia to assess the skill set and contribution that aredesired recognising that competencies and experiences evolves over time. The process wasconducted by allowing the Board to engage in candid discussions with each Director withthe underlying objective of taking best possible decisions in the interest of the Companyand its stakeholders. The Directors were individually evaluated based on personalinteraction to ascertain feedback on well defined parameters which interalia comprisedof level of engagement and their contribution to strategic planning and other criteriabased on performance and personal attributes of the Directors. During the process ofevaluation the Board of Directors also considered the criteria for evaluation ofperformance of Independent Directors and the Board of Directors formulated by theNomination and Remuneration Committee and review of the performance of the Chairman(taking into account the views of non-executive directors) the Non-independent Directorsand the Board as a whole carried out by the Independent Directors. A statement indicatingthe manner in which formal annual evaluation has been made by the Board of Directors isgiven in the Report on Corporate Governance which forms a part of the Annual Report.
SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION
The Board of Directors in consonance with the recommendation of Nomination andRemuneration Committee (NRC) has adopted a terms of reference which interalia deals withthe criteria for identification of members of the Board of Directors andselection/appointment of the Key Managerial Personnel/Senior Management Personnel of theCompany. The NRC recommends appointment of Director/appointment or re-appointment ofManager & CEO based on their qualifications expertise positive attributes andindependence in accordance with prescribed provisions of the Companies Act 2013 and rulesframed thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. The NRC in addition to ensuring diversity of race and gender also considers theimpact the appointee would have on Boards balance of professional experiencebackground view points skills and areas of expertise.
The Board of Directors in consonance with the recommendation of Nomination andRemuneration Committee has also adopted the Remuneration Policy for the members of theBoard and Executive Management. The guiding principles of the Remuneration Policy arestated in the Report on Corporate Governance which forms a part of the Annual Report.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
In terms of the provisions of Section 177(9) of the Companies Act 2013 the Companyhas implemented a Vigil Mechanism which includes implementation of the Whistle BlowerPolicy to deal with instances of fraud and mis-management if any and conducting businesswith integrity including in accordance with all applicable laws and regulations. Noemployee has been denied access to the Vigilance Officer as well as Chairman of the AuditCommittee. The details of the Vigil Mechanism and Whistle-Blower Policy are explained inthe Corporate Governance Report and also posted on the website of the Company.
Messrs V. Sankar Aiyar & Co. Chartered Accountants (Registration No.109208W) wereappointed as Statutory Auditors to hold office for a term of 3 (three) years untill theconclusion of twenty fifth Annual General Meeting of the Company to be held for thefinancial year 2016-17 subject to ratification of their appointment as such by the membersat every Annual General Meeting. They have confirmed to the Company that theirappointment if ratified by the members at the ensuing twenty fourth Annual GeneralMeeting would be according to the terms and conditions prescribed under Section(s) 139and 141 of the Companies Act 2013 and rules framed thereunder and that they are notdisqualified for appointment as Auditors within the meaning of the said Act The CharteredAccountants Act 1949 and the rules and regulations made thereunder.
The Board of Directors has re-appointed Messrs D. Sabyasachi & Co. CostAccountants as Cost Auditors for conducting audit of the cost records/accounts maintainedby the Company in respect of specified products of the Company covered under the Companies(Cost Records and Audit) Amendment Rules 2014 and fixed their remuneration based on therecommendation of the Audit Committee. The remuneration payable to Cost Auditors issubject to ratification by the shareholders in the ensuing Annual General Meeting of theCompany.
The Auditors Report on the financial statements of the Company forms a part ofthe Annual Report. There is no qualification reservation adverse remark disclaimer ormodified opinion in the Auditors Report which calls for any further comments orexplanations. Further during the year under review the Auditors have not reported anymatter under Section 143(12) of the Companies Act 2013 therefore no detail is requiredto be disclosed in pursuance to Section 134(3)(ca) of the Companies Act 2013.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 Messrs R.K.Mishra& Associates Company Secretaries (PCS Registration no.14474) were appointed toundertake the Secretarial Audit of the Company for the year ended March 312016. TheReport of the Secretarial Auditor is given in Annexure-II which is attached hereto andforms a part of the Directors Report.
No qualification or observation or other remarks have been made by Messrs R.K.Mishra& Associates in the Secretarial Audit Report which calls for any comments orexplanations.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into by the Company during thefinancial year under review were on arms length basis and in the ordinary course ofbusiness. The disclosure of related party transactions as required under Section 134(3)(h)of the Companies Act 2013 read with Rule 8 of the Companies (Accounts)Rules 2014 inprescribed Form AOC-2 is given in Annexure-III which is attached hereto and forms a partof the Directors Report. There are no material significant related partytransactions entered into by the Company with its Promoters Directors Key ManagerialPersonnel or other designated persons which may have a potential conflict with theinterest of the Company at large.
All related party transactions are placed before the meeting(s) of Audit Committee forits approval. Prior omnibus approval of the Audit Committee is obtained on an annual basisfor a financial year for the transactions which are of a foreseen and repetitive innature. The statement giving details of all related party transactions entered intopursuant to the omnibus approval together with relevant documents/information are placedbefore the Audit Committee for review and updation on quarterly basis. The CompanysPolicy on materiality of Related Party Transactions and dealing with Related PartyTransactions as approved by the Board of Directors is uploaded on the Companyswebsite and can be accessed at weblink:http://www.birlaericsson.com/pdf/RPTPolicy_BEOL.pdf.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013
The particulars of Loans Guarantees and Investment in pursuance to Section 186 of theCompanies Act 2013 have been disclosed in the financial statements read together withNotes annexed to and forming an integral part of the financial statements.
DISCLOSURE OF RATIO OF REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL ETC.
As required under Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theStatement of Disclosure of Remuneration and such other details as prescribed therein aregiven in Annexure-IV which is attached hereto and forms a part of the DirectorsReport.
EXTRACT OF ANNUAL RETURN
An Extract of Annual Return as provided under Section 92(3) of the Companies Act 2013is given in Annexure-V which is attached hereto and forms a part of the DirectorsReport.
PARTICULARS OF EMPLOYEES
Particulars of employees in accordance with the provisions of Section 197 of theCompanies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are not given as none of the employees qualifies forsuch disclosure.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO
As required under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 the information on Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and Outgo are given in Annexure-VI which isattached hereto and forms a part of the Directors Report.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions or events on these items during the yearunder review:
(a) the Company has neither issued shares with differential rights as to dividendvoting or otherwise nor has granted stock options or sweat equity under any scheme.Further none of the Directors of the Company holds investments convertible into equityshares of the Company as on March 312016.
(b) No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status of the Company and its operations infuture.
(c) The Company has zero tolerance towards sexual harassment at workplace and hasadopted a Policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and Rule made thereunder. During theyear under review there were no cases filed or reported pursuant to the provisions of thesaid Act.
(d) There are no material changes or commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this Report.
The Board of Directors desires to place on record its grateful appreciation for theexcellent assistance and co-operation received from the State Government and continuedsupport extended to the Company by the bankers investors venders esteemed customers andother business associates. Your Director wish to place on record their sincere thanks andindefinite appreciation to all the employees of the Company for their unstinted commitmentand continued contribution. The Board also expresses its appreciation of the assistanceand unstinted support received from venturers and promoter companies viz. UniversalCables Limited Vindhya Telelinks Limited and Ericsson Cables AB Sweden.
|Yours faithfully || |
|Harsh.V.Lodha ||Chairman |
|(DIN:00394094) || |
|D.R.Bansal || |
|(DIN: 00050612) || |
|R.C.Tapuriah || |
|(DIN:00395997) || |
|Aravind Srinivasan || |
|(DIN:00088037) || |
|Arun Kishore ||Directors |
|(DIN:00177831) || |
|K.Raghuraman || |
|(DIN:00320507) || |
|Archana Capoor || |
|(DIN:01204170) || |
|New Delhi May 18 2016 || |