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Crew B.O.S. Products Ltd.

BSE: 532542 Sector: Others
NSE: CREWBOS ISIN Code: INE514G01019
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Crew B.O.S. Products Ltd. (CREWBOS) - Director Report

Company director report

Directors

To the Members,

Crew B.O.S. Products Limited

Your Directors have pleasure in presenting this Twenty-Fourth Annual Report and AuditedAccounts for the financial year ended 31st March, 2013.

FINANCIAL RESULTS

(Rs. In Lacs)

Particulars Year ended March 31, Year ended March 31,
2013 ( Rs. ) 2012 ( Rs. )
Net Sales /Income from operations 26,794.99 42,742.39
Other Income 209.04 52.28
Total Revenue 27,004.03 42,794.67
Total Expenses 35,057.07 41,789.77
Profit/(Loss) from operations before exceptional and Extraordinary items and tax (8,053.05) 1004.90
Exceptional Items prior period Expenses 260.17 143.03
Profit/(Loss) before Extraordinary items and tax (8,313.22) 861.87
Extraordinary items (13,697.10) (213.53)
Profit/(Loss) before tax (22,010.32) 648.35
Tax Expenses
1. Current Tax - 205.00
2. Income Tax for previous years 464.11 -
3. Deferred Tax (1856.08) (77.00)
Net Profit/(Loss) after Tax (20,618.36) 520.35
Net Profit/(Loss) for the period (20,618.36) 520.35

PERFORMANCE REVIEW

Since the onset of the global meltdown, we have all been expecting a turnaround in theglobal economy. It has become a continual wait. There are definitely some signs of theglobal economic recovery in certain quarters with the US economy showing signs of growth;as against that, the EU is yet to come back on track with the GDP still in the negativezone. Indian Economy continues to oscillate over policy issues. Investment climate isstill a challenge with credit availability and cost of capital adversely impacting newproject build rate.

FY12-13 was a year in which Crew B.O.S. was trying to consolidate its business intomore efficient, productive factories. During the year we continued to expand ourcapacities in hand bags and shoes. Crew B.O.S. is forging long term and strategicrelationships with customers to best utilize the capacities it has created. However, anincrease in the total expenditure (with increased interest costs, finance charges, higherdepreciation and staff and other costs going up) affected net profits during the yearunder review. Your Company is confident of increasing its business during the currentfiscal and steps taken in the form of consolidations plans encompassing the high adherenceto world class quality standards shall contribute in realizing its aspirations. Thepresent year has had its share of misfortune in the international trade and your companysuffered heavily due to non realization of debts from exports /domestic trades due to theeconomic downturn in the Global economy. Coupled with this the company was led to believeby its senior financial head to enter into very ambitious transactions which led toquantum losses and devastating financial collapse. The company had no options but toaccept these losses in its overseas business and in its subsidiaries. The company had totake far reaching and urgent measures by removing the Chief Financial Officer and havestarted serious investigation into the frauds and misappropriation in such dealing. Thematter is being investigated by the law enforcement authorities of the country. In spiteof these drastic setbacks your company is confident that the inherent robustness andcorrective actions will pave the path of recovery though slow.

The Net Loss after tax is Rs. 20, 618.37 Lakhs during the year as against the Netprofit after tax of Rs. 520.32 Lakhs in the previous financial year.

DIVIDEND

As the Company has continued to incur heavy losses in the last financial year due toadverse factors as stated above, hence the board of directors does not recommend anydividend for the financial year ended on 31st March 2013.

REFERENCE TO B.I.F.R.

Section 15(1) of the Sick Industrial Companies (Special Provisions)Act, 1985 providesthat where an Industrial Company has become a Sick Industrial Company, the Board ofDirectors of the Company, shall, within 60 days from the date of finalization of the dulyaudited accounts of the Company for the financial year as at the end of which the companyhas became Sick Industrial Company, make a reference to the Board for Industrial andFinancial Reconstruction (BIFR) for determination of measures which shall be adopted withrespect to the Company.

The loss of the company for the financial year ended 31st March, 2013 have resulted inerosion of entire Net Worth of company and the company is to make a reference to Board forIndustrial and Financial Reconstruction (BIFR).

The main reasons for the loss are as under.

1. Debts/Receivable/Sales:- Due to misfortune in the international trade,company suffered heavily due to non realization of debts from exports/domestics trades dueto economic downturn in the Global Economy. Coupled with this company was led to believeby its financial head to enter into very ambitious transactions which led to quantumlosses and resulting in devastating financial collapse and with no option for the companybut to accept these losses in its overseas business and it its subsidiaries. Further thecompany had taken far reaching and urgent measures by removing the Chief Financial Officerand has started serious investigation into the frauds and misappropriation in suchdealings. The company has also started legal cases and against those overseas partiesagainst whom amounts are pending/due.

2. Loss on Inventories:- Written-off/disposal of the obsolete and rejectedWIP/Finished Goods due to (a) cancellation and delay of lifting ordered quantity dueeconomic slowdown. (b) large scale rejection by foreign buyers on pretext of badworkmanship and quality factors. (c) change of fashion by European buyers in the past forwhich large stock holding of finished products were retained in the hope of alternatebuyers at cheaper prices. These stocks later became hazardous to store and were requiredto be destroyed and burnt. Company had to take a huge decision in destroying these stocksas they became pollution and health hazard problem. (d) Market value of saleable itemstailor made to customers’ requirements and had to be valued at prices less than costthere was substantial loss on this account. In totality losses on stock had to becorrected as otherwise the accounts would not reflect true and correct view, The Companyhas taken the assistance of the Chartered Engineer to value of the stock at realisticvalues.

3. Substantial Operating loss:- There was substantial fall in Net Income fromoperation turnover in current year with tune of Rs. 159.47 crore which is 37.31% ascompared to previous year figure. As such there was substantial operating loss in thecurrent year.

4. Delay in execution of orders in hand:- On account of the uncertainty anddelayed payments, the suppliers were not willing to provide credit or accept letter ofcredits for fear of default. This is turn resulted in customer order getting delayed andeven getting cancelled. Due to delay in completion of order, shipments were not liftedthus reducing into operational loss in the current year.

5. Loss on account of foreign exchange fluctuation:- Due to adverse foreigncurrency fluctuation, company incurred huge losses in forward and derivative contracts.Similarly there has been increase in prices of imported raw material resulting a reductionin gross margin

6. Increase burden of finance cost:- To curb rising prices, the Reserve Bank ofIndia has lifted interest rates, caused affecting the company’s overallprofitability. Due to this high interest cost wherein due to limited price elasticity, itwas not possible to pass the higher cost to buyers thus it has increasingly becomingdifficult to sustain company operations at present cost of capital.

DIRECTORS

Mr. Gautam Nair, Independent Director of the Company has resigned from the post ofDirectorship and approve the same by Board of Directors of the Company during the year.

CAPITAL STRUCTURE

Authorised Capital

During the year there is no change in the authorised capital of the Company, hence itremains the same i.e. INR 30 Crores.

Paid Up Capital

During the year there is no change in the Paid Up capital of the Company, hence itremains the same i.e. INR 139934670/- comprising of 13993467 equity shares of Rs.10/- each

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors to the best oftheir knowledge and belief confirm that:

(a) In the preparation of the annual accounts for the year ended 31st March, 2013, theapplicable accounting standards have been followed along with proper explanation;

(b) Prudent accounting policies have been selected and have made judgements andestimates that are reasonable and prudent so as to give true and fair view of the state ofaffairs of the Company as at 31st March, 2013 and of the Profit of the Company for thefinancial year ended 31st March, 2013;

(c) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act, 1956, forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;

(d) Annual accounts have been prepared on a going concern basis.

AUDITORS & AUDITOR’S OBSERVATION

M/s. Anil K. Goyal & Associates, Chartered Accountants, New Delhi Statutoryauditors of the Company have communicated that they do not wish to offer themselves forreappointment at the conclusion of their present term of appointment, at the ensuingAnnual General Meeting of the Company, which has been accepted by the Board of Directorsof the Company.

Further, the Company has received consent letter from Mr. Atish Kumar Shaw, CharteredAccountant indicating his willingness to serve as the statutory auditor of the Company, ifappointed at the ensuing Annual General Meeting. They have confirmed that if he isappointed as the Statutory Auditor of the Company, his appointment will be in accordancewith the limits specified u/s 224(1B) of the Companies Act, 1956.

The Board recommends the appointment of Mr. Atish Kumar Shaw, Chartered Accountant asthe Statutory Auditor of the Company.

The Board recommends the ordinary resolution set forth at item no 3 of the notice forthe approval of the members.

The observation of the Auditors in the Auditors’ Report is explained, wherevernecessary, in the appropriate notes to the accounts.

CORPORATE GOVERNANCE

As required by Clause – 49 of the Listing Agreement, a Report on CorporateGovernance along with Certificate on Corporate Governance confirming compliances with theconditions of Corporate Governance obtained from the Practicing Company Secretary isannexed to this Report. (Annexure-1)

MANAGEMENT DISCUSSION & ANALYSIS

The Report as required by Clause-49 of the Listing Agreement is annexed herewith.(Annexure-2)

LISTING AT STOCK EXCHANGE

The Equity Shares of the Company continues to be listed on Bombay Stock ExchangeLimited and The National Stock Exchange of India Limited. Global Depository Receipts arelisted on the Stock Exchange at Luxembourg. The Annual Listing Fees for the financial year2013-14 have been paid to the Stock Exchanges.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOUNDER SECTION 217(1)(e)OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (DISCLOSURE OFPARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

Information in accordance with the provisions of section 217 (1) (e) of the CompaniesAct, 1956 read with Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988 regarding conservation of Energy, technology absorption, foreignexchange earnings and outgo is given in the ‘Annexure A’ forming part of thisreport.

SUBSIDIARY COMPANIES

VOGUE HOME PRODUCTS LIMITED

Vogue Home Products Limited, wholly owned subsidiary of Crew B.O.S. Products Limited isengaged in manufacture and export of home furnishing and small leather goods.

CREW B.O.S. ENTERPRISES LIMITED

This is a wholly owned subsidiary of Crew B.O.S. Products Limited, carrying on thebusiness of creative and stylish designing of lifestyle products, wearing apparels made ofleather or non leather, consumer products, cosmetics, artificial furniture, beautyproducts and designer goods and furnishing.

EMPORIO B.O.S. DESIGN LIMITED

A wholly owned subsidiary of Crew B.O.S. Products Limited, with the main objects ofcarrying on the business of creative and stylish designing of lifestyle products, wearingapparels made of leather or non leather, consumer products, cosmetics, artificialfurniture, beauty products and designer goods and furnishing.

CREW ROR PRODUCTS LIMITED

Incorporated as a wholly owned subsidiary of Crew B.O.S. Products Limited with the mainobjects of carrying on the business of manufacturing and trading including import andexport of all kinds of fashion accessories made from leather, wood, metal, poly-urytheneand fabrics including leather bags, portfolios, travel bags, shoes, wallets, leathergarments and belts of all kinds, wearing apparel of leather and fabric, garments, textile,furniture.

CREW REPUBLICA RETAIL LIMITED

Incorporated as a subsidiary of Crew B.O.S. Products Limited with the main objects toestablish/manage/carry retail business or trade in India through retail outlets, showroomsfor retailing in house manufactured leather goods and apparels as well as manufactured byother popular brands.

CREW P.P.O LEATHERS LIMITED

Incorporated as a wholly owned subsidiary of Crew B.O.S. Products Limited with the mainobjects to carry on the manufacturing of leather products and accessories

CREW MAG EXPORTS LIMITED

Crew MAG Exports Ltd. is a subsidiary of the Crew B.O.S. Products Limited and it isengaged in the manufacturing of leather footwear.

I.BIZ TRADE POST

The wholly owned subsidiary incorporated in Mauritius is engaged in Internationaltrading.

ALCHEMY TRADE POST

The wholly owned subsidiary incorporated in Mauritius is engaged in Internationaltrading.

CREW B.O.S. PRODUCTS (INT) PTE LIMITED

The wholly owned subsidiary incorporated in Singapore is engaged in Internationaltrading.

I. CONECT TRADE POST

The wholly owned subsidiary incorporated in Mauritius is engaged in Internationaltrading.

JOINT VENTURE COMPANIES

CENTRE OF EXCELLENCE IN DESIGN LIMITED

Centre of Excellence in Design Limited is a joint venture between the Crew B.O.S.Products Limited and Matrix Clothing Pvt Ltd. The object of the Company is to carry on thebusiness of creative and stylish designing of lifestyle products, retailing, processing,assembling and crafting all type of apparel and wearing apparels made from all type ofleather and non leather materials.

PUBLIC DEPOSIT

The Company has neither invited/nor accepted any deposits during the year within themeaning of Section

58A of the Companies Act, 1956, read with Companies (Acceptance of Deposit) Rules,1975.

CONSOLIDATED FINANCIALS

As required by Accounting Standard-21 on Consolidation of Financial Statements,Consolidated Financial Statements and Cash Flow Statement are appended.

PARTICULARS OF EMPLOYEES

During the year under review no employee, whether employed whole or part of the year,was drawing remuneration exceeding the limits as laid down under Section 217(2A) of theCompanies act,1956 read with Companies (Particulars of Employees)Amendment Rules,2011

ACKNOWLEDGEMENTS

Your Directors place on record their deep sense of appreciation for the contribution ofemployees at all levels and for the support from our valued customers, bankers andfinancial institutions, business associates, shareholders, suppliers and other statutoryauthorities.

For and on behalf of the Board

Sd/- Sd/-
Tarun Oberoi Robin Bartholomew
(Managing Director) (Director)

Place : Gurgaon

Date : 30/09/2013

ANNEXURE TO DIRECTORS’ REPORT Annexure-A

PARTICULARS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OFBOARD OF DIRECTORS) RULES, 1988

1. CONSERVATION OF ENERGY

A. ENERGY CONSERVATION MEASURES TAKEN

The manufacturing operations of the Company are not energy intensive and do not consumehigh level of power, however the Company has undertaken appropriate steps to conserve theenergy thereby enhancing energy conservation. These are:

1. Replacement of Copper chokes with Electronic blasts.

2. Installation of switches on each table so as to ensure that light is switched on asper requirement.

3. Installation of Power Factor panel so as to achieve UNITY power factor.

4. Introducing concept of task lighting vis--vis ambient lighting.

B. ADDITIONAL INVESTMENT AND PROPOSAL, IF ANY, BEING IMPLEMENTED FOR REDUCTION OFCONSUMPTION OF ENERGY-

C. IMPACT OF ABOVE MEASURES

Implementation of Energy Conservation measures have resulted-

1. In reduction of energy cost and thereby production cost.

2. In the increase of awareness in the employees.

3. Reduction of Carbon footprints

FORM’A’

Form for Disclosure of Particulars with respect to Conservation of Energy:

POWER AND FUEL CONSUMPTION

Particulars Current Year Previous Year
31.3.2013 31.3.2012
1. Electricity
(a) Purchased from Electricity Board
Total Units 2220297 2184419
Total Amount (Rs.) 15209034.45 1,37,40,000
Rate per unit (Rs./units) 6.85 6.29
(b) Own Generation
HSD/F.Oil/LSHS & LDO(Ltrs) 170836 199009
Cost of HSD/F.Oil/LSHS & LDO (Rs.) 7993416.44 80,40,000
Rate per ltr 46.79 40.4
2. Furnance Oils/LSHS/LDO/HSD Qty.(Ltrs.)
Total Amount (Rs.) 21600 21,600
Total Quantity(Ltrs) 210 210
Average Rate(Rs./Ltrs) 102.85 102.85

FORM ‘B’

Form for Disclosure of Particulars with respect to:

A) RESEARCH AND DEVELOPMENT (R & D)

Company has been giving thrust on R & D activities in the following areas:

1. New Product innovations

2. Increased efficiencies

3. Energy conservation

4. Improving yields

5. Improving quality

B) BENEFITS DERIVED AS THE RESULT OF THE ABOVE (R&D)

Increasing productivity and addition to value added products for better productsquality and process efficiency to the stakeholder’s satisfaction.

C) FUTURE PLAN OF ACTION

Steps are continuously taken for upgradation of technology which results in lowercosts, improvement of production yields and improvement in quality.

D) EXPENDITURE ON R&D

No specific account is kept.

2. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

Efforts in brief made towards technology absorption, adaptation and innovation

Company uses latest Technology to keep the manufacturing process more automated toupgrade itself to the pertinent development as they occur.

Benefits derived as result of the above efforts.

Benefits derived from these efforts are improved product quality and higherefficiencies.

3. Foreign Exchange earnings and outgo

a) Export initiatives, development of new export markets for products and export plans

The Company’s products continue to be well recognized and accepted in theinternational market due to its exclusive superiority and diversified array. The Companyis continuously pursuing its proposals dynamically to further augment its existence in theoverseas market through tapping new customers and new markets. Going forward the Companyintends to keep its focus on finest leather products across the established markets., TheCompany would continue to emphasis on giving customized service and its commitment toexcellence.

b) Foreign Exchange Earning (on FOB basis) and Outgo

Rs./Million

Particulars 2012-2013 2011-12
Earning 1752.25 3035.07
Outgo 812.80 1618.77

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