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Bluechip Tex Industries Ltd.

BSE: 506981 Sector: Industrials
NSE: N.A. ISIN Code: INE472D01017
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OPEN 105.55
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VOLUME 543
52-Week high 130.50
52-Week low 57.00
P/E 6.87
Mkt Cap.(Rs cr) 19.36
Buy Price 96.00
Buy Qty 3.00
Sell Price 101.05
Sell Qty 1.00
OPEN 105.55
CLOSE 92.95
VOLUME 543
52-Week high 130.50
52-Week low 57.00
P/E 6.87
Mkt Cap.(Rs cr) 19.36
Buy Price 96.00
Buy Qty 3.00
Sell Price 101.05
Sell Qty 1.00

Bluechip Tex Industries Ltd. (BLUECHIPTEXIND) - Director Report

Company director report

To

The Members

Blue Chip Tex Industries Limited

Your Directors are pleased to present herewith the 31st Annual Report on thebusiness and operations of your Company and Audited Accounts for the Financial Year endedMarch 31 2016 together with the Audited Statement of Accounts and Auditor's Reportthereon.

The State of the Company’s Affairs:

1. KEY FINANCIAL HIGHLIGHTS:

In terms of INR

2015-2016 2014-2015
Profit before depreciation 49752095 35101368
Less: depreciation 12551734 10173887
Profit before Tax 37200361 24927481
Less: Provision for taxation
Current tax 10601111 5408817
Deferred tax 2501091 2389783
Fringe Benefit tax
Profit After Tax 24098159 17128881
Add: Taxation for earlier year
Total 24098159 17128881
Balance in Profit and Loss Account 33755539 21297743
Surplus available for appropriation 57853698 38321515
Transfer to General Reserve 1720000
Proposed Dividend 2955750 2364600
Tax on Proposed Dividend 601720 481377
Balance carried to Balance Sheet 54296228 33755538

During the year under review your Company has reported a total income of INR1380716834/- out of which non-operating income amounts to INR 812845/-. Revenue fromOperations Income registered increase by INR 264251508/- i.e. by 23.69 % as compared tothe previous year.

2. DIVIDEND:

Your Directors are pleased to recommend a final dividend of INR 1.50/- per equity sharefor the Financial Year ended 31st March 2016.

3. TRANSFER TO RESERVES:

The Company has proposed to transfer NIL amount to the General Reserve out of amountavailable for appropriations.

4. THE STATE OF COMPANY’S AFFAIRS :

The highlights of State of Company's affairs are as under :

The Company had completed its expansion programme and presently having own 5 DrawTexturing Machines and 3 Air Texturising Machines.

The Company also hired Machineries to meet the demand.

This year Company is concentrating upon existing production capacities for maximumutilisation and for future expansion the Company is searching suitable Industrial land inDadra & Nagar Haveli.

5. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO [SECTION 134 (3) (m) OF THE COMPANIES ACT 2013:

Particulars required to be furnished by the Companies as per Rule 8 of Companies(Accounts) Rules 2014 are as follows:

A. Rule 8 Sub-Rule 3 (A) pertaining to Conservation of Energy:

(i) Energy conservation measures taken:

Appropriate measures have been initiated to conserve energy. The Company has alwaysbeen conscious about the need for conservation of energy.

(ii) Additional investments and proposals if any being implemented for reduction ofenergy consumption:

The efforts for conservation of energy are on an ongoing basis throughout the year.

(iii) The impact of the above measures for reduction of energy consumption andconsequent impact on the cost of production of goods:

The measures taken have resulted in savings in the cost of production.

Total energy consumption and energy consumption per unit of production:

Power and Fuel Consumption:

1. Electricity: Financial Year ended 31.03.2016 Financial Year ended 31.03.2015
Purchased Units (KWH) 16042868 10233398
Total Amount (INR) 67750977 45370176
Cost/Unit (INR) 4.22 4.43
Consumption per ton polyester
Texturised Yarn Production (units in KWH) 1013.39 862.21

B. Rule 8 Sub-Rule 3 (B) pertaining to Technology absorption

Efforts in brief made towards technology absorption adoption and innovation: TheCompany keeps itself abreast of the technical development and innovation in its line ofproducts worldwide and tries to bring about improvements in the product for better yieldquality and cost effectiveness etc.

Continuous efforts are being made in the areas of quality improvements wastereduction process capability and cost minimization to specially improve the marketacceptance of the product.

C. Rule 8 Sub-Rule 3 (C) pertaining to Foreign exchange earnings and Outgo:

There are NIL Foreign Exchange earned in terms of actual inflows during the year andthe Foreign Exchange outgo was of INR 59791/- towards payment of travelling expensesduring the year in terms of actual outflows.

6. MATERIAL CHANGES AND COMMITMENTS DURING THE YEAR:

No material changes and commitments other than in the normal course of business haveoccurred after the close of the year till the date of this Report which affect thefinancial position of the Company.

7. DETAILS OF SUBSIDIARY/ JOINT VENTURES/ASSOCIATE COMPANIES.

Name of Company Subsidiary / Joint ventures/ Associate Company Date of becoming of Subsidiary / Joint ventures/ Associate Company.
NIL NIL NIL

8. STATEMENT CONTAINING SALIENT FEATURES OF FINANCIAL STATEMENTS OF ASSOCIATE COMPANY:

Your Company is not having any associate Company and hence the statement containing thesalient feature of the financial statement of a company's associate company under thefirst proviso to subsection (3) of section 129 in the prescribed Form AOC-1 does not formpart of Directors' Report.

9. DETAILS OF NEW SUBSIDIARY/ JOINT VENTURES/ASSOCIATE COMPANIES:

There are no new Subsidiary/Joint Ventures/Associate Companies of the Company duringthe year under review.

10. DETAILS OF THE COMPANY WHO CEASED TO BE ITS SUBSIDIARY/ JOINT VENTURES/ ASSOCIATECOMPANIES:

Name of Company Subsidiary / Joint ventures/ Associate Company Date of cession of Subsidiary / Joint ventures/ Associate Company.
N.A N.A. N.A.

11. CHANGE IN THE NATURE OF BUSINESS:

There has been no change in the nature of business of the Company during the year underreview.

12. INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:

The Company has adequate and effective control systems commensurate with its size andnature of business to ensure that assets are efficiently used and the interest of theCompany is safe guarded and the transactions are authorized recorded and reportedcorrectly. Checks and balances are in place to determine the accuracy and reliability ofaccounting data.

13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Particulars of loans guarantees given and investments made during the year inaccordance with Section 186 of the Companies Act 2013 is annexed with this Report in "AnnexureII".

14. ANNUAL RETURN:

The extract of Annual Return pursuant to Section 92 of the Companies Act 2013 readwith The Companies (Management and Administration) Rules 2014 in the prescribed FormMGT-9 is hereby annexed with this report as "Annexure I’’ and thesame is as on 31st March 2016.

15. DEPOSITS:

The Company has not accepted any deposits within the meaning of Section 73(1) of theCompanies Act 2013 and the Rules made thereunder.

16. BOARD MEETINGS:

The Board of Directors (herein after called as "the Board") met for Four timesduring the Year under review:

Date of Meetings Venue and time of the meeting Directors present Directors who were absent with/ without leave of absence
15.05.2015 Venue: ‘Jasville' 1) Mr. Nand K. Khemani Mr. Shahin N.
2nd Floor 2) Mr. Ashok K. Khemani Khemani
Opp. Liberty Cinema 3) Mr. Kumar S. Nathani
New Marine Lines 4) Mr. Manmohan K. Anand
Mumbai - 400 020. 5) Mr. Rahul A. Khemani
6) Mr. Vijay Kumar Mishra
Time:4:00 PM. 7) Ms. Shraddha Teli
28.07.2015 Venue: ‘Jasville' 1) Mr. Ashok K. Khemani None
2nd Floor 2) Mr. Kumar Nathani
Opp. Liberty Cinema 3) Mr. Manmohan K. Anand
New Marine Lines 4) Mr. Nand K. Khemani
Mumbai - 400 020. 5) Mr. Rahul A. Khemani
6) Mr. Shahin Khemani
Time: 3:30 P.M. 7) Ms. Shraddha Teli 8) Mr. Vijaykumar Mishra
29.10.2015 Venue: ‘Jasville' 1) Mr. Ashok K. Khemani Mr. Vijay Narottam
2nd Floor 2) Mr. Nand K. Khemani Lal Mishra
Opp. Liberty Cinema 3) Mr. Rahul Khemani
New Marine Lines 4) Mr. Shahin Khemani
Mumbai - 400 020. 5) Ms. Shraddha Teli
6) Mr. Kumar Nathani
Time: 3:30 p.m. 7) Mr. Manmohan K. Anand
12.02.2016 Venue: ‘Jasville' 1) Mr. Ashok K. Khemani Mr. Vijay Narottam
2nd Floor 2) Mr. Nand K. Khemani Lal Mishra
Opp. Liberty Cinema 3) Mr. Rahul Khemani
New Marine Lines 4) Mr. Shahin Khemani
Mumbai - 400 020. 5) Ms. Shraddha Teli
6) Mr. Kumar S.Nathani
Time: 3:30 p.m. 7) Mr. Manmohan K. Anand

17. CHANGE IN DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the period under review the following Changes in Directors and Key managerialpersonnel has taken place:

Name of the Director/ Key managerial personal Particulars Date of Appointment
1 Mr. Nand Khemani Designation changed from Managing Director to Director Effective date of change is 01.09.2015
2 Mr. Ashok Khemani Appointed as Managing Director Effective date of appointment is 01.09.2015
3 Mr. Rahul Khemani Appointed as Chief Financial Officer Effective date of appointment is 15.05.2015
4 Shraddha Mangesh Teli Designation changed from Additional Director to Director Member's of the Company in the Annual General Meeting held on Thursday 23rd July 2015 has regularise the appointment of Ms. Shraddha Mangesh Teli

18. QUALIFICATION GIVEN BY THE STATUTORY AUDITORS:

There are no qualifications reservation or adverse remarks or disclaimers made by theStatutory Auditors of the Company in their report.

19. AUDITORS:

M/s Rajendra & Co. Statutory Auditors of your Company bearing registration number108355W retires at the ensuing Annual General Meeting and are eligible for re-appointment.The Auditors have given their consent in writing and have furnished a certificate to theeffect that their re-appointment if made would be in accordance with the provisions ofSection 139(1) and that they meet with the criteria prescribed under section 141 of theCompanies Act 2013. Directors recommend their re-appointment in the ensuing AnnualGeneral Meeting.

20. CONTRACT OR ARRANGEMENT WITH RELATED PARTIES:

The Company has entered into transactions with related parties in accordance with theprovisions of the Companies Act 2013 and the particulars of contracts or arrangementswith related parties referred to in Section 188(1) as prescribed in Form AOC - 2 isappended as "Annexure III’’ of the rules prescribed under Chapter IXrelating to Accounts of Companies under the Companies Act 2013 is duly entered in theregister.

21. DETAILS OF REMUNERATION/COMPENSATION RECEIVED BY MANAGING DIRECTOR FROM HOLDING/SUBSIDIARY COMPANIES:

Name of Managing/ Whole Time Director Name of Holding/ Subsidiary Company paying remuneration/ compensation Nature of remuneration/ compensation Amount of remuneration/ compensation
N.A N.A N.A N.A

22. DISCLOSURE OF REMUNERATION PAID TO DIRECTOR AND KEY MANAGERIAL PERSONNEL ANDEMPLOYEES:

The details with regard to payment of remuneration to Director and Key ManagerialPersonnel is provided in Form No. MGT 9- extract of annual return appended as "AnnexureI".

23. CHANGE IN CAPITAL STRUCTURE:

There has been no change in the capital structure of the Company during the year ended31st March 2016.

24. CORPORATE SOCIAL RESPONSIBILITY POLICY:

During the year under review the Company has not developed the policy on CorporateSocial Responsibility as the Company does not fall under the prescribed classes ofCompanies mentioned under section 135(1) of the Companies Act 2013.

25. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBULNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY’S OPERATION IN FUTURE:

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

26. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013:

The Company is committed to provide safe and conducive environment to its employeesduring the year under review. Your Directors further state that that during the year underreview there were no cases filed pursuant to the Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.

27. CONSOLIDATION OF FINANCIAL STATEMENTS:

Company does not have any subsidiaries and Associate Company so there was no need toprepare Consolidated Financial Statement for the Financial year 2015-2016.

28. STATEMENT ON DECLARATION GIVEN BY THE INDEPENDENT DIRECTORS UNDER SECTION 149 (6)OF THE COMPANIES ACT 2013:

As per the provisions of Section 149(4) of the Companies Act 2013 every listed publiccompany shall have at least one-third of the total number of directors as independentdirectors.

In view of the above your Company has duly complied with the provision by appointingfollowing Independent Directors:

Name of the Independent Director Date of appointment/ Reappointment Date of passing of ordinary resolution
1. Mr. Vijay Mishra 30.07.2014 09.09.2014
2. Mr. Kumar Nathani 16.08.1993 09.09.2014
3. Mr. Manmohan Anand 30.07.2014 09.09.2014
4. Ms. Shraddha Teli 07.11.2014 23.07.2015

All the above Independent Directors meets the criteria of ‘independence'prescribed under section 149(6) and have submitted declaration to the effect that theymeet with the criteria of ‘independence' as required under section 149(7) of theCompanies Act 2013.

29. COMMITTEES OF BOARD:

I. Nomination and Remuneration Committee:

The ‘Nomination and Remuneration Committee' consists of four Directors with threeindependent non-executive directors and one executive director with the Chairman being theIndependent Director and the said constitution is in accordance with the provisions ofSection 178 of the Companies Act 2013. The Committee acts in accordance with the Terms ofReference as approved and adopted by the Board.

The Composition of the Committee is as under:

Chairman:Mr. Kumar Nathani Members: 1. Mr. Nand Khemani

2. Mr. Vijay Mishra

3. Mr. Manmohan Anand

Nomination and Remuneration Policy

The Company's Nomination and Remuneration Policy for Directors Key ManagerialPersonnel and other employees is annexed as "Annexure IV’’ to theDirectors' Report. Further the Company has devised a Policy for performance evaluation ofIndependent Directors Board Committees and other individual Directors. The Company'sNomination and Remuneration Policy is directed towards rewarding performance based onreview of achievements periodically. The Nomination and Remuneration Policy is inconsonance with the existing industry practice.

II. Audit Committee:

In accordance with the provisions of Section 177 of the Companies Act 2013 yourCompany has constituted an "Audit Committee" comprising of Four directorsconsisting of Three non- executive Independent directors and one executive director withthe Chairman being Independent director. The Audit Committee acts in accordance with theTerms of Reference specified by the Board in writing.

The Composition of the Committee is as under:

Chairman: Mr. Kumar Nathani

Members: 1. Mr. Ashok Khemani

2. Mr. Vijay Mishra

3. Mr. Manmohan Anand

The Terms of reference of the Audit Committee are broadly stated as under:

1. Recommendation for appointment remuneration and terms of appointment of auditors ofthe company;

2. Review and monitor the auditor's independence and performance and effectiveness ofaudit process;

3. Examination of the financial statement and the auditors' report thereon;

4. Approval or any subsequent modification of transactions of the company with relatedparties;

5. Scrutiny of inter-corporate loans and investments;

6. Valuation of undertakings or assets of the company wherever it is necessary;

7. Evaluation of internal financial controls and risk management systems;

8. Monitoring the end use of funds raised through public offers and related matters.

30. THE VIGIL MECHANISM:

Your Company believes in promoting a fair transparent ethical and professional workenvironment. The Board of Directors of the Company has established a Whistle Blower Policy& Vigil Mechanism in accordance with the provisions of the Companies Act 2013 and theListing Regulations for reporting the genuine concerns or grievances or concerns of actualor suspected fraud or violation of the Company's code of conduct. The said Mechanism isestablished for directors and employees to report their concerns. The policy provides theprocedure and other details required to be known for the purpose of reporting suchgrievances or concerns. The same is uploaded on the website of the Company.

31. QUALIFICATION GIVEN BY THE SECRETARIAL AUDITOR:

There are no qualifications reservation or adverse remarks or disclaimers made by theSecretarial Auditors of the Company in their report.

The Board has appointed M/s. Pramod S. Shah and Associates Practising CompanySecretaries to conduct Secretarial Audit for the financial year 2015-16. The SecretarialAudit Report for the financial year ended March 312016 is annexed as "AnnexureV’’.

32. ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEESAND INDIVIDUAL DIRECTORS:

During the year the Board adopted a formal mechanism for evaluating its performanceand as well as that of its Committees and individual Directors including the Chairman ofthe Board. The exercise was carried out through a structured evaluation process coveringvarious aspects of the Boards functioning such as composition of the Board &committees experience & competencies performance of specific duties &obligations governance issues etc. Separate exercise was carried out to evaluate theperformance of individual Directors including the Board Chairman who were evaluated onparameters such as attendance contribution at the meetings and otherwise independentjudgment safeguarding of minority shareholders interest etc.

The evaluation of the Independent Directors was carried out by the entire Board andthat of the Chairman and the Non-Independent Directors were carried out by the IndependentDirectors.

The Directors were satisfied with the evaluation results which reflected the overallengagement of the Board and its Committees with the Company.

Having regard to the industry size and nature of business your company is engaged inthe evaluation methodology adopted is in the opinion of the Board sufficientappropriate and is found to be serving the purpose.

33. DIRECTORS’ RESPONSIBILITY STATEMENT:

In accordance with provisions of section 134(3)(c) and 134(5) of the Companies Act2013 your Directors state the following:-

(a) In the preparation of the annual accounts for the year ended March 31 2016 theapplicable accounting standards had been followed and there are no material departuresfrom the same;

(b) The Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 312016 and of the profit ofthe Company for the year ended on that date;

(c) The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) The directors had prepared the annual accounts on a going concern basis;

(e) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively and

(f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

34. MANAGEMENT DISCUSSION AND ANALYSIS:

Industry Structure

The Indian textile and apparel Industry has been a significant contributor to theIndian economy and continues to play a pivotal role in India's growth story through itscontribution to industrial output employment generation and export earnings. The textileIndustry contributes 14% to the industrial production while it's share in Indian exportsstands at a significant 12%. The Indian textile Industry contributes 5% to India's GDP.India is one of the few countries with a complete and integrated textile value chainhaving production at each level of textile manufacturing with an overall annual growth of8.9%. The textile Industry is labour intensive and is one of the largest employers. TheIndian textiles Industry currently estimated at around 110 billion dollars approx isexpected to reach us$ 114 billion by 2021. The Industry is the second largest employerafter agriculture providing direct employment to over 45 million and 60 million peopleindirectly.

Strength and Opportunities

- Ambition of the Government of India to make India a hub for textiles will create anopportunity for your company to perform better in the coming years also variousinitiatives provided by the Government will help to boost the textile Industry;

- Make in India campaign;

- Large overseas and domestic market: Increase in consumption pattern of polyesteracross the country and even globally will give a boost to the polyester yarn market alsothe use of polyester yarn as a affordable substitute of much other manmade and naturalfibres has led to the increase in consumption of polyester yarn world over;

- Abundant raw material availability;

- Low cost skilled labour;

- Promising export potential.

Weakness and Threats

- Fragmented Industry;

- Cost competitiveness and low margins: Due to severe recessionary trends which arecontinuing in the developed countries unit realisation of products may continue to beunder pressure;

- Technological obsolenscence in weaving and spinning sector;

- Competition in the domestic as well as world markets specially from China;

- Problems of power yet prevail: Severe power shortage in some of the states willremain a big threat for the utilisation of the plant and equipments due to shortage ofpower the utilisation may drop severely and hence volatility in yarn prices may continue;

- Increase in Labour wage rate on an average by 10-15%.

- Shortage of skilled labour;

- Increasing input costs i.e. power finance and logistics;

- Volatile government policies.

Management Perception of Risks and Concerns

- In today's challenging and competitive environment strategies for mitigatinginherent risks in accomplishing the growth plans of the company are imperative. The mainrisks include strategic risk operational risk financial risk and compliances and legalrisk. The fast technology obsolescence high cost of manufacturing and taxation are themajor risk/ concerns of the business;

- Fluctuations in foreign exchange adversely impacted exports and long term exportorders cannot be booked in view of the uncertainty in exchange rates also the fluctuationin exchange rates makes it difficult to purchase machinery from abroad due to uncertaintyof the future;

- Adequate availability of raw material at the right prices is crucial for the company.Disruption in the supply or violent changes in the cost structure would affect theprofitability of the company;

- Government's periodical announcements for liberalised tariff concessions offered toleast developed countries like Bangladesh Nepal Bhutan and other countries under SouthAsian Free Trade Area (SAFTA) is also an area concern.

However the future for the textile Industry looks promising buoyed by strong domesticconsumption as well as export demand. Free trade with Asian countries and proposedagreements with EUCountries will also help to boost exports. Also the west has startedtaken India seriously as a potential supplier of polyester yarn apart from china. Risinggovernment focus and favorable policies to support the Industry has led to growth in theIndustry.

Internal Control and Management Systems:

Your company has an adequate internal control system. There is a system of continuousinternal audit which aims at ensuring effectiveness and efficiency of systems andoperations. Your company has the benefit of internal control systems which have beendeveloped over the years and which has ensured that all transactions are satisfactorilyrecorded and reported and all assets are protected against loss from unauthorised use orotherwise. The process of Internal control and systems statutory compliance riskanalysis and its management and information technology are taken together to provide ameaningful support to the management process also continuous efforts are being made tostrengthen the system.

Acknowledgement

Your Directors place on record their sincere gratitude for the assistance guidance andco-operation the Company has received from all stake holders. The Board further places onrecord its appreciation for the dedicated services rendered by the employees of theCompany.

For and on behalf of the Board

Sd/- Sd/-
Ashok K. Khemani Nand K. Khemani
(Managing Director) (Director)
DIN:00053623 DIN: 00053671
Place : Mumbai
Date : 16th April 2016

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