Your Directors have pleasure in presenting the Ninth Annual Report and Audited Accountsof the Company for the year ended 31st March 2013.
| || ||(Rs. In Lacs) |
|Particulars ||2012-13 ||2011-12 |
|Sales & Other Income ||81504 ||78357 |
|Expenditure towards sale including cost of sales ||79591 ||72851 |
|Profit before Depreciation Interest and Taxation (PBDIT) ||1913 ||5506 |
|Interest & Bank Charges ||3962 ||2992 |
|Depreciation/Amortisation ||670 ||974 |
|Profit/(Loss) before Exceptional Items and Tax ||(2719) ||1540 |
|Exceptional Items ||4148 ||- |
|Profit/(Loss) before Tax ||(6867) ||1540 |
|Income Tax for current year ||- ||702 |
|Income Tax for earlier years ||(1517) ||147 |
|Provision for Deferred Tax (Asset)/Liability ||200 ||(159) |
|Profit/(Loss) After Taxation (PAT) ||(5550) ||850 |
|PAT brought forward from last year ||614 ||- |
|Transferred to Debenture Redemption Reserve ||- ||236 |
|PAT carried forward to next year ||(4936) ||614 |
YEAR IN RETROSPECT:
The Sales & Other Income for the year was Rs. 81504 Lacs recording an increase of4.02% over the previous year. Profit before Depreciation Interest and Taxation (PBDIT)for the year was Rs. 1913 lacs against Rs. 5506 lacs in the previous year. Profit/(Loss)after Taxation (PAT) for the year was Rs. (5550) lacs against Rs. 850 lacs in the previousyear. Higher discounts resulting in lower profit margins and higher interest burden haveimpacted the profits. Other major reasons for the loss incurred during the year areExceptional Items aggregating to Rs. 4148.14 Lacs i.e provision for diminution in thevalue of Investment in unviable business of subsidiary amounting Rs. 2898.10 Lacs andwritten off Goodwill amounting to Rs. 1250.04 Lacs during the year. Goodwill was createdin the earlier years as an asset representing future economic benefit upon the demerger ofbusiness with the erstwhile parent company and now Company does not anticipate anyeconomic benefit in the future.
As no surplus is available in current financial year your Directors are unablerecommend payment of dividend on equity capital of the Company for the year ended 31stMarch 2013.
OPERATING RESULTS AND BUSINESS:
The challenges faced by the Indian organized apparel retail sector are various such aslack of prominent retail space with real estate prices escalating slow-down in theeconomy shortage of trained manpower stiff competition from global retail giantsincrease in input and overhead costs and unfavorable scenario during the year.
The Company is facing pressure on margins because of higher costs and discount offersin a competitive market. To ensure higher earnings the Company is focusing on reducingvarious expenses and costs and increasing internal rate of returns by way of slow andsteady growth. The Company is also responding by trying to become leaner and moreefficient.
A portfolio comprising brands that cater to various demographic and psychographicprofiles would act as an ideal impetus for creating presence in different geographiesacross India. Your Company's strategy of retailing brands with high awareness quotient andmarket pull would continue to augment growth and profits.
Brandhouse Oviesse Limited Subsidiary Company:
During the year under review Company's subsidiary Brandhouse Oviesse Limited (BOL)closed down its business in view of the unviable operations.
As on 31st March 2013 your Company's equity participation in BOL was Rs.2898.10 Lacs for 28981030 equity shares of Rs. 10/- each representing 58% of BOL'stotal paid-up capital of Rs. 4996.65 Lacs.
Since BOL is a loss-making company and it has closed down its operations the Companyhas made a provision for diminution in the value of its Investment in BOL.
The audited financials of BOL could not be received by the Company for consolidationbecause BOL had been in the discussion and negotiation with the Franchisor of BOL for thecontinuation or otherwise of the Franchisee Agreement and this has resulted in unforeseendelay and interruption in adoption of audited accounts of BOL in its Board Meeting.Therefore the accounts of Subsidiary Company for the current financial year ended onMarch 31 2013 could not be consolidated with the accounts of the Company.
The Management is confident that diminution in the value of investment of itssubsidiary will not have any material effect on the profitability of the Company.
During the year Mrs. Jyoti N. Kasliwal had resigned as a Director from the Board ofDirectors of the Company with effect from 24th August 2012 due to herpre-occupation and family commitments.
Mr. Denys Firth Nominee Director India Debt Management Pvt. Ltd. (IDM) withdrewnomination of Mr. Alexander Shaik as his Alternate Director and appointed Mr. NavinSambtani in his place as his Alternate Director with effect from 10th November2012.
Mr. Jagadeesh S. Shetty Director Finance (SKNL) & Group CFO was appointed as anadditional Non-Executive Director on the Board with effect from 10th November2012 pursuant to section 260 264 of the Companies Act 1956. The Company has received therequisite notice from a member pursuant to Section 257 of the Companies Act 1956proposing the candidature of Mr. Jagadeesh S. Shetty for the office of Director.
Mr. Susheel Kak Mr. Denys Firth and Mr. Navin Sambtani (Alternate to Mr. Denys Firth)resigned as Directors upon withdrawal of nomination by India Debt Management PrivateLimited (IDM) with effect from 10th January 2013 and IDM has requested andreserved the right to attend the Board Meetings as an Observer until such time IDMre-nominates individuals to the Board.
Mr. Nitin S. Kasliwal was reappointed as Managing Director for a further period of 5years i.e from 30th January 2013 to 29th January 2018 withoutpayment of any remuneration and subject to approvals of the members and the CentralGovernment.
Mr. Dara D. Avari had resigned as a Director from the Board of Directors of the Companywith effect from 1st March 2013 due to his preoccupation and advancing age.
In accordance with the provisions of the Companies Act 1956 and Article 130 of theArticles of Association of the company Mr. Vijay G. Kalantri retires by rotation andbeing eligible offer himself for re-appointment.
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 statement in terms ofSection 217(2AA) of the Companies Act 1956.
1. That in the preparation of the Annual accounts for the year ended on 31stMarch 2013 the applicable accounting standards have been followed along with properexplanations relating to material departures if any;
2. That the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of profit of the company for the year.
3. That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and preventing and detecting fraud and other irregularities; and
4. That the Directors have prepared the annual accounts for the year ended on 31stMarch 2013 on a going concern basis.
Fixed deposits received from shareholders and public stood at NIL as on 31stMarch 2013 (previous year Rs. NIL). The company does not have any fixed deposit scheme.
PARTICULARS OF EMPLOYEES:
Information as per Section 217 (2A) of the Companies Act 1956 read with Companies(Particulars of Employees) Rules 1975 as amended forms part of this Report. However asper the provisions of Section 219(1) (iv) of the Companies Act 1956 the Reports andAccounts are being sent to the shareholders of the Company excluding the statement ofemployees under Section 217(2A) of the Companies Act. Any shareholder interested inobtaining a copy of the said statement may write to the Secretary at the Registered Officeof the company.
As required under clause 49 of the Listing Agreement with the Stock Exchanges theReport on Corporate Governance together with the Certificate from the Practising CompanySecretary regarding compliance of the provisions of the Corporate Governance forms part ofthis Directors' Report.
MANAGEMENT DISCUSSION AND ANALYSIS:
Management Discussion and Analysis forming part of this Directors' Report is attached.
PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGSAND OUTFLOW:
Your company has no activity relating to Conservation of Energy and Technologyabsorption as stipulated in the Companies (Disclosure of Particulars in the Report ofBoard of Directors) Rules 1988.
During the year under review the expenditure of your company in foreign exchange wasRs. Nil (Previous year Rs. 39.47 Lacs) and there was no earning in foreign exchange(Previous year NIL).
M/s. Haribhakti & Co. Chartered Accountants and M/s. Shyam Malpani &Associates Chartered Accountants Joint Statutory Auditors of the Company who holds theoffice upto the conclusion of this Annual General Meeting.
M/s. Shyam Malpani & Associates being eligible have offered themselves forre-appointment. The other firm of Statutory Auditors M/s. Haribhakti & Co. haveexpressed their desire not to seek reappointment in view of their heavy prior professionalcommitments.
The Board of Directors upon the recommendations of the Audit Committee proposes thereappointment of M/s. Shyam Malpani & Associates as Statutory Auditors of the Companyfor conducting the audit of the accounts of the Company to hold office till the conclusionof the next Annual General Meeting of the Company.
M/s. Shyam Malpani & Associates have furnished the required certificate to theCompany under section 224(1B) of the Companies Act 1956 regarding their eligibility forre-appointment as Statutory Auditors of the Company. The necessary resolution is includedin the Notice of the ensuing Annual General Meeting.
In respect of the observations and Emphasis of Matter paragraph made by the Auditorsplease refer to Note 29 Note 38 and Note 39 of notes to Financial Statement which areself-explanatory and hence in the opinion of the Directors do not require any furtherexplanation
Your Directors wish to place on record their gratitude to the shareholders of theCompany Banks Financial Institutions valued Customers suppliers and BusinessAssociates for their support and confidence in the Company. Your Directors gratefullyappreciate the co-operation and assistance extended by various Government Agencies andplace on record their appreciation for unstinted co-operation and assistance extended toyour Company by its employees at all levels.
On Behalf of the Board
For Brandhouse Retails Limited
Nitin S. Kasliwal
Chairman & Managing Director
Place : Mumbai
Date : 16th July 2013.