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Black Rose Industries Ltd.

BSE: 514183 Sector: Industrials
NSE: N.A. ISIN Code: INE761G01016
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VOLUME 14366
52-Week high 32.00
52-Week low 20.20
P/E 28.57
Mkt Cap.(Rs cr) 143
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 29.00
CLOSE 28.00
VOLUME 14366
52-Week high 32.00
52-Week low 20.20
P/E 28.57
Mkt Cap.(Rs cr) 143
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Black Rose Industries Ltd. (BLACKROSEINDUS) - Director Report

Company director report

(Including Management Discussion and Analysis Report)

Dear Members

Your Directors are pleased to present this 27th Annual Report together with theAudited Financial Accounts of the company for the year ended 31st March 2017.

1. Financial Results

The company’s standalone and consolidated performance during the financial yearended 31st March 2017 as compared to the previous financial year is summarised below:

Rs in Lacs

Consolidated Standalone
Particulars Year ended Year ended
31.03.2017 31.03.2016 31.03.2017 31.03.2016
Revenue from Operations and Other Income 24203.65 17772.16 16646.71 12919.23
Earnings Before Interest Depreciation Tax and 1469.83 968.12 1463.73 965.40
Amortisation (EBIDTA)
Less: Finance Cost 475.64 446.97 475.64 446.97
Profit before Depreciation and Tax (PBDT) 994.19 521.15 988.09 518.43
Less: Depreciation 273.52 272.57 273.52 272.57
Profit before Tax 720.67 248.58 714.57 245.86
Less: Provision for Tax 255.41 87.83 255.41 84.20
Profit after Tax 465.26 160.75 459.16 161.66

2. Nature of Business

The company is primarily in the business of chemical distribution and chemicalmanufacturing as well as textile manufacturing and renewable energy generation. Thechemical distribution business consists mainly of import and sales of specialty andperformance chemicals manufactured by overseas and domestic principals. Chemicalmanufacturing is currently focused on the production of a single product acrylamide. Thetextile business is engaged in the manufacture of fabrics and industrial made-ups such assafety gloves and the renewable energy activity supplies the State Electricity Boards ofRajasthan and Gujarat with wind-generated power.

3. Performance Review

The year 2016 – 2017 saw a 36% and 29% increase in consolidated and standalonerevenues respectively. The growth in standalone revenues was largely due to a 25%increase in sales of acrylamide (despite some slow down in Q3) and a 26% increase in salesof the chemical distribution business. The sales increase was supported by increase involumes. The top 5 products of the distribution business delivered strong results whileaccounting for 75% of the department’s sales. Our subsidiary in Japan alsocontributed to a rise in revenue and accounted for 30% of the consolidatedturnover.Profitability improved over the last year due to better operation rate of theacrylamide plant and the growth in distribution business. The company ended the year witha rise in EBIDTA of

52% bringing the standalone EBIDTA margin to 8.8%. Profit before tax increased to Rs714.57 as compared to a profit of Rs 245.86 lacs in the previous year.

A detailed analysis of the company’s operations is provided later in the ManagementDiscussion and Analysis Report.

4. Dividend

Your Directors are pleased to recommend an equity dividend of Rs 0.10 per equity sharesof face value of Rs 1 each for the year ended 31st March 2017 subject to the approval ofthe shareholders at the ensuing Annual General

Meeting.

5. Business Scenario

There was an improvement in the global economic scenario during the 2016 2017 fiscalyear. Although certain sectors of the Indian economy slowed down temporarily during Q3 andthe first part of Q4 due to the effects of demonetisation the overall economy showedreasonable strength. Interest costs started to come down in India because of the suddenincrease in liquidity while interest rates in the US inched up. The Indian Rupee stayedwithin a band of Rs 66-67 per US Dollar for the initial part of the year and after a briefweakening during November to January steadily strengthened during Q4. Prices of chemicalsand other products gradually increased with increase in oil prices and general demand.

The business scenario is discussed later in more detail in the Management Discussionand Analysis Report.

6. Acrylamide Plant at Jhagadia Gujarat

An expansion was carried out at the company’s acrylamide plant and the installedcapacity at the end of the year is now 14000MT per year from 10000MT per year. Anin-depth explanation about the plant operations is given in the Management Discussionand Analysis Report.

7. Subsidiary – B.R. Chemicals Co. Ltd. Japan

During the year under review the turnover of the company’s wholly ownedsubsidiary incorporated in Japan increased significantly to Rs 76 crores. The subsidiaryshowed a profit of approximately Rs 6 lacs.

The nature of business of the subsidiary company remained unchanged during the year.

The performance and financial position of company’s subsidiary B.R. Chemicals Co.Ltd. for the year ended 31st March 2017 is attached to the financial statements hereto.

8. Material Changes and Commitments

There have been no material changes and commitment 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 the report.

9. Directors and Key Managerial Personnel

There were no changes in the directors or key managerial personnel during the year.

Pursuant to Section 152 of the Companies Act 2013 Mr. Anup Jatia (DIN 00351425)Executive Director of the Company retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.

All the Independent Directors have given declarations that they have meet the criteriaof independence as laid down under Section 149(6) of the Companies Act 2013 and theListing Regulations.

10. Board Meetings and Board Committees a. Board Meetings

The Board of Directors met five times during the financial year ended 31st March 2017in accordance with the provisions of Companies Act 2013 and rules made thereunder and theListing Regulations. b. Committees

Pursuant to Section 177 and 178 of the Companies Act 2013 and the rules madethereunder and in accordance with Listing Regulations your Board of Directors hasconstituted four committees namely Audit Committee Nomination and RemunerationCommittee Stakeholders Relationship Committee and Corporate Social ResponsibilityCommittee.

The company has been employing women employees in various grades within its offices andfactory premises.

The company has constituted an Internal Compliant Committee as required under SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 toredress any complaints received from employee(s) of the Company. The Company is stronglyopposed to sexual harassment and all the employees are made aware about the consequencesof such acts and the constitution of the Internal Compliant Committee.

During the year there was no complaint received from any employee and hence nocompliant is outstanding as on 31st March 2017.

c. Evaluations

Pursuant to the provisions of Companies Act 2013 and rules made thereunder and inaccordance with the Listing Regulations the Board had carried out an annual performanceevaluation of its own the Board Committees and of the Independent Directors.

Further independent directors at their separate meeting evaluated performance of thenon – independent director Board as a whole and of the Chairman of the Board.

d. Policy on Directors’ Appointment and Remuneration and other details

The Company’s policy on directors’ appointment and remuneration and othermatters provided in Section 178(3) of the Companies Act 2013 has been disclosed inNomination and remuneration Policy which forms part of this report. The Nomination andRemuneration Policy is set out in Annexure I to this report and is also availableon the Company’s Policy.

11. Auditors and their Reports a. Statutory Auditors

The independent statutory auditors’ report does not contain any qualificationreservation or adverse remark on the accounts for the year ended 31st March 2017.Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Companies(Audit and Auditors)

Rules 2014 M/s. Karnavat & Co. Chartered Accountants the Statutory Auditors ofthe Company hold office up to the conclusion of the 27th Annual General Meeting and arenot eligible for re-appointment due to expiry of their term of appointment.

In view of mandatory rotation of Auditors the Board of Directors of theCompany on the recommendation of Audit Committee recommends appointment of M/s. PKJ &Co. Chartered Accountants (Firm Registration No. 124115W) as a Statutory Auditors of theCompany for a period of one year commencing from the conclusion of 27th Annual GeneralMeeting. The Company has received a certificate from the said Auditors that they areeligible to hold office as the Auditors of the Company and are not disqualified for beingso appointed.

The resolution for appointment of the said Auditors is included in the Notice of AnnualGeneral Meeting for seeking approval of members. b. Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the rules madethereunder the Board of Directors had appointed M/s. ND & Associates CompanySecretary in Whole – Time Practice as Secretarial Auditor to undertake theSecretarial Audit of the Company.

As required under provisions of Section 204 of the Companies Act 2013 the report inrespect of the Secretarial Audit carried out by M/s. ND & Associates CompanySecretary in Whole – Time Practice in Form MR – 3 for the Financial Year 2016 -17 forms part to this report. The said report does not contain any adverse observation orqualification requiring explanation or comments from the Board under Section 134(3) of the

Companies Act 2013.

c. Cost Auditors

In terms of the provisions of Section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 the Board of Directors on therecommendation of the Audit Committee have approved the appointment of M/s. Poddar &Co. Cost Accountants as the Cost Auditors of the Company to conduct audit of costaccounting records maintained by the Company for the year ending March 31 2017 on aremuneration as mentioned in the Notice 27th Annual General Meeting for conducting theaudit of the cost records maintained by the Company.

A Certificate from M/s. Poddar & Co. Cost Accountants has been received to theeffect that their appointment as Cost Auditor of the Company if made would be inaccordance with the limits specified under Section 141 of the Act and rules framedthereunder. ratification A resolution seeking Member’s for the remuneration payableto Cost Auditor forms part of the

27th Annual General Meeting of the Company and same is recommended for Member’sconsideration and approval.

12. Corporate Social Responsibility (CSR)

Until 2015-16 financial year although the company was not mandatorily governed byprovisions of Section 135 of the Companies Act 2013 on Corporate Social Responsibility(CSR) it was forming an integral part of an overall business policy aligned with itsbusiness goals.

However during the year under review with the company’s net profit crossing Rs 5crores the provisions of Section 135 of the Companies Act 2013 on CSR mandatorily becameapplicable to the Company and thus the Board of Directors of the Company has constitutedCSR Committee comprising of three directors viz. Mr. Anup Jatia – Executive Directorof the Company Mr. Shivhari Halan and Mrs. Garima Tibrawalla both Non – Executiveand Independent Directors of the Company.

All the members of CSR Committee have good knowledge and exposure to utilise theCompany’s resources towards its CSR.

13. Deposits

During the year under review the company did not accept any deposits in terms ofSection 73 of the Companies Act 2013 read with the Companies (Acceptance of Deposit)Rules 2014.

14. Consolidated Financial Statements

The company has prepared Consolidated Financial Statements in accordance withAccounting Standards (AS) viz. AS 21 AS 23 and AS 27 issued by The Institute of CharteredAccountants of India. The Consolidated Financial Statements form part of this AnnualReport.

15. Directors’ Responsibility Statement

Pursuant to Section 134(3)(c) of the Companies Act 2013 your Directors to the best oftheir knowledge and belief confirm the following: i) that in the preparation of the annualfinancial statements for the year ended March 31 2017 the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any; ii) that such accounting policies as mentioned in note 1 of the Notesto the Financial Statements have been selected and applied consistently and judgment andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company as at March 31 2017 and of the profits of thecompany for the year ended on that date; iii) that proper and sufficient care has beentaken for the maintenance of adequate accounting records in accordance with the provisionsof the Companies Act 2013 for safeguarding the assets of the company and for preventingand detecting fraud and other irregularities;

iv) that the annual financial statements have been prepared on a going concern basis;

v) that proper internal financial controls were in place and that the financialcontrols were adequate and were operative satisfactorily however this reportingrequirement is in a evolving stage the management is in a process of establishingeffective implementation with the help of internal and external consultations andconfident that the same will be fully implemented within few months. vi) that systems toensure compliance with the provisions of all applicable laws were in place and wereadequate and operating effectively.

16. Extract of Annual Return

Pursuant to the provisions of Section 92(3) and Section 134(3)(a) of the Companies Act2013 an extract of the

Annual Return in Form MGT 9 for the financial year ended 31st March 2017 is given in AnnexureII and forms part of this Annual Report.

17. Loans Guarantees and Investments

The particulars of loans guarantees and investments given/made during the financialyear under review and governed by the provisions of Section 186 of the Companies Act 2013have been furnished in Annexure III which forms part of this Annual Report.

18. Internal Financial Controls and Compliance Framework

The company has well defined and adequate Internal Control System commensurate withsize scale and complexity of its operations. The Internal Financial Controls (IFC) areadequate and are operating effectively so as to ensure orderly and efficient conduct ofbusiness operations

During the year IFC testing process was done in order to review adequacy and strengthof IFC followed by the

Company. As per the assessment there are no major concerns and Controls are strong.

The Board has also put in place requisite legal compliance framework to ensurecompliance of all the applicable laws and that such systems were adequate and operatingeffectively.

19. Roll Out of Goods and Services Tax (GST) Model Law

In view of impending roll out of Goods and Services Tax (GST) with effect from July 12017 the Company is gearing up to get itself to the tune of the new GST frame work whichwill not only lead to change in the indirect tax structure but shall also lead to thechange in the business processes/functions. The Company has already obtained theprovisional registration in respect of all its units across the country. It has alsostarted creating awareness on GST Model Law amongst the marketing operations and accountsteams and its vendors and customers.

20. Risk Management

Company has implemented an integrated risk management approach through which it reviewsand assesses significant risks on a regular basis to ensure that a robust system of riskcontrols and mitigation is in place.

Senior management periodically reviews this risk management framework to keep updatedand address emerging challenges. Risk management system followed by the Company iselaborately detailed in Management Discussion and Analysis Report.

21. Vigil Mechanism and Reporting of Frauds

The Company has set up vigil mechanism viz. Whistle Blower Policy to enable theemployees and Directors to report genuine concerns unethical behavior and irregularitiesif any in the company noticed by them which could adversely affect company’soperations to the Audit Committee Chairman.

There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and/or Board under Section 143(12) ofthe Act and Rules framed thereunder.

22. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withrules made thereunder is annexed herewith as Annexure IV and forms part of thisAnnual Report.

23. Contracts and Arrangements with Related Parties

All the contracts arrangements and transactions entered by the company during thefinancial year with related parties were in the ordinary course of business and are onarm’s length basis hence Section 188(1) is not applicable and consequently noparticulars in Form AOC – 2 are required to be furnished. During the year thecompany had not entered into any contract arrangements or transactions with relatedparties which could be considered material. All the contracts arrangements andtransactions with related parties are placed before the Audit Committee as also the Boardas may be required for approval.

24. Orders passed by Regulators or Courts or Tribunals

No significant and material orders have been passed by any regulators or courts ortribunals which can have an impact on the going concern status of the Company and itsfuture operations.

25. Listing

The company’s shares are listed on the Bombay Stock Exchange Limited and theapplicable listing fees have been paid.

26. Managerial Remuneration and Particulars of Employees

The Statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is not applicable as none of theemployees of the company is covered under the provisions of the said rules.

The ratio of the remuneration of each Director to the median employees remuneration andother details in terms 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 isannexed herewith as Annexure V and forms part of this Annual Report.

27. Service of Documents through Electronic Means

All documents including the Notice and Annual Report shall be sent through electronictransmission in respect of members whose e-mail IDs are registered in their demat accountor are otherwise provided by the members. A member shall be entitled to request forphysical copy of any such documents.

28. Acknowledgement

The Board of Directors greatly values the support and cooperation received during theyear from the company’s bankers statutory authorities and all organisationsconnected with the company’s business. The directors also take pleasure in commendingthe valuable contributions made by the company’s employees at all levels during theyear under review.

Cautionary Statement

Certain statements in this Directors’ Report and in the Management Discussion andAnalysis Report describing the company’s objectives estimates and projections maybe forward-looking statements and are based on certain expectations. Actual results couldhowever differ materially from those expressed or implied. Important factors that couldmake a difference in the company’s operations include the availability of rawmaterial/product cost of raw material/product changes in demand from customersfluctuations in exchange rates changes in government policies and regulations changes intax structure economic developments within India and the countries in which business isconducted and various other incidental factors. We cannot guarantee that these forward -looking statements will be realised although we believe we have been prudent in makingany assumptions. We undertake no obligation to publicly update any forward - lookingstatements whether as a result of new information future events or otherwise.

For and on behalf of the Board

Shivhari Halan Anup Jatia
Director Executive Director
Place: Mumbai
Dated: May 30 2017