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Celebrity Fashions Ltd.

BSE: 532695 Sector: Industrials
BSE 15:42 | 23 Feb 18.85 0.60






NSE 15:44 | 23 Feb 18.75 0.40






OPEN 18.80
VOLUME 23762
52-Week high 26.74
52-Week low 10.20
P/E 85.68
Mkt Cap.(Rs cr) 86
Buy Price 18.85
Buy Qty 2743.00
Sell Price 0.00
Sell Qty 0.00
OPEN 18.80
CLOSE 18.25
VOLUME 23762
52-Week high 26.74
52-Week low 10.20
P/E 85.68
Mkt Cap.(Rs cr) 86
Buy Price 18.85
Buy Qty 2743.00
Sell Price 0.00
Sell Qty 0.00

Celebrity Fashions Ltd. (CELEBRITY) - Director Report

Company director report



Dear Members

The Directors hereby submit the 27th Annual Report on the business and operations ofthe Company along with the audited statements of the Company for the year ended 31st March2016. The Management Discussion and Analysis is also included in this report.

Global Overview

In 2015 global economic activity remained subdued. Growth in emerging market anddeveloping economies while still accounting for over 70 percent of global growth-declinedfor the fifth consecutive year while a modest recovery continued in advanced economies.

Three key transitions continue to influence the global outlook: (1) the gradualslowdown and rebalancing of economic activity in China away from investment andmanufacturing toward consumption and services (2) lower prices for energy and othercommodities and (3) a gradual tightening in monetary policy in the United States in thecontext of a resilient U.S. recovery as several other major advanced economy central bankscontinue to ease monetary policy.

The IMF has downgraded its growth forecast for 2016 to 3.2% from its projection issuedin January. China’s slowdown and weak commodity prices are taking a deeper toll onemerging markets than expected. Recessions in Russia and Brazil are deeper and longer thananticipated after political problems compounded the effects of a plunge in commodityprices.

However Indian economy is expected to grow at 7-7.75% during FY 2016-17 despiteuncertainties in global market. India is expected to grow at a potential 8% on averageduring fiscal 2016 to 2020 powered by greater access to banking technology adoptionurbanization and other structural reforms.

Industry Overview

India’s textile industry is one of the leading textile industries in the worldexporting to over 100 countries.

Textile and apparel exports from India are expected to increase to US$ 82 billion by2021 from US$ 40 billion in 2014. Readymade garments remain the largest contributor tototal textile and apparel exports from India. In FY15 the segment had a share of 40 percent of all textile and apparel exports.

The U.S apparel market is the largest in the world and has a market value in excess of300 billion U.S dollar. With India’s market share at 4% of global apparel trade ithas enormous opportunity to grow.

Yet the above opportunities are not without challenges; the subdued demand fromEurozone the pricing pressures of customers duty benefits enjoyed by other South EastAsian Countries stringent labour laws continued increase in operating costs andnon-availability of skilled labour at competitive prices limit the growth ability of theIndian Garment Manufacturers.

However the allocation of around Rs.4600 crs to the textile industry in the upcomingfinancial year to support under various schemes is expect to provide the necessary boostto the industry.

Against this backdrop the Company hopes to post reasonable growth in its chosen lineof business and also continue to explore new profitable business opportunities. Thebusiness of the Company while showing signs of green shoots continue to be challenged bycost escalations labour availability and a relatively weak demand in


Financial Highlights Rs. In Crs

FY 2015-16 FY 2014-15
Revenue From operations 197.21 205.87
Gross Profit / (Loss) before interest and depreciation 11.01 13.84
Interest 8.65 9.33
Profit / (Loss) before depreciation and tax 2.37 4.51
Depreciation 8.05 6.80
Profit / (Loss) before Exceptional and Extra-Ordinary (5.69) (2.29)
Exceptional Item 27.09 -
Extra-Ordinary Item - -
Profit / (Loss) after Exceptional and Extra-Ordinary 21.40 (2.29)
Profit / (Loss) before tax 21.40 (2.29)
Provision for Taxation - -


FY 2015-16 FY 2014-15
Profit / (Loss) after tax 21.40 (2.29)
Balance brought forward from previous year (65.17) (61.76)
Less: Value of Assets with Expired Life written off - (1.12)
Balance carried to Balance Sheet (43.77) (65.17)

Company’s Performance

Revenue from Operations for FY 2015-16 was at Rs.197.21 crs as compared to Rs.205.87crs in FY 2014-15. Earnings before Interest Tax and Depreciation (EBITDA) was at Rs.11.01crs against Rs.13.84 crs in FY 2014-15. Profit after Tax Rs.21.40 crs includingexceptional item of Rs.27.09 crs against Net losses of Rs.2.29 crs in FY 2014-15.

The year 2016 was a year of aberration with the company’s operations impacted dueto Chennai floods in November and December. The Company lost significant of effectiveproduction leading to deferred shipments at incremental costs and capacity losses. Howeverthe resilience and extra-ordinary determination / dedication put forth by the managementteam helped the Company to minimize its losses.

During the year under review the Company disposed two of its non-core properties inline with the re-structuring package sanctioned by the Lender. The gain of Rs.27.09 crs onsale of properties were recorded under exceptional Item in the Financial Statements of theCompany.

The sale proceeds of the properties were utilized towards repayment of term loans. Asat 31st March 2016 the Company had met the obligations on debt repayment and interest asper the re-structuring package sanctioned to the Company by its lender.

Share Capital

There were no changes to Share Capital during the year under Review. The Share Capitalof the Company as on 31st March 2016 is as below:

Authorised Share Capital

44000000 Equity Shares of Rs.10 each Rs.44.00 crs

26000000 - 1% Cumulative Redeemable Preference Shares of Rs.10 each – Rs.26.00crs

Issued Subscribed and Paid-up Equity Share Capital 39003765 Equity Shares of Rs.10each Rs.39.00 crs

25104500 - 1% Cumulative Redeemable Preference Shares of Rs.10 each - Rs.25.10 crs

Transfer to Reserves

The Company transferred Rs.21.40 Crs to Reserves and Surplus account during thefinancial year ending 31st March 2016.


In view of the accumulated losses no dividend is being recommended.

Finance and Accounts

The financial statements have been prepared in compliance with the requirements of theCompanies Act and Generally Accepted Accounting Principles (GAAP) in India. Themanagement accepts responsibility for the integrity and objectivity of these financialstatements as well as for various estimates and judgments used therein. The estimates andjudgment relating to the financial statements have been made on a prudent and reasonablebasis in order that the financial statements reflect in a true and fair manner the formand substance of transactions and reasonably present our state of affairs and profits/(losses) for the year.

Due to the losses incurred by the Company in the earlier years there is no provisionfor Income Tax. The Company has recognized Deferred Tax Asset in unabsorbed depreciationand accumulated losses to the extent of corresponding deferred tax liability on thedifference between the book balances and written down value of fixed assets under IncomeTax. The company has not accepted any deposits from the public within the meaning ofSection 73 of the Companies Act 2013 and as such no amount on account of principal orinterest on deposits from public was outstanding as on date of the balance sheet.

The Accounts of the Company have been prepared on the basis of ‘going concernconcept’. The Company continue to focus on cash generation. The focus is on improvingoperating efficiencies and cost savings and to improve the financial health of theCompany.

Cash Flow Statement

In conformity with the provisions of Regulation 34 (2)(c) of SEBI (LODR) Regulations2015 the Cash Flow Statement for the year ended 31st March 2016 forms part of the AnnualReport.

Particulars of Contracts or Arrangements with Related Parties

All the transactions with the Related Parties are in the Ordinary Course of Businessand on Arm’s length basis. The details on Related Party Transactions have beendisclosed in the notes to accounts. The Company has framed a policy on Related PartyTransactions and the same has been displayed in the Company’s The details of related party transactions pursuant to clause (h) ofsub-section (3) of section 134 of the Act is enclosed in form no. AOC-2 as Annexure-II

Corporate Governance Report

The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by SEBI. The report on CorporateGovernance as stipulated under Regulation 34 (3) of SEBI (LODR) Regulations 2015 forms apart of the Annual Report. The requisite certificate from the compliance of conditions ofCorporate Governance as stipulated under Schedule V(E) of SEBI (LODR) Regulations 2015which forms part of this report.

Compliance with Code of Conduct

The Company has put in place a Code of Conduct for its Board Members and SeniorManagement Personnel. Declarations of Compliance with Code of Conduct have been receivedfrom all the Board Members and Senior Management Personnel. A Certificate this effect fromMr. Charath Ram Narsimhan Managing Director forms part of this Report.

Corporate Social Responsibility (CSR)

The Company has constituted a Corporate Social Responsibility (CSR) Committee. As therehave been carry forward losses provisions of section 135 of Companies Act 2013pertaining to corporate social responsibility are not applicable to the Company.

The particulars relating to CSR committee and policy have been detailed in CorporateGovernance Report.

Establishment of Vigil Mechanism

The Company has in place a vigil mechanism pursuant to which a Whistle Blower Policyhas been adopted by the Board Members. The Whistle Blower Policy covering all employeesand directors is hosted on the Company’s Website


In accordance with the provisions of Section 152 of the Companies Act 2013 Mrs. RamaRajagopal retires by rotation at the ensuing Annual General Meeting and being eligibleoffers herself for reappointment.

Declaration by Independent Director

The Company has received necessary declaration from each Independent Director of theCompany under Section 149(7) of the Act that they meet the criteria of Independence aslaid down in Section 149(6) of the Act.

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as Annexure-III

Number of Meetings of Board

During the financial year the Board met 8 times. The Board meetings were held inaccordance with the provisions of the Companies Act 2013. The particulars relating to themeeting of Board of Directors has been detailed in Corporate Governance Report which formspart of this report.

Audit Committee

During the year all the recommendations of the Audit Committee were accepted by theBoard. The particulars relating to the Audit Committee has been detailed in GovernanceReport which forms part of the report.

Key Managerial Personnel

Pursuant to the provision of Section 203 of the Companies Act 2013 Mr. Charath RamNarsimhan Managing Director Mrs. L. Visalakshi Chief Financial Officer have beendesignated as the Key Managerial Personnel (KMP) of the Company.

Remuneration Policy

The Board of Directors of the Company formulated and adopted policies for remunerationof Directors. The details of the same have been included in Report on CorporateGovernance which forms part of this report.

Particulars of Loan Guarantees or Investments

The Company has not given any loans or guarantees covered under the provision ofsection 186 of the Companies Act 2013. The details of the investments made by the companyare given in the notes to the financial statements.

Material Changes & Commitment if any affecting the financial position of theCompany

There were no material changes affecting the financial position of the Company whichhas occurred between the end of the financial year i.e. March 31 2016 and date of theDirectors’ report i.e. May 30 2016.

Board Evaluation

Pursuant to the applicable provisions of the Companies Act 2013 and SEBI (LODR)Regulations 2015 the Board has carried out an evaluation of its own performance thedirectors individually as well as the evaluation of the working of its Audit Nomination& Remuneration Committees. The manner in which the evaluation has been carried out hasbeen explained in the Corporate Governance Report.

Report as per Section 134 read with Rule 8 sub rule 5 of Companies Accounts Rules 2014:

Auditor M/s CNGSN & Associates LLP confirming the Change in nature of business ifany: Nil Details of Director or KMP appointed or resigned:

Mr. K Senthil Kumar Company Secretary KMP and Compliance Officer services of theCompany w.e.f August 21 2015.

Pursuant to Mr. K Senthil Kumar’s resignation Ms. Uma Maheswari was appointed asthe to Company Secretary KMP and Compliance Officer of the Company effective September18 2015. Ms. Uma Maheshwari resigned from the services of the Company w.e.f 30th March2016

Name of Companies which become or cease to be its subsidiaries JV or associate duringthe year: NIL

Details relating to deposits covered under Chapter V of Companies Act 2013: Nil Detailsof deposits which are not in compliance with the requirements of Chapter V of CompaniesAct 2013: Not Applicable

Details of significant and material orders tribunals impacting the going concern statusand company’s operations in future:

The Company was not in receipt of any orders from the regulator / courts / tribunalsimpacting the going concern status of future operations of the Company. The Company was inreceipt of the notices / orders from statutory authorities during the year for claim notacknowledged by the company as debts. The details of the same have been provided in Note28 of the financial statements.

Internal control systems and their adequacy:

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations to ensure that all assets are safeguarded and protectedagainst any loss from unauthorized use or disposition and that all transactions areauthorized recorded and reported correctly.

To maintain its objectivity and independence the Internal Audit function reports tothe Chairman of the Audit Committee of the Board & to the Chairman & ManagingDirector. The Internal Auditor monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthere by strengthen the controls. A report of Auditors pursuant to Section 143(3) (i) ofthe Companies Act 2013 certifying the adequacy of Internal Financial Controls (IFC) isannexed with the Auditors report.

Adequate systems and processes commensurate with the size of the Company and of itsbusiness are put in place to ensure compliance with the provisions of all applicable lawsand such systems and processes are operating effectively.

Audit Committee and Board of Directors of the Company were appraised on the performanceof the IFC.

Business Risk Management:

In an interdependent fast-moving world organizations are increasingly confronted byrisks that are complex in nature and global in consequence. Such risks can be difficult toanticipate and respond to even for the most seasoned business leaders.

Pursuant to section 134 (3) (n) of the Companies Act 2013 & Regulation 21 of SEBI(LODR) Regulations 2015 the company has constituted a business risk managementcommittee. The details of the committee and its terms of reference are set out in thecorporate governance report which forms part of the Boards report.

At present the company has not identified any element of risk which may threaten theexistence of the company.

The Company is exposed to the following risks:

Foreign Exchange Risk

The Company’s policy is to systematically hedge its long term foreign exchangerisks as well as short term exposures in line with its hedging policy. In addition tothis the company also has a natural hedge on the imports of the company which is almost40%-50% of its Exports.

Interest Rate Risk

The Company is exposed to interest rate risk. The interest rates have softened duringthe course of the year.

The Company’s Banks have sanctioned a re-structuring package wherein the interestrates on term loans are at concessional levels. However the Banks reserves the right ofrecompense and the compensation will cover the entire amount of sacrifice and concessionsin rates of interest of all facilities.

Apart from the above the Company is also exposed to certain operating business risksin the form of government regulations and the same is taken care through regularmonitoring and corrective mechanisms.

Familiarisation Programme for Independent Director:

The Board members are provided with necessary documents / brochures reports andinternal policies to enable them to familiarize with the Company’s procedures andpractices.

The details of such familiarization programmes for the Independent Directors are postedon the website of the Company (for details please visit

Statutory Auditors

M/s Anil Nair & Associates Chartered Accountants Chennai and M/s CNGSN &Associates LLP Chartered Accountants Chennai the Joint Auditors of the Company retireat the ensuing Annual General Meeting and are eligible for re-appointment.

The Annual Accounts of the Company including its Balance Sheet Statement of Profit andLoss and Cash Flow Statement including the Notes and Schedules to the Accounts have beenaudited by M/s Anil Nair & Associates Chennai and M/s CNGSN & Associates LLPChennai.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. BP & Associates Practicing Company Secretaries as SecretarialAuditors to undertake the Secretarial Audit of the Company. The Secretarial Audit Reportis presented separately and forms part of this report.

Auditors’ Report and Secretarial Auditor’s Report

The auditors’ report and secretarial auditor’s report do not contain anyqualifications reservations or adverse remarks.

Listing Fee

The equity shares of the Company are listed on the Bombay Stock Exchange Limited andNational Stock Exchange of India Limited. The Company has paid the applicable listing feeto the Stock Exchanges upto date.

Human Resources/Industrial Relations

Industrial relations have continued to be harmonious at all units throughout the year.

Measures for employees’ safety their welfare and development received toppriorities.

Your Company has a vision of being an ‘Injury Free’ and ‘ZeroEnvironment Incident’ organisation. Over the past many years your Company has beenprogressing well on the safety record in factories and facilities. The Company had around3690 employees as on 31st March 2016.

The Board wishes to place on record its appreciation to all the employees in thecompany for their sustained efforts and contribution to the Company.

Transfer to Investor Education and Protection Fund:

During the financial year 2015-16 no unpaid or unclaimed dividend was required to betransferred to IEPF.

Policy on Prevention of Sexual Harassment of Woman at Workplace:

The Company has in place a Policy on Prevention Prohibition and Redressal of Sexual

Harassment and Non-discrimination at Work Place in line with the requirements of SexualHarassment of Women at the Workplace (Prevention Prohibition & Redressal) Act 2013.All employees (permanent contractual temporary trainees) are covered under this policy.An Internal Compliants Committee (ICC) was set up to redress complaints received regardingsexual harassment and discrimination at workplace.

During the year ended March 31 2016 the ICC has received no complaints pertaining tosexual harassment / discrimination at work place.

Directors Responsibility Statement

In terms of Section 134(5) of the Companies Act 2013 the directors would like tostate that:

i) In the preparation of the annual accounts the applicable accounting standards havebeen followed.

ii) The directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that were reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company at the end of the financial year andof the profit or loss of the Company for the year under review.

iii) 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 for preventing and detecting fraud and other irregularities.

iv) The Board of Directors have prepared the annual accounts on a "going concernbasis".

v) The Board of Directors have laid down internal financial controls to be followed bythe company and that such internal financial controls are adequate and were operatingeffectively.

vi) The Board of Directors have devised proper system to ensure compliance with theprovisions of all applicable laws and that such system were adequate and operatingeffectively.

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed bymanagement and the relevant board committees including the audit committee the board isof the opinion that the Company’s internal financial controls were adequate andeffective during FY 2015-16.

Adoption of New Set of Articles of Association

On December 07 2015 the Company’s Shareholders approved by way of Postal Ballotadoption of new set of Articles of Association in the place of existing Articles ofAssociation in line with the provisions of the Companies Act 2013.

Conservation of Energy / Technology Absorption / Foreign Exchange

i. Conservation of Energy:

The operations of the Company are not energy-intensive. However wherever possible theCompany strives to curtail the consumption of energy on a continuing basis.

ii. Technology absorption: Not applicable.
iii. Foreign Exchange Earning and Outgo:
Total Foreign exchange earned (FOB Value) Rs.162.56 crs
Total Foreign exchange outgo Rs. 41.67 crs

Cautionary Statement

Statement in this Directors Report and Management Discussion and Analysis describingthe Company’s objectives projections estimates expectations or predictions may be"forward looking statements" within the meaning of applicable securities lawsand regulations. Actual results could materially differ from those expressed or implied.Important factors that could make a difference to the Company’s operations includeraw material availability and prices global demand-supply conditions changes ingovernmental regulations and tax structure economic structure within India and thecountries with which the Company has business contacts and other incidental factors.


The Directors are sincerely thankful to you – the esteemed shareholderscustomers business partners and State Bank of India for the faith reposed and valuablesupport provided by them in the Company and its Management.

Date : 30th May 2016 For and on Behalf of the Board
Place : Chennai V. Rajagopal