Your Directors have pleasure in presenting this thirtieth Annual Report together withthe Audited Statement of Accounts for the financial year ended on 31st March2017.
The Company's financial performance for the year ended 31st March 2017 issummarised below:
(Rs. in lakhs)
| ||Financial Year ended on 31 March 17 ||Financial Year ended on 31 March 16 |
|Revenue from Operations ||44734.60 ||99459.67 |
|(Gross) || || |
|LESS: Excise Duty ||4501.26 ||9365.48 |
|Revenue from ||40233.34 ||90094.19 |
|Operations (Net) || || |
|Other Income ||317.80 ||537.66 |
|Operating Expenditure ||42925.86 ||84112.08 |
|Operating Profit/(Loss) ||(2692.52) ||5982.11 |
|Profit/(Loss) before ||(2374.52) ||6519.77 |
|Depreciation and Finance cost || || |
|Finance Cost ||2124.64 ||3447.75 |
|Depreciation ||1161.48 ||1154.92 |
|Profit/ (Loss) before Tax ||(5560.84) ||1917.10 |
|IT/Deferred Tax for the current year ||(111.01) ||678.10 |
|Profit/ (Loss) after Tax ||(5549.83) ||1239.00 |
2. REVIEW OF OPERATIONS:
The Company registered a gross turnover of Rs.447.35 crores for the period ended 31stMarch 2017 against Rs.994.60 crores including Government Agencies sales of Rs.432.70crores as compared to previous year ended on 31st March 2016. After completionof the Government supplies made to Tamil Nadu Government and Pondicherry Co-OperativeWholesales Stores Limited the Company achieved the above turnover only through brandedsales. The de-growth was mainly due to demonetization volatility in raw material pricesand continuous weak consumer sentiments during the festive season especially in southernstates due to natural calamities.
Considering the loss incurred by the Company the Board of Directors does not recommendany dividend for the financial year under review on equity shares.
Mr.V.M.Seshadri (DIN No.00106506) Director retires by rotation from the Boardpursuant to the provisions of section 152(6) (c) of the Companies Act 2013 and beingeligible offers himself for reappointment.
Consequent to the resignation of Mr.Prakash Iyer from M/s.Fairwind Private Equity(formerly Reliance Alternative Investment Fund - Private Equity Scheme-I) his nominationhas been withdrawn and Mr.Anand Mundra was appointed as a Nominee Director by M/s.Fairwind Private Equity (formerly Reliance Alternative Investment Fund Private EquityScheme -I) pursuant to the provisions of Article 112 of the Company's Articles ofAssociation and Section 161(3) of the Companies Act 2013 with effect from the close of05.08.2016.
5. MANAGEMENT DISCUSSION AND ANALYSIS:
The Directors' comments on Management Discussion and Analysis which forms a part ofthis report are restricted to the areas which are relevant to the current scenario of theCompany and outlook.
6. CREDIT RATING:
The Company is retaining the following CRISIL's credit ratings for its bank facilities.
|Long Term Rating ||CRISIL BBB+ |
|Short Term Rating ||CRISIL A2 |
7. 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 ofthe profit & Loss 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;
(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 had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
8. CORPORATE GOVERNANCE:
The Report on Corporate Governance along with a certificate from the Statutory Auditorsas required under the various provisions of the Companies Act 2013 and as stipulatedunder the SEBI (LODR) Regulations 2015 is annexed to this Report.
9. 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 an 'arm's length'basis. The Company had not entered into any contract/arrangement/transactions with relatedparties which could be considered material in accordance with the policy of the Company onmateriality 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
10. RISK MANAGEMENT:
The Board has formulated the Company's Risk Management Policy identifying the elementsof 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 Company's website.
11. INTERNAL FINANCIAL CONTROLS:
The Company has in place adequate and effective internal financial control systemcommensurate with its size and operations.
12. 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).
13. APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION:
Pursuant to the provisions of Section 178 (3) read with Companies (Meetings of Boardand its 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 Company's website www.butterflyindia.com .
14. KEY MANAGERIAL PERSONNEL (KMP):
The following managerial personnel are Key Managerial Personnel (KMP):
> Mr.V.M.Lakshminarayanan Chairman & Managing Director
> Mr.V.M.Balasubramaniam Vice-Chairman & Managing Director
> Mr.V.M.Seshadri Managing Director
> Mr.V.M.Gangadharam Executive Director
> Mr.V.M.Kumaresan Executive Director -Technical
> Mr.Prakash Iyer Chief Executive Officer w.e.f. 5.8.2016.
> Mr.K.S.Ramakrishnan Company Secretary & General Manager-Legal w.e.f.1.7.2016
> Mr.R.Nagarajan Chief Financial Officer
15. 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 .
16. 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 Company's policy in this regard is exhibited in its website www.butterflyindia.com .
17. PERFORMANCE EVALUATION OF DIRECTORS:
The independent Directors of the Company held a separate meeting on 29.03.2017 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 Non-Executive Director. Similarly at a meeting of the Board of Directorsheld on 7.4.2017 the Board evaluated the performance of each Independent Directors andthe Committees represented by such Independent Directors in accordance with the parametersfor such evaluation formulated by the Nomination and Remuneration Committee of theCompany.
18. AUDITORS AND AUDITORS REPORT: Statutory Auditors:
Under Section 139 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 the term of M/s.Rudhrakumar Associates (FRN 007033 S) CharteredAccountants Chennai as the Statutory Auditor of the Company expires at the conclusion ofthe ensuing Annual General Meeting of the Company. The Board wishes to place on record itsappreciation for the valuable contribution/services made by them to the Company duringtheir long tenure.
The Board of Directors of the Company at their meeting held on 5.7.2017 on therecommendation of the Audit Committee have made its recommendation for the appointment ofM/s.ASA Associates LLP Chartered Accountants (FRN 009571N/N500006) as Statutory Auditorsof the Company by the Members at the Thirtieth Annual General Meeting of the Company foran initial term of five years. Accordingly a resolution proposing appointment of M/s.ASAAssociates LLP Chartered Accountants as a Statutory Auditors of the Company for a term offive consecutive years (i.e.) from the conclusion of Thirtieth Annual General Meeting ofthe Company till the conclusion of the thirty fifth Annual General Meeting of the Companysubject to ratification of the appointment by the Members at every Annual General Meeting.
Pursuant to Section 139 of the Companies Act 2013 forms part of the notice of thethirtieth Annual General Meeting of the Company.
19. 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 2017-18. Their report forfinancial year 2015-16 was filed on the MCA Portal on 27.08.2016.
20. SECRETARIAL AUDIT:
The Board has appointed Mr.T.Murugan Company Secretary in Practice [COP No.4393]M-22E Sri Subah Colony Munusamy Road K.K.Nagar Chennai - 600 078 to conductSecretarial Audit for the financial year 201617. The Secretarial Audit Report for thefinancial year ended 31.3.2017 is annexed to this report as Annexure II. The SecretarialAudit Report does not contain any qualification reservation or adverse remark.
The Audit Committee comprises Independent Directors viz. Messrs.K.Ganesan (Chairman)M.Padmanabhan and A.Balasubramanian (Members) all Chartered Accountants 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 Company's Whistle Blower Policy may beaccessed on its website at the link www.butterflyindia.com .
Meetings of the Board:
The Board met seven times during the financial year. The meeting details are providedin the Corporate Governance Report forming part of this Board's 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) 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 (1) (2) & (3) of Companies (Appointment andremuneration)
Information as per Section 197 (12) of the Companies Act 2013 read with Rules 5 (1)(2) & (3) of Companies (Appointment and Remuneration) Rules 2014 is annexed asAnnexure V.
Payment ofremuneration 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.
During the year under review the Company created a plan to ensure that its CSRinitiatives are truly beneficial to the community in the long run. The company initiatedCSR projects in the area of education environment and community/social development havingduration of more than one year. For this reasons during the year the Company's spendingon the CSR activities has been less than the prescribed limits. The Company regularlyspends significant amounts of money on various activities aimed at serving communitiesaround the factories. That our Company was always contributing to CSR activities muchbefore it was even mandated for several years now. The Company will keep this momentum;despite spend on such social responsibility activities not qualifying as CSR expensesunder the Companies Act 2013.
The CSR committee confirmed that the implementation and monitoring of CSR Policy is incompliances with CSR objectives and Policy of the Company.
Details of CSR Activities are annexed as Annexure VI.
Listing with Stock Exchanges:
The Company confirms that it has paid the Annual Listing Fee for the year 2017-18 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 Company's 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 31.03.2017 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 Fullerton India Credit Company Ltd Indian Oil Corporation Ltd. BharatPetroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. for the co-operationextended by them. Our thanks are also due to employees at all levels suppliersdistributors dealers and customers for their strong support.
Your Directors also thank the shareholders for their continued confidence and trustplaced by them with the Company.
|Navalur - 600 130 ||For and on behalf of the Board |
|Date - 05.07.2017 ||V.M.LAKSHMINARAYANAN |
| ||Chairman & Managing Director |