TO THE SHAREHOLDERS
The Board of Directors has the pleasure of presenting its Twenty Eighth Annual Report of the business and operations of your Company together with the Audited Financial Statements of the Company for the financial year ended March 31 2020.
SUMMARY OF FINANCIAL RESULTS & STATE OF COMPANY'S AFFAIRS
Amount (Rs in lakhs)
|Revenue from Operations||22307.12||50231.28|
|Earnings before Finance Costs Depreciation and Tax||1918.72||8165.86|
|Profit before Depreciation and Tax||1204.16||7678.88|
|Depreciation and Amortization||1173.81||1052.01|
|Profit before Tax||30.35||6626.87|
|Tax Expenses / (Credit)||(71.26)||1923.40|
|Net Profit for the year||101.61||4703.47|
The financial statements for the year ended March 312020 have been prepared in accordance with Ind AS in terms of the provisions of Section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules 2015 as amended from time to time.
GENERAL & CORPORATE MATTERS
During the year under review your Company achieved Revenue from operations of Rs 22307.12 lakhs as compared to Rs 50231.28 lakhs in the previous year (reduction of about 55.59 %). The decrease in order flow is mainly due to reduction in network rollout from various customers. The Profit before Depreciation and Tax for the year stood at Rs 1204.16 lakhs as compared to Rs 7678.88 lakhs in the previous year. The huge decrease is mainly attributed to low off-take by the customers and price erosion experienced by the company during the year under review.
The Global demand for Optical Fibre Cable has contracted to the level of 477.9 M FKM in 2019 which is a clear reduction of 6.3 %. The decrease in demand from the Telcos due to severe recessionary conditions coupled with COVID - 19 Pandemic situation during early 2020 has severely dented the demand. Similar trend prevailed in Indian Market thereby shrinking the overall demand for Optical Fibre Cables in a considerable way.
The Domestic market contraction mainly happened due to less than expected network rollout by the Telcos coupled with slowdown in Government Driven projects which ultimately reduced the price levels amidst excess capacity available all across the world.
Despite the reduction in the off-take of Cables by the Customers in the Domestic Market the Export market fared reasonably well which contributed decently to the Revenue of the Company.
After considering the Company's profitability free cash flow and overall financial performance the Board of Directors of your Company has decided not to recommend any Dividend for the financial year ended on March 312020. No amount has been transferred to the General Reserve for the financial year 2019-20.
The paid-up Equity Share Capital of the Company as at March 312020 stood at Rs 3000.00 lakhs. During the year under review the Company has neither issued shares with differential rights as to dividend voting or otherwise nor has granted stock options or sweat equity under any scheme. Further none of the Directors of the Company holds investments convertible into equity shares of the Company as on March 31 2020.
DEPOSITS / FINANCE
Your Company has not accepted any public deposits during the year within the meaning of Section(s) 73 to 76 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 and as such no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.
Your Company continued to optimise bank borrowings during the year by focusing on cash flows and working capital management. By availing alternate funding options like issuance of Buyer's Credit and Supplier's Credit coupled with reduction in charges for non-fund based credit facilities your Company ensured efficiency in its borrowings costs.
Pursuant to Regulation 34(3) read with Para C of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended from time to time (Listing Obligations) the Management Discussion & Analysis Report on Corporate Governance and a certification by the Chief Executive Officer (CEO) confirming compliance by all the Board Members and Senior Management Personnel with Company's Code of Conduct and Auditors' Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
As a part of its initiative under Corporate Social Responsibility (CSR) the Company has undertaken CSR projects and programmes in the areas of (i) Animal welfare; (ii) Promoting health care including preventive health care; Promoting education including employment enhancing vocation skills especially among children girls and women and livelihood enhancement projects; (iii) Ensuring Environmental Sustainability and Ecological Balance Conservation of Natural Resources and maintaining quality of Soil Air and Water and (iv) Employment Enhancing Vocation Skills especially among girls and women and Livelihood Enhancement Projects. These activities are largely in accordance with Schedule VII of the Companies Act 2013 read with Companies (Corporate Social Responsibility Policy) Rules 2014 and the Company's CSR Policy.
The Annual Report on CSR activities is given in Annexure-I which is attached hereto and forms a part of the Directors' Report. The Corporate Social Responsibility Policy of the Company is available on the website of the Company i.e. www.birlacable.com.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act 2013:
(a) that in the preparation of the annual financial statements for the year ended March 312020 the applicable accounting standards read with requirements set out under Schedule III to the Companies Act 2013 have been followed and there are no material departures from the same;
(b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2020 and of the profit of the Company for the year ended on that date;
(c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the annual financial statements have been prepared on a going concern basis;
(e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and
(f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.
RISK MANAGEMENT AND ADEQUACY OF INTERNAL CONTROL SYSTEMS
Your Company's system of financial and compliance controls with reference to the financial statements and risk management is embedded in the business process by which the Company pursues its objectives. Additionally the Audit Committee and the Board of Directors assess and monitor regularly the framework for identification evaluation and prioritization of risks mechanism to mitigate risks process that methodically track governance objectives risk ownership/accountability compliance with policies and decisions that are set through the governance process risks to those objectives and services and effectiveness of risk mitigation and controls besides inherent risks associated with the products/goods and services dealt with by the Company. Your Company's approach to address business risks and compliance functions is comprehensive across the business and includes periodic review of such risks and a framework for mitigating and reporting mechanism of such risks. In the opinion of the Board of Directors there are no material risks which may threaten the existence of the Company.
The Company has laid down the policies and procedures for internal financial controls for ensuring the orderly and efficient conduct of its business in order to achieve the strategic operational and other objectives over a long period and that its exposure to risks are within acceptable limits. In addition the policies and procedures have been designed with an intent to ensure safeguarding of Company's assets the prevention and detection of frauds and errors the accuracy in completeness of the accounting records and the timely preparation of reliable financial information.
The management is committed to ensure effective internal financial controls environment which provides assurance on the efficiency of Company's business operations coupled with adherence to its established policies safety/security of its assets besides orderly and legitimate conduct of business in the circumstances which may reasonably be foreseen. The Company has defined organisation structure authority levels delegated powers internal procedures rules and guidelines for conducting business transactions. The Company's system and process relating to internal controls and procedures for financial reporting have been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Companies Act 2013 Companies (Indian Accounting Standards) Rules 2015 and other relevant provisions of the Act and rules made thereunder and all other applicable regulatory/statutory guidelines etc. for disclosures with reference to financial statements.
Your Company's internal control systems are supplemented by an extensive program of internal audit by an independent firm of Chartered Accountants. Internal audits are conducted at regular intervals and a summary of the observations and recommendations of such audits are placed before the Audit Committee. The Internal Auditors as well as the Audit Committee conduct an evaluation of the adequacy and effectiveness of the system of internal financial controls system on an ongoing basis.
The Board has also implemented systems to ensure compliance of all applicable laws to the Company which were effective and operative. At quarterly intervals the Company Secretary & Compliance Officer places before the Board a certificate alongwith a detailed statement certifying compliance of various laws and regulations as applicable to the business and operations of the Company after obtaining confirmation from all functional heads responsible for compliance of such applicable laws and regulations. The Company Secretary is responsible for compliance of corporate laws including the Companies Act 2013 SEBI Act and rules/guidelines other corporate laws/rules and regulations and Listing Regulations including any statutory amendment(s) modification(s) or enactment(s) thereto to the extent apply and extend to the Company.
INDUSTRIAL RELATIONS AND SAFETY
Industrial relations remained cordial throughout the year. Your Directors recognize and appreciate the sincere and hard work loyalty dedicated efforts and contribution of all the employees in the continued satisfactory financial performance of the Company. Despite adverse and challenging business environment the enthusiasm and unstinting efforts of the employees have enabled your Company to remain at the forefront of the industry.
Your Company continues to accord a very high priority to both industrial safety and environmental protection and these are ongoing process at the Company's plant and facilities to maintain high awareness levels. Your Company is conscious of the importance of environmentally clean and safe operations so as to ensure safety of all concerned and compliance of applicable environmental regulations and to this end working continuously towards reduction in waste for disposal. The Company as a policy re-evaluates safety standards and practices from time to time in order to raise the bar of safety standards for its people as well as users and customers.
The Company's manufacturing facilities continue to remain certified by independent and reputed external agency as being compliant as well as aligned with the external standards for Quality Management System ISO 9001:2015 TL:9000 R6.0/R.5.5(H) Environmental Management Standards ISO 14001:2015 ISO 45001:2018 and Information Security Management System ISO/IEC 27001:2013 Standards for design development and manufacture of optical fibre cables ribbon type optical fibre cables polyethylene insulated jelly filled telecommunication cables copper communication cables insulated wire & cables electric conductors and copper cable assemblies and supply of accessories for optical fibre cables & copper cables and support processes. During the year the audits for these Certifications established continuous improvement in performance against these standards.
During the year members by way of Special Resolution passed at the 27th Annual General Meeting of the Company held on August 6 2019 have re-appointed Smt. Archana Capoor (DIN: 01204170) as Independent Directors of the Company not liable to retire by rotation for a second term of five consecutive years with effect from 10th November 2019 to 9th November 2024.
In accordance with the provisions of Section 152 of the Companies Act 2013 and the Company's Articles of Association Shri D.R. Bansal (DIN: 00050612) Director shall retire by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment. The Board recommends his re-appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.
The brief resume and other details of Directors recommended for appointment/re-appointment as required under Regulation 36(3) of the Listing Regulations and Clause 1.2.5 of the Secretarial Standard on General Meetings (SS-2) are given in the Annexure to the Notice of the ensuing Annual General Meeting which is being sent to the shareholders along with the Annual Report.
KEY MANAGERIAL PERSONNEL
Shri R Sridharan Manager and Chief Executive Officer Shri Shalendra Kumar Thakur Chief Financial Officer and Shri Somesh Laddha General Manager (Accounts) & Secretary are the Key Managerial Personnel of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
All Independent Directors of your Company viz. Shri R.C.Tapuriah Dr.Aravind Srinivasan Shri Arun Kishore Shri K. Raghuraman and Smt. Archana Capoor have severally given a declaration pursuant to Section 149(7) of the Companies Act 2013 that they meet the criteria of Independence as laid down under Section 149(6) of the Companies Act 2013. They have also furnished the Declaration and Confirmation pursuant to Regulation 25(8) of the Listing Regulations affirming compliance to the criteria of Independence as provided under Regulation 16(1)(b) of the Listing Regulations. The Independent Directors have individually confirmed that they are not aware of any circumstances or situation which exist or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence. Based on the declarations and confirmations of the Independent Directors and after undertaking due assessment of the veracity of the same the Board of Directors recorded their opinion that all the Independent Directors are independent of the Management and have fulfilled all the conditions as specified under the governing provisions of the Companies Act 2013 and the Listing Regulations.
MEETINGS OF BOARD AND COMPOSITION OF COMMITTEES
During the year under review the Board met 4 times viz. on May 17 2019 August 10 2019 November 10 2019 and February 6 2020. As required under Section 177(8) read with Section 134(3) of the Companies Act 2013 and the rules framed thereunder the composition and meetings of the Audit Committee were in line with the provisions of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 details of which alongwith composition number of meetings of all other Board Committees held during the year under review and attendance at the meetings are provided in the Report on Corporate Governance forming a part of the Annual Report. During the year under review all the recommendations of the Audit Committee were accepted by the Board of Directors.
PERFORMANCE EVALUATION OF BOARD COMMITTEES AND DIRECTORS
Pursuant to the Provisions of the Companies Act 2013 and Listing Regulations and the Guidance Note on Board Evaluation issued by SEBI the Board of Directors of the Company carried out the formal annual evaluation of its own performance and that of its Committees and individual Directors interalia to assess the skill set and contribution that are desired recognising that competencies and experiences evolves over time. The evaluation process also covered various aspects of the Board functioning such as composition of the Board and its Committees experience and competencies performance of specific duties and obligations governance issues etc. The process was conducted by allowing the Board to engage in candid discussions with each Director with the underlying objective of taking best possible decisions in the interest of the Company and its stakeholders. The Directors were individually evaluated on well-defined parameters which interalia comprised of level of engagement and their contribution to strategic planning and other criteria based on performance and personal attributes of the Directors. During the process of evaluation the Board of Directors also considered the criteria for evaluation of performance of Independent Directors and the Board of Directors formulated by the Nomination and Remuneration Committee. The Board of Directors also reviewed and deliberated the review of performance of the Chairman (taking into account the views of non-executive directors) the Non-independent Directors and the Board as a whole carried out by the Independent Directors. In conclusion the Board of Directors was satisfied with the performance and functioning of the Board its Committees and individual members. The manner in which formal annual evaluation has been carried out by the Board of Directors is given in the Report on Corporate Governance which forms a part of the Annual Report.
SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION
The Board of Directors in consonance with the recommendation of Nomination and Remuneration Committee (NRC) has adopted a terms of reference which interalia deals with the criteria for identification of members of the Board of Directors and selection/appointment of the Key Managerial Personnel/Senior Management Personnel of the Company. The NRC recommends appointment of Director/ appointment or re-appointment of Manager & CEO based on their qualifications expertise positive attributes and independence/ professional expertise in accordance with prescribed provisions of the Companies Act 2013 and rules framed thereunder and Listing Regulations. The NRC in addition to ensuring diversity of race and gender also considers the impact the appointee would have on Board's balance of professional experience background view points skills and areas of expertise.
The Board of Directors in consonance with the recommendation of Nomination and Remuneration Committee has also adopted the Remuneration Policy for the Directors Key Managerial Personnel and Senior Managerial Personnel. The guiding principles of the Remuneration Policy are stated in the Report on Corporate Governance which forms part of the Annual Report. The Remuneration Policy is uploaded on the website of the Company and the weblink of the same ishttp://birlacable.com/pdf/remuneration-policy- birlacable.pdf .
VIGIL MECHANISM / WHISTLE BLOWER POLICY
In terms of the provisions of Section 177(9) of the Companies Act 2013 the Company has implemented a Vigil Mechanism Policy/ Whistle Blower Policy to deal with instances of fraud and mis-management if any and conducting business with integrity including in accordance with all applicable laws and regulations. No employee has been denied access to the Vigilance Officer as well as Chairman of the Audit Committee. The details of the Vigil Mechanism and Whistle-Blower Policy are explained in the Report on Corporate Governance and also posted on the website of the Company.
MAINTENANCE OF COST RECORDS
The requirement of maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act 2013 and have the audit of its cost records conducted by a Cost Accountant is applicable in respect of certain specified products of the Company and accordingly such accounts and records are made and maintained by the Company.
In terms of the provisions of Section 139 of the Companies Act 2013 read with the Companies (Audit and Auditors) Rules 2014 as amended vide the Companies (Amendment) Act 2017 and the Companies (Audit and Auditors) Amendment Rules 2018 respectively Messrs Jain Pramod Jain & Co. Chartered Accountants (Firm Registration No. 016746 N) were appointed as Statutory Auditors of the Company to hold office for a term of five (5) years until the conclusion of the Thirtieth Annual General Meeting of the Company to be held for the financial year 2021-22 and their appointment is not required to be ratified each year at Annual General Meeting of the Company. The Auditors have confirmed to the Company that they continue to remain eligible to hold office as the Auditors and not disqualified for being so appointed under the Companies Act 2013 the Chartered Accountants Act 1949 and the rules and regulations made thereunder.
The Board of Directors has on the recommendation of the Audit Committee re-appointed Messrs D. Sabyasachi & Co. Cost Accountants (Registration No. 000369) as Cost Auditors for conducting the audit of the cost records maintained by the Company in respect of certain specified products of the Company covered under the Companies (Cost Records and Audit) Rules 2014 and fixed their remuneration based on the recommendation of the Audit Committee. The remuneration together with applicable tax thereon and reimbursement of out of pocket expenses to be paid to the Cost Auditors is subject to ratification by the members in the ensuing Annual General Meeting of the Company. The Cost Audit Report in respect of applicable specified products for the financial year ended March 312019 was filed by the Company on August 22 2019.
The Auditors' Report on the financial statements of the Company forms a part of the Annual Report. There is no qualification reservation adverse remark disclaimer or modified opinion in the Auditors' Report which calls for any further comments or explanations. Further during the year under review the Auditors have not reported any matter under Section 143(12) of the Companies Act 2013 therefore no detail is required to be disclosed in pursuance to Section 134(3)(ca) of the Companies Act 2013.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Messrs R.K. Mishra & Associates Practicing Company Secretaries (PCS Registration no.14474) were appointed to undertake the Secretarial Audit of the Company for the year ended March 31 2020. The Report of the Secretarial Auditor is given in the prescribed form in Annexure-II which is attached hereto and forms a part of the Directors' Report.
Observation or other remarks made by Messrs R.K. Mishra & Associates in the Secretarial Audit Report which is self explanatory and do not call for any comments or explanations.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company has proper system in place to ensure compliance with the provisions of applicable Secretarial Standards. During the year under review your Company has complied with applicable provisions of Secretarial Standard on Meetings of the Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2) issued by the Institute of Company Secretaries of India.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into by the Company during the financial year under review were generally on arms' length basis and in the ordinary course of business. The disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in prescribed Form AOC-2 is given in Annexure III which is attached hereto and forms a part of the Directors' Report. There are no material significant related party transactions entered into by the Company with its Promoters Directors Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
All related party transactions are placed before the meeting(s) of Audit Committee for its review and approval. Prior omnibus approval of the Audit Committee is obtained on an annual basis for a financial year for the transactions which are of a foreseen and repetitive in nature. The statement giving details of all related party transactions entered into pursuant to the omnibus approval together with relevant documents/information are placed before the Audit Committee for review and updation on quarterly basis. The Company's Policy on materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board of Directors is uploaded on the Company's website and can be accessed at weblink: http://www.birlacable.com/pdf/RPTPolicy_BCL.pdf.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT 2013
The particulars of Loans Guarantees and Investment in pursuance to Section 186 of the Companies Act 2013 have been disclosed in the financial statements read together with Notes annexed to and forming an integral part of the financial statements.
DISCLOSURE OF RATIO OF REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL ETC.
As required under Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Statement of Disclosure of Remuneration and such other details as prescribed therein are given in Annexure-IV which is attached hereto and forms a part of the Directors' Report.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as provided under Section 92(3) of the Companies Act 2013 is given in Annexure V which is attached hereto and forms part of the Directors' Report which is also placed on the Company's website at http://birlacable.com/pdf/ MGT-9-BCL.pdf.
PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(2) and 5(3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of an employee of the Company are given in Annexure-VI which is attached hereto and forms a part of the Directors' Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO
As required under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 the information on Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo are given in Annexure-VII which is attached hereto and forms a part of the Directors' Report.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions or events on these items during the year under review:
(a) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status of the Company and its operations in future.
(b) The Company has zero tolerance towards sexual harassment at workplace and has adopted a Policy on prevention prohibition and redressal of sexual harassment at workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and Rules made thereunder. During the year under review no case was filed or reported in pursuance to the provisions of the said Act.
(c) There have been no material changes and commitments which affect the financial position of the Company that have occurred between the end of the financial year to which the financial statements relate and the date of this Report save and except severe contraction in business activities due to extended lockdown imposed by the Central and State Government authorities in India considering public health and safety due to outbreak of COVID-19 pandemic.
(d) No frauds were reported by the Auditors in terms of Section 143(2) of the Companies Act 2013 and rules if any made thereunder. ACKNOWLEDGEMENT
The Board of Directors desires to place on record its grateful appreciation for the excellent assistance and co-operation received from the State Government and continued support extended to the Company by the bankers investors vendors esteemed customers and other business associates. Your Directors also wish to place on record their sincere thanks and infinite appreciations to all the employees of the Company for their unstinted commitment and valuable contribution in the improved financial performance of the Company.
For and on behalf of the Board of Directors
|Harsh V. Lodha||R.C.Tapuriah|
|(DIN: 00394094)||(DIN: 00395997)|
|Place : Satna|
|Date : June 1 2020|