(Including Management Discussion and Analysis Report)
Your Directors are pleased to present this 29th Annual Report on the business andoperations of the Company together with the Audited Statement of Accounts for thefinancial year ended 31st March 2019.
1. Financial Results - Extract
The company's standalone and consolidated performance during the financial year ended31st March 2019 as compared to the previous financial year is summarised below:
| || || |
Rs. in Lakhs
| ||Consolidated ||Standalone |
|Particulars ||Year ended ||Year ended |
| ||31.03.2019 ||31.03.2018 ||31.03.2019 ||31.03.2018 |
|Revenue from Operations and Other Income ||30946.20 ||29823.12 ||21423.65 ||18545.09 |
|Earnings Before Interest Depreciation Tax and Amortisation (EBIDTA) ||2459.60 ||2241.78 ||2382.07 ||2153.63 |
|Less: Finance Cost ||312.92 ||381.93 ||312.92 ||381.93 |
|Profit before Depreciation and Tax (PBDT) ||2146.68 ||1859.85 ||2069.15 ||1771.70 |
|Less: Depreciation ||210.94 ||240.94 ||210.94 ||240.94 |
|Profit before Tax ||1935.74 ||1618.91 ||1858.21 ||1530.76 |
|Less: Provision for Tax ||547.14 ||443.85 ||529.10 ||415.14 |
|Profit after Tax ||1388.60 ||1175.06 ||1329.11 ||1115.62 |
|Total Comprehensive Income ||1381.88 ||1174.59 ||1322.39 ||1115.29 |
2. Nature of Business
The company is primarily in the business of chemical distribution and chemicalmanufacturing as well as textile manufacturing and renewable energy generation. Thechemical distribution business consists mainly of import and sales of specialty andperformance chemicals manufactured by overseas and domestic principals. Chemicalmanufacturing is currently focused on the production of a single product acrylamide. Thetextile business is engaged in the manufacture of fabrics and industrial made-ups such assafety gloves and the renewable energy activity supplies the State Electricity Boards ofRajasthan and Gujarat with wind-generated power.
Your Directors are pleased to recommend an equity dividend of Rs. 0.30 per equityshares of face value of Rs. 1 each for the year ended 31st March 2019 subject to theapproval of the shareholders at the ensuing Annual General Meeting.
4. Transfer to Reserves
The Board of Directors has decided to retain the entire amount of profits for thefinancial year 2018 2019 in the profit and loss account.
5. Business Scenario
The economy was generally slow and even the Indian Rupee was battered by over 15%during the year to finally end the year 6% lower. This did not stop the company fromdelivering a good performance. Acrylamide sales increased both domestically andinternationally with the increase in plant capacity and sales of the chemicaldistribution business increased with rising demand from the Indian specialty chemicalsector. Going forward the company expects the ongoing trade friction between China andthe United States the tightening of environmental restrictions in China the resultantincrease in global attention for Indian chemicals and of course the inevitable growth ofIndian consumption to provide a strong boost to the Indian chemical sector which thecompany is a part of. The business scenario is discussed later in more detail in theManagement Discussion and Analysis Report.
During the year under review the company did not accept any deposits in terms ofSection 73 of the Companies Act 2013 read with the Companies (Acceptance of Deposit)Rules 2014.
7. Material Changes and Commitments
There have been no material changes and commitment affecting the financial position ofthe Company which have occurred between the end of the financial year of the company towhich the financial statements relate and the date of the report.
8. Performance Review
The year 2018 2019 saw a 10% and 11% increase in consolidated and standalone EBIDTArespectively. Standalone revenue figures also grew significantly by 16% due to an increasein both acrylamide sales and chemical distribution business. The top 5 products of thedistribution business continued to deliver strong results and accounted for more than 75%of the department's sales. Revenues at our subsidiary in Japan fell by 16%. Profitabilitycontinued to be strong due to increased efficiency at the acrylamide plant and goodmargins in the distribution business because of continuing tightening of environmentalregulatory scenario in China as well as improving demand in India. The standalone EBIDTAmargin for 2018-19 was 11.1% and standalone profit before tax increased by 21% to Rs.1858.21 lakhs.
A detailed analysis of the company's operations is provided later in the ManagementDiscussion and Analysis Report.
9. Acrylamide Plant at Jhagadia Gujarat
The company's acrylamide plant has an installed capacity of 14000MT per year. Thecompany's acrylamide sales grew over the previous year. An in-depth explanation about theplant operations is given in the Management Discussion and Analysis Report.
10. Subsidiary B.R. Chemicals Co. Ltd. Japan
During the year under review the turnover of the company's wholly owned subsidiaryincorporated in Japan reduced slightly to just under Rs. 100 crores. The profit at thesubsidiary remained mostly constant at approximately Rs. 60 lakhs.
The nature of business of the subsidiary company remained unchanged during the year.
The performance and financial position of company's subsidiary B.R. Chemicals Co. Ltd.for the year ended 31st March 2019 is attached to the financial statements hereto.
11. Directors and Key Managerial Personnel
Pursuant to the provisions of Section 152 of the Companies Act 2013 Mr. Anup Jatia(DIN 00351425) Executive Director of the Company retires by rotation at the ensuingAnnual General Meeting and being eligible offers himself for re-appointment. At the 24thAnnual General Meeting (AGM) of the Company Mr. Shivhari Halan Mr. Basant Kumar Goenkaand Mr. Sujay Sheth were appointed as Independent Directors of the Company for a term offive years upto 31st March 2019. Pursuant to the provisions of Section 149 of theCompanies Act 2013 Mr. Shivhari Halan Mr. Basant Kumar Goenka and Mr. Sujay Shethbeing eligible were re-appointed by the Board as Non Executive Independent Directors onthe Board of the Company for another term effective 1st April 2019 to hold office tillthe conclusion of 33rd AGM subject to approval of the members at the ensuing AGM of theCompany.
The members in the 28th Annual General Meeting held on September 22 2018 had appointedMr. Ameet Nalin Parikh (DIN 0007036) as a Non Executive Independent Director for aperiod of five consecutive years i.e. from May 25 2018 to May 24 2023.
All the Independent Directors have given declarations that they have meet the criteriaof independence as laid down under Section 149(6) of the Companies Act 2013 and theListing Regulations.
Mr. C.P. Vyas shall cease to be Company Secretary and Compliance Officer of the Companywith effect from close of business hours on May 31 2019 and Mr. Nevil Avlani has beenappointed as Company Secretary and Compliance Officer with effect from June 1 2019. Apartfrom the above no other Director or Key Managerial Personnel were appointed or hadretired or resigned.
12. Board Meetings and Board Committees
a. Board Meetings
The Board of Directors met five times during the financial year ended 31st March 2019in accordance with the provisions of Companies Act 2013 and rules made thereunder and theListing Regulations.
Pursuant to Section 177 and 178 of the Companies Act 2013 and the rules madethereunder and in accordance with Listing Regulations your Board of Directors hasconstituted four committees namely Audit Committee Nomination and RemunerationCommittee Stakeholders' Relationship Committee and Corporate Social ResponsibilityCommittee. The company has been employing women employees in various grades within itsoffices and factory premises.
The company has constituted an Internal Compliant Committee as required under SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 toredress any complaints received from employee(s) of the Company. The Company is stronglyopposed to sexual harassment and all the employees are made aware about the consequencesof such acts and the constitution of the Internal Compliant Committee.
During the year there was no complaint received from any employee and hence nocompliant is outstanding as on 31st March 2019.
Pursuant to the provisions of Companies Act 2013 and rules made thereunder and inaccordance with the Listing Regulations the Board had carried out an annual performanceevaluation of its own the Board Committees and of the Independent Directors.
Further independent directors at their separate meeting evaluated performance of theNon - Independent Director and the Board as a whole.
d. Policy on Directors' Appointment and Remuneration and other details
The Company's policy on directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Companies Act 2013 has been disclosed in Nomination andremuneration Policy which forms part of this report.
The Nomination and Remuneration Policy is set out in Annexure I to this reportand is also available on the Company's Website.
13. Auditors and their Reports
a. Statutory Auditors
Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Companies(Audit and Auditors) Rules 2014 M/s. PKJ & Co. Chartered Accountants the StatutoryAuditors of the Company hold office up to the conclusion of the Thirty Second AnnualGeneral Meeting. However their appointment as Statutory Auditors of the company issubject to ratification by the members at every Annual General Meeting. The Company hasreceived a certificate from the said Auditors that they are eligible to hold office as theAuditors of the Company and are not disqualified for being so appointed. The resolutionfor ratification of appointment of the said Auditors is included in the Notice of AnnualGeneral Meeting for seeking approval of members.
The independent statutory auditors' report does not contain any qualificationreservation or adverse remark or disclaimer on the accounts for the year ended 31st March2019.
b. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the rules madethereunder the Board of Directors had appointed M/s. ND & Associates CompanySecretary in Whole Time Practice as Secretarial Auditor to undertake the Secretarial Auditof the Company.
As required under provisions of Section 204 of the Companies Act 2013 the report inrespect of the Secretarial Audit carried out by M/s. ND & Associates CompanySecretary in Whole Time Practice in Form MR 3 for the Financial Year 2018 - 19 forms partto this report. The said report does not contain any adverse observation or qualificationrequiring explanation or comments from the Board under Section 134(3) of the CompaniesAct 2013.
c. Cost Auditors
The Board of Directors of the Company has appointed M/s. Poddar & Co. CostAccountants as the Cost Auditors of the Company to conduct audit of cost accountingrecords maintained by the Company for the financial year 2019 20.
A resolution seeking approval of the members for ratifying the remuneration payable toCost Auditors for financial year 2019-20 is provided in the Notice of 29th Annual GeneralMeeting of the Company.
14. Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) forms an integral part of an overall businesspolicy aligned with its business goals. The Company from time to time endeavors toutilize allocable CSR budget for the benefit of society.
Sailent features of the CSR policy and the details of activities as required underCompanies (Corporate Social Responsibility Policy) Rules 2014 is provided in AnnexureVI forming part of this report. The CSR Policy may be accessed on the Company'swebsite www.blackrosechemicals.com.
15. Consolidated Financial Statements
The Directors also present the consolidated financial statements incorporating thefinancial statements of the subsidiaries and as prepared in compliance with the CompaniesAct 2013 applicable Accounting Standards and SEBI Listing Regulations 2015 asprescribed by SEBI.
A separate statement containing the salient features of its subsidiaries in theprescribed form AOC-1 is annexed separately.
16. Directors' Responsibility Statement
Pursuant to Section 134(3)(c) of the Companies Act 2013 your Directors to the best oftheir knowledge and belief confirm the following: i) that in the preparation of the annualfinancial statements for the year ended March 31 2019 the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any; ii) that such accounting policies as mentioned in note 1 of the Notesto the Financial Statements have been selected and applied consistently and judgment andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company as at March 31 2019 and of the profits of thecompany for the year ended on that date; iii) that proper and sufficient care has beentaken for the maintenance of adequate accounting records in accordance with the provisionsof the Companies Act 2013 for safeguarding the assets of the company and for preventingand detecting fraud and other irregularities; iv) that the annual financial statementshave been prepared on a going concern basis; v) that proper internal financial controlswere in place and that the financial controls were adequate and were operativesatisfactorily however this reporting requirement is in a evolving stage the managementis in a process of establishing effective implementation with the help of internal andexternal consultations and confident that the same will be fully implemented within fewmonths. vi) that systems to ensure compliance with the provisions of all applicable lawswere in place and were adequate and operating effectively.
17. Loans Guarantees and Investments
The particulars of loans guarantees and investments given/made during the financialyear under review and governed by the provisions of Section 186 of the Companies Act 2013have been furnished in Annexure II which forms part of this Annual Report.
18. Extract of Annual Return
Pursuant to the provisions of Section 92(3) and Section 134(3)(a) of the Companies Act2013 an extract of the Annual Return in Form MGT 9 for the financial year ended 31stMarch 2019 is given in Annexure III and forms part of this Annual Report.
19. Internal Financial Controls and Compliance Framework
The Company has documented its internal financial controls considering the essentialcomponents of various critical processes physical and operational. This includes itsdesign implementation and maintenance along with periodical internal review ofoperational effectiveness and sustenance which are commensurate with the nature of itsbusiness and the size and complexity of its operations. This ensures orderly and efficientconduct of its business including adherence to the Company's policies safeguarding ofits assets prevention of errors accuracy and completeness of the accounting records andthe timely preparation of reliable financial information.
The internal financial controls with reference to the financial statements wereadequate and operating effectively.
The Board has also put in place requisite legal compliance framework to ensurecompliance of all the applicable laws and that such systems were adequate and operatingeffectively.
20. Risk Management
Company has implemented an integrated risk management approach through which it reviewsand assesses significant risks on a regular basis to ensure that a robust system of riskcontrols and mitigation is in place. Senior management periodically reviews this riskmanagement framework to keep updated and address emerging challenges.
Risk management system followed by the Company is elaborately detailed in ManagementDiscussion and Analysis Report.
21. Vigil Mechanism and Reporting of Frauds
The Company has set up vigil mechanism viz. Whistle Blower Policy to enable theemployees and Directors to report genuine concerns unethical behavior and irregularitiesif any in the company noticed by them which could adversely affect company's operationsto the Audit Committee Chairman. There was no instance of fraud during the year underreview which required the Statutory Auditors to report to the Audit Committee and/orBoard under Section 143(12) of the Act and Rules framed thereunder.
22. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withrules made thereunder is annexed herewith as Annexure IV and forms part of thisAnnual Report.
23. Contracts and Arrangements with Related Parties
All the contracts arrangements and transactions entered by the company during thefinancial year with related parties were in the ordinary course of business and are onarm's length basis hence Section 188(1) is not applicable and consequently no particularsin Form AOC 2 are required to be furnished. During the year the company had not enteredinto any contract arrangements or transactions with related parties which could beconsidered material. All the contracts arrangements and transactions with related partiesare placed before the Audit Committee as also the Board as may be required for approval.
24. Orders passed by Regulators or Courts or Tribunals
No significant and material orders have been passed by any regulators or courts ortribunals which can have an impact on the going concern status of the Company and itsfuture operations.
The company's shares are listed on the BSE Limited and the applicable listing fees havebeen paid.
26. Managerial Remuneration and Particulars of Employees
The Statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is not applicable as none of theemployees of the company is covered under the provisions of the said rules. The ratio ofthe remuneration of each Director to the median employees remuneration and other detailsin terms of Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexedherewith as Annexure V and forms part of this Annual Report.
27. Service of Documents through Electronic Means
All documents including the Notice and Annual Report shall be sent through electronictransmission in respect of members whose e-mail IDs are registered in their demat accountor are otherwise provided by the members. A member shall be entitled to request forphysical copy of any such documents.
The Directors wish to convey their deep appreciation to all the employees customersvendors and consultants / advisors of the Company for their sincere and dedicatedservices as well as their collective contribution to the Company's performance. TheDirectors also thank Company's principals and statutory authorities for their cooperationextended to the Company.
Certain statements in this Directors' Report and in the Management Discussion andAnalysis Report describing the company's objectives estimates and projections may beforward-looking statements and are based on certain expectations. Actual results couldhowever differ materially from those expressed or implied. Important factors that couldmake a difference in the company's operations include the availability of rawmaterial/product cost of raw material/product changes in demand from customersfluctuations in exchange rates changes in government policies and regulations changes intax structure economic developments within India and the countries in which business isconducted and various other incidental factors. We cannot guarantee that these forward -looking statements will be realised although we believe we have been prudent in makingany assumptions. We undertake no obligation to publicly update any forward - lookingstatements whether as a result of new information future events or otherwise
|For and on behalf of the Board || |
|Shivhari Halan ||Anup Jatia |
|Director ||Executive Director |
|Place: Mumbai || |
|Dated: May 24 2019 || |