Butterfly Gandhimathi Appliances Ltd.
|BSE: 517421||Sector: Consumer|
|NSE: BUTTERFLY||ISIN Code: INE295F01017|
|BSE LIVE 11:52 | 30 Mar||177.65||
|NSE LIVE 12:30 | 30 Mar||176.00||
|Mkt Cap.(Rs cr)||317.64|
|Mkt Cap.(Rs cr)||317.64|
Butterfly Gandhimathi Appliances Ltd. (BUTTERFLY) - Director Report
Company director report
Your Directors have pleasure in presenting this Twenty Ninth Annual Report togetherwith the Audited Statement of Accounts for the financial year ended on 31st March 2016.
1. FINANCIAL RESULTS
The Companys financial performance for the year ended 31st March 2016 issummarised below:
Against Rs.84.30 crores (net) Government sale in financial year 2014-15 the sale forfinancial year 2015-16 was Rs.432.7 crores (net).
Taking into account the net profits earned by the Company in the financial year underreview your Directors are pleased to recommend a dividend of Rs.1.25 per equity share on17879551 fully paid up equity shares of Rs.10/- each. The total cash outflow on accountof this dividend including dividend distribution tax is Rs.268.99 lakhs.
3. REVIEW OF OpERATIONS
Total net revenue from operations grew by 70.32% on a year-on-year basis from Rs.528.98crores in financial year 2014-15 to Rs.900.94 crores in financial year 2015-16.
Sales of branded products would have been higher but for several challenges in theform of lacklustre economic conditions inflation impact of free distribution schemes bythe Tamil Nadu and Pondicherry governments and overall weak consumer sentiments during thefestive season especially in Tamil Nadu due to unfortunate floods.
During the year the Company has made steady progress in its initiatives to enhance itsdistribution network. The combined effect of high volatility in foreign exchange rates andmarket pressure against price revision resulted in lower profitability. In addition theinitiatives taken towards widespread advertising and marketing to augment sales anddistribution network have resulted in an increase in cost for the Company while theseexpenses are being incurred upfront the benefit will accrue in later years throughaccelerated growth in sales. Hence the management believes that the compression in profitmargins of the Company is only temporary.
4. AWARDS AND RECOGNITION
The Company was awarded Certificate of Appreciation by the PetroleumConservation Research Association of Government of India New Delhi as the FirstManufacturer authorised to use BEE Label with Star Rating "2" for its specificmodel of Domestic Gas Stove under the brand Butterfly.
5. CURRENT YEAR'S OPERATIONS
Supplies made to the Tamil Nadu Government and Pondicherry Co-operative WholesaleStores Ltd. i.e. Government supplies comprised the lions share of Companyssales turnover for the financial year ended on 31.3.2016. Having completed these suppliesthe Company for its current years operations is giving vigorous thrust on itsbranded sales which will be supplemented by sales through agents of Liquefied PetroleumGas Canteen Stores Department Chain Stores and online sales.The Company is also planningto add more variants of premium products.
With the above effective steps towards notching up the sales turnover/profitability ofthe Company your Directors are optimistic of better performance during the currentfinancial year.
The present tenure of Mr.V.M.Seshadri Managing Director (DIN 00106506) ends on31.05.2017. The Nomination and Remuneration Committee and the Board of Directors at theirmeetings held respectively on 19.5.2016 and 09.06.2016 have recommended his reappointmentwith no change in remuneration package as detailed in resolution no.5 of the Notice fora further period of five years w.e.f. 01.06.2017 to 31.5.2022.
The present tenure of Mr.V.M.Gangadharam Executive Director (DIN 00106466) ends on30.09.2016. The Nomination and Remuneration Committee and the Board of Directors at theirmeetings held respectively on 19.5.2016 and 09.06.2016 have recommended his reappointmentwith no change in remuneration package as detailed in resolution no.6 of the Notice fora further period of five years w.e.f. 01.10.2016 to 30.9.2021.
Mr.V.R.Lakshminarayanan Independent Director (DIN 00101895) resigned from the Boardafter conclusion of the Board meeting on 30.5.2016. Your Directors would like to place onrecord their admiration of his high and rare administrative skills and rich contributionto the growth of the Company for the past twenty three years as a Director.
Mr.D.Krishnamurthy (DIN No.00085444) who was reappointed at the Annual General Meetingof the Company held on 26.07.2013 as wholetime Executive Director-cum-Company Secretaryfor a period of three years w.e.f.1.6.2013 to 31.5.2016 is not seeking reappointment. YourDirectors place on record their high appreciation of the valuable services rendered byMr.Krishnamurthy who was the Company Secretary for over twenty five years.
Mr.V.M.Kumaresan (DIN No.00835948) Director retire by rotation from the Boardpursuant to the provisions of section 152(6) (c) of the Companies Act 2013 and beingeligible offers himself for reappointment.
7. MANAGEMENT DISCUSSION AND ANALYSIS
The Directors comments on Management Discussion and Analysis which forms a partof this report are restricted to the areas which are relevant to the current scenario ofthe Company and outlook.
8. CREDIT RATING
The Company is retaining the following CRISILs credit ratings for its bankfacilities.
9. DIRECTORS RESpONSIBILITY STATEMENT
In pursuance of Section 134(5) of the Act the Directors hereby confirm that:
a. In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b. The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and theprofit of the Company for that period;
c. The directors had 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; and
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.
f. The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
10. CORPORATE GOVERNANCE
In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (Listing Regulations) a Compliance Report on Corporate Governance as per Schedule Vof the Listing Regulations along with a Certificate of Compliance from the StatutoryAuditors forms part of this report.
11. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY TRANSACTIONS
All contracts/arrangements/transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on anarms length basis. The Company had not entered into anycontract/arrangement/transactions with related parties which could be considered materialin accordance with the policy of the Company on materiality of related party transactions.
The Company enjoys distinct advantages in the form of competitive prices productquality economy in transportation cost and lower inventories by virtue of the existingrelated party transactions.
Particulars of contract or arrangements with related parties referred to in Section 188(1) in Form AOC-2 has been annexed as Annexure - I
12. RISK MANAGEMENT
The Board has formulated the Companys Risk Management Policy identifying theelements of risk that the Company may face such as strategic financial credit marketliquidity security property legal regulatory and other risks pursuant to theprovisions of Section 134 (3) (n) which has been exhibited in the Companys website.
13. INTERNAL FINANCIAL CONTROLS
The Company has in place adequate and effective internal financial control systemcommensurate with its size and operations.
14. DECLARATION FROM INDEpENDENT DIRECTORS
The Company has received necessary declaration from each Independent Director undersection 149 (7) of the Act that they meet with the criteria of their independence laiddown in Section 149 (6).
15. APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION
Pursuant to the provisions ofSection 178 (3) read with Companies (Meetings of Board andits Powers) Rules 2014 and Regulation 19(4) read with Schedule II Part D of SEBI(LODR) Regulations 2015 the Nomination and Remuneration Committee has formulated thecriteria for determining qualifications positive attributes and independence of aDirector and for evaluating performance of the Directors and Key Management Personnelwhich can be viewed at the Companys website www.butterflyindia.com.
16. PROGRAMME FOR FAMILIARISATION OF INDEPENDENT DIRECTORS
The details of programme for familiarization of independent directors of the Companytheir roles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company and related matters are put up on thewebsite of the Company at its link www.butterflyindia.com.
17. NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee of the Company has formulated and devisedpolicies regarding qualifications positive attributes and independence of a Director asalso a policy relating to the remuneration for the Directors and Key Management Personnel.The Companys policy in this regard is exhibited in its websitewww.butterflyindia.com.
18. performance evaluation of directors
The independent Directors of the Company held a separate meeting on 26.03.2016 withoutthe attendance of non-independent Directors and members of management. At the saidmeeting they reviewed the performance of non-independent Directors and the Board as awhole including the Chairman of the Company taking into account the views of ExecutiveDirectors and NonExecutive Director. Similarly at a meeting of the Board of Directorsheld on the said date the Board evaluated the performance of each Independent Directorsand the Committees represented by such Independent Directors in accordance with theparameters for such evaluation formulated by the Nomination and Remuneration Committee ofthe Company.
19. AUDITORS AND AUDITORS REpORT
At the twenty eighth Annual General Meeting of the Company held on 20.08.2015 membersappointed M/s. Rudhrakumar Associates Chartered Accountants (FRN.007033 S) Chennai asstatutory auditors of the Company from the conclusion of the said Annual General Meetingtill the conclusion of the thirtieth Annual General Meeting of the Company. Pursuant tothe first proviso to section 139(1) of the Act the matter relating to his appointment isplaced for ratification by members vide resolution No.3 of the Notice.
20. COST AUDITORS
The Board has reappointed M/s.S.Mahadevan & Co. Cost Auditors (FRN.000007) No.1Lakshmi Nivas K.V.Colony Third Street West Mambalam Chennai - 600 033 for conductingthe audit of cost records of the Company for the financial year 2016-17. Their report forfinancial year 2014-15 was filed on the MCA Portal on 17.11.2015.
21. SECRETARIAL AUDIT
The Board has appointed Mr.T.Murugan Company Secretary in Practice [COP No.4393]M22E Sri Subah Colony Munusamy Road K.K.Nagar Chennai - 600 078 to conduct SecretarialAudit for the financial year 2015-16. The Secretarial Audit Report for the financial yearended 31.3.2016 is annexed to this report as Annexure II. The Secretarial Audit Reportdoes not contain any qualification reservation or adverse remark.
The Audit Committee comprises Independent Directors viz. Messrs.K.Ganesan (Chairman)V.R.Lakshminarayanan M.Padmanabhan and A.Balasubramanian (Members) and alsoV.M.Lakshminarayanan Chairman & Managing Director of the Company as a Member. All therecommendations made by the Audit Committee were accepted by the Board.
The Company has established vigil mechanism for directors and employees to reportgenuine concerns pursuant to section 177 (9) and (10) of the Act and Regulation 22 of theListing Regulations 2015.
The Vigil Mechanism of the Company also incorporates a Whistle Blower Policy in termsof the Listing Regulations. Protected disclosures can be made by a Whistle Blower throughan' email or dedicated telephone line or a letter addressed to the Chairman of the AuditCommittee/Executive Director of the Company. The Companys Whistle Blower Policy maybe accessed on its website at the link www.butterflyindia.com.
Meetings of the Board
Eight meetings of the Board of Directors were held during the financial year. Forfurther details please refer to Report on Corporate Governance in this Annual Report.
Conservation of energy technology absorption and foreign exchange out go
Information relating to energy conservation technology absorption foreign exchangeearned and spent and research and development activities undertaken by the Company inaccordance with Section 134 (3) (m) of the Act read with Rule 8(3) (A) of Companies(Accounts) Rules 2014 are given in Annexure - III of the Directors Report.
Extract of Annual Return
As required pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies(Management and Administration) Rules 2014 an extract of Annual Return in Form MGT-9 isgiven in Annexure - IV of the Directors Report.
Statement pursuant to Rule 5(2) & (3) of Companies (Appointment and Remuneration ofManagerial personnel) Rules 2014
Statement showing the details of employees pursuant to the provisions of Rule 5(2)& (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is annexed as Annexure- V
Details/disclosure of ratio of remuneration to each Director to the medianemployees remuneration pursuant to provisions of Section 197 (12) read with Rule5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 areannexed as Annexure - VI
Payment of remuneration made to managerial personnel is in conformity with Schedule VPart II Section II (A) to the Companies Act 2013.
Corporate Social Responsibility Committee
Pursuant to the provisions of Section 135(1) of the Act the Company has constituted aCorporate Social Responsibility Committee consisting two Independent Directors and theChairman & Managing Director of the Company. The said Committee has formulated andrecommended to the Board a Corporate Social Responsibility Policy (CSR Policy) indicatingthe activities to be undertaken by the Company which has been approved by the Board.
An amount of Rs.58.10 lakhs has been provided in the Audited accounts for the financialyear ended 31.3.2016. This amount will be utilised towards the Corporate SocialResponsibility (CSR) activities as enumerated in Schedule VII to the Act (as amended upto date) read with the Companys CSR Policy.
Listing with Stock Exchanges
The Company confirms that it has paid the Annual Listing Fee for the year 2015-16 toboth National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd. with whom theequity shares of the Company have been listed.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as they are not applicable for the financial year under review:
1. Details relating to deposits covered under chapter V of the Act;
2. Details regarding investment/loan/guarantee attracting the provisions of section186 of the Act;
3. Issue of equity shares with differential rights as to dividend voting or otherwise;
4. Issue of shares (including sweat equity shares) to employees of the Company underany scheme;
5. Material orders if any passed by the Regulators or Courts or Tribunals which mayimpact the going concern status and Companys operations in future;
6. Case if any filed under the Sexual Harassment of Women at the Work Place(Prevention Prohibition and Redressal) Act 2013.
There are no material changes and commitments affecting the financial position of theCompany which have occurred between financial year ended 31.03.2016 and the date of thisreport.
The spirit of trust transparency and team work has enabled the Company to build atradition of partnership and harmonious industrial relations. Your Directors record theirsincere appreciation of the dedication and commitment of the employees to achieveexcellence in all areas of the business.
Your Directors take this opportunity to thank in particular State Bank of TravancoreIndustrial Development Bank of India Ltd. Axis Bank Kotak Mahindra Bank Ltd State Bankof India Ratnakar Bank Ltd. Aditya Birla Finance Ltd. Fullerton India Credit CompanyLtd Tamil Nadu Civil Supplies Corporation Pondicherry Co-operative Wholesale StoresPondicherry Indian Oil Corporation Ltd. Bharat Petroleum Corporation Ltd. and HindustanPetroleum Corporation Ltd. for the co-operation extended by them. Our thanks are also dueto employees at all levels suppliers distributors dealers and customers for theirstrong support.
Your Directors also thank the shareholders for their continued confidence and trustplaced by them with the Company.