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Black Rose Industries Ltd.

BSE: 514183 Sector: Others
NSE: N.A. ISIN Code: INE761G01016
BSE 11:56 | 28 Sep 184.95 -0.70






NSE 05:30 | 01 Jan Black Rose Industries Ltd
OPEN 183.15
52-Week high 239.00
52-Week low 165.00
P/E 35.09
Mkt Cap.(Rs cr) 943
Buy Price 184.50
Buy Qty 83.00
Sell Price 184.95
Sell Qty 56.00
OPEN 183.15
CLOSE 185.65
52-Week high 239.00
52-Week low 165.00
P/E 35.09
Mkt Cap.(Rs cr) 943
Buy Price 184.50
Buy Qty 83.00
Sell Price 184.95
Sell Qty 56.00

Black Rose Industries Ltd. (BLACKROSEINDUS) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the 31st Annual Report on the business andoperations performance of the Company together with the Audited Financial Statements forthe financial year ended 31st March 2021.

1. Financial Results - Extract

The company's standalone and consolidated performance during the financial year ended31st March 2021 as compared to the previous financial year is summarised below:

Rs. in Lakh



Year ended

Year ended

31-03-2021 31-0 13-2020 31-03-2021 31- 03-2020
Revenue from Operations and Other Income 38051.06 37350.05 23568.04 25314.14
Earnings Before Interest Depreciation Tax Amortisation and Exceptional Items (EBIDTAE) 4057.53 3343.31 3960.41 3252.17
Less: Exceptional Items - 123.66 - 123.66
Earnings Before Interest Depreciation Tax and Amortisation (EBIDTA) 4057.53 3219.66 3960.41 3128.51
Less: Finance Cost 120.44 254.25 120.44 254.25
Profit Before Depreciation and Tax (PBDT) 3937.09 2965.40 3839.97 2874.26
Less: Depreciation 257.82 233.44 257.82 233.44
Profit Before Tax 3679.27 2731.97 3582.15 2640.82
Less: Provision for Tax 934.79 666.71 907.31 647.53
Profit After Tax 2744.48 2065.25 2674.84 1993.29
Total Comprehensive Income 2745.20 2086.84 2675.57 2014.88

2. Nature of Business

The company is primarily in the business of chemical manufacturing and chemicaldistribution. The company also manufactures textiles and made-ups and owns windmills forthe generation and sale of renewable energy.

The chemical manufacturing business is focused on the production and sale of acrylamideand polyacrylamide liquid and going forward will concentrate on adding acrylamide solidn-methylol acrylamide (NMA) and polyacrylamide solid to its manufacturing portfolio. Thechemical distribution business consists mainly of import and sales of specialty andperformance chemicals manufactured by overseas and domestic principals. The renewableenergy activity supplies the State Electricity Boards of Rajasthan and Gujarat withwindgenerated power while the textile business is engaged in the manufacture of fabricsand industrial made-ups.

3. Performance Review

The year 2020-21 saw a 26% and 26.50% increase in consolidated and standalone EBITDArespectively. Standalone revenue figures were affected by the impact of the pandemicdecreasing marginally by 7%. The top 5 products of the distribution business continued todeliver strong results and accounted for more than 75% of the department's sales. Revenuesat our subsidiary in Japan increased by 20% YoY. Profitability on both EBITDA and netprofit basis improved due to increased productivity at the acrylamide plant and strongmargins in the distribution business. The standalone EBITDA margin for 2020-21 was 16.80%and standalone profit before tax increased by 35.70% to Rs.3582 Lakh.

A detailed analysis of the company's operations is provided later in the ManagementDiscussion and Analysis Report.

4. Dividend

For FY 2020-21 based on the Company's performance the Directors are pleased torecommend an equity dividend of Rs.0.45 per equity share of face value of Rs.1 each forthe year ended 31st March 2021 subject to approval of the members at the ensuing AnnualGeneral Meeting.

5. Transfer to Reserves

The Directors have not proposed to transfer any amount to the general reserve and hasdecided to transfer Rs.2675.57 Lakh to retained earnings for the FY 2020-21. The closingbalance of the retained earnings of the Company as at 31st March 2021 after allappropriation and adjustments was Rs.7770.97.

6. Business Scenario

The impact of COVID-19 was most severe during the first quarter of the year.Subsequently businesses revived during the next two quarters. However again as weapproached the end of the year the second wave of the pandemic began to adversely impacteconomies globally. The impact in India was most severe. Furthermore disruption in supplychains due to international logistics logjam and the unprecedented rise in chemical pricesacross the board saw major raw materials and intermediaries trading at life-time highs.The Indian rupee which started the year weak at Rs.76 to the US Dollar recovered duringthe year to close at around Rs.73 per US Dollar at the end of the year.

Despite such challenges the company delivered its best ever annual profits this yearwhich was made possible by its proactive approach in dealing with these adversities bypreplanning its procurement logistics and sales strategy. During the year the chemicaldistribution segment added new principals and products further strengthening its presencein both the domestic market. The manufacturing segment also achieved its highest everannual turnover and profits despite substantial setback in the first quarter of the year.Looking ahead the company plans to expedite its roll out of acrylamide solid andn-methylol acrylamide (NMA) during the year FY22 both of which are import substitutes.

The business scenario is discussed in more detail in the Management Discussion andAnalysis Report.

7. Acrylamide Plant at Jhagadia Gujarat

The company's acrylamide plant underwent further expansion during Q4 of the previousyear. The total installed capacity after expansion is 20000MT per annum for merchantsales and an additional 12000MT for captive consumption. This additional capacity wasuseful in catering to the spurt in demand during the third quarter of the year.

An in-depth explanation about the acrylamide plant operations is given in theManagement Discussion and Analysis Report.

8. Polyacrylamide Liquid Plant at Jhagadia Gujarat

The company continued to add new customers for its BRILBIND CE01 during the year byconducting plant level trials with various end customers during the year. The plantexpansion to 40000MT was also commissioned in FY21.

An in-depth explanation about the polyacrylamide liquid plant operations is given inthe Management Discussion and Analysis Report.

9. Subsidiary - B.R. Chemicals Co. Ltd. Japan

The Company has one subsidiary as on 31st March 2021. There are no associate or jointventure companies within the meaning of Section 2(6) of the Companies Act 2013("Act").

The nature of business of the subsidiary company remained unchanged during the year.

During the year under review the turnover of the company's wholly owned subsidiaryincreased by 20% to over Rs.144 Crore.

The performance and financial position of company's subsidiary B.R. Chemicals Co. Ltd.for the year ended 31st March 2021 is attached to the financial statements hereto.

Pursuant to the provisions of Section 129(3) of the Act a statement containing thesalient features of financial statements of the Company's subsidiary in Form No. AOC-1 isattached to the financial statements of the Company.

10. Effects of the COVID-19 Pandemic

The company regularly evaluated the impact of COVID-19 pandemic on its businessoperations liquidity and financial position during FY21.

Sales during the first quarter of the year was subdued due to lack of demand from amajority of the company's domestic customers during the months of April and May as theywere overstocked with raw materials and finished products due to reduced manufacturingoperations. However during the second quarter of FY2020-21 it picked up sharply duringthe months of August and September due to a return of demand after a prolonged lockdownand period of reduced purchases. The company achieved pre-COVID level sales in Q3FY2020-21.

Despite the reduction in domestic demand the company's export volumes remainedconsistent and were largely unaffected by the COVID situation until the fourth quarterwhen disruption in the logistics and supply chain started to have a negative impact onexports.

During the first quarter of this financial year India experienced a massive second waveof Covid-19 infections due to the Delta variant which resulted in lockdowns and reductionin domestic demand and manufacturing activities. The exports also continued to be hit byextraordinarily high freight costs coupled with unavailability of vessel space andcontainers.

11. Material Changes and Commitments

There have been no material changes and commitments 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.

12. Directors and Key Managerial Personnel

At the 30th Annual General Meeting of the Company held on 29th September 2020following appointment/re-appointment was approved by the members:

a) Mr. Rishabh Rajendra Saraf (DIN 00161435) was appointed as Independent Non -Executive Director of the Company.

b) Mrs. Garima Tibrawalla (DIN 00203909) was re-appointed as Non-Executive IndependentDirector of the Company to hold the office for a second term of five years from 29thSeptember 2020.

c) Mr. Anup Jatia (DIN 00351425) was re-appointed as Executive Director of the Companyfor a period of three years commencing from 1st May 2021 as his present term ofappointment was expiring on 30th April 2021 which is earlier than the ensuing AnnualGeneral Meeting.

d) Mr. Sandeep Chokhani (DIN 02346782) was appointed as an Additional Director from 1stApril 2020 and subsequently was appointed as a Whole-Time Director of the Company for aperiod of three years commencing from 26th June 2020.

Pursuant to the provisions of Section 152 of the Companies Act 2013 Mr. SandeepChokhani (DIN 02346782) Whole-Time Director of the Company retires by rotation at theensuing Annual General Meeting and being eligible offers himself for re-appointment.

Brief Profile of Mr. Chokhani is provided in the Notice convening the 31st AnnualGeneral Meeting of the Company for reference of the members.

Mr. Shivhari Halan had tendered his resignation from the position of Non-ExecutiveIndependent Director of the Company before the expiry of his term on 3rd April 2020 dueto his growing work commitments at his other businesses.

Further resignation letter of Mr. Halan contains confirmation that there is no othermaterial reason other than those provided in his resignation letter.

Apart from the above no other Director or Key Managerial Personnel were appointed orhad retired or resigned.

13. Declaration from Independent Directors

The Company has received following declarations from all the Independent Directorsconfirming that:

a) the meet the criteria of independence as laid down under Section 149(6) of theCompanies Act 2013 and Rules issued thereunder as well as of Regulation 16 of theListing Regulations.

b) In terms of Rule 6(3) of the Companies (Appointment and Qualification of Directors)Rules 2014 they have registered themselves with the Independent Director's databasemaintained by the Indian Institute of Corporate Affairs Manesar.

c) In terms of Regulation 25(8) of the Listing Regulations they are not aware of anycircumstances or situation which exist or may be reasonably anticipated that couldimpair or impact their ability to discharge their duties.

14. Board Meetings and Board Committees

a. Board Meetings

Four meetings of the Board of the Directors were held during the year under review. TheCorporate Governance Report which is part of this report contains the details of themeetings of the Board.

b. Committees

Pursuant to Section 177 and 178 of the Companies Act 2013 and the rules madethereunder and in accordance with Listing Regulations the Board of Directors hasconstituted five Committees namely Audit Committee Nomination and RemunerationCommittee Stakeholders' Relationship Committee Corporate Social Responsibility Committeeand Risk Management Committee.

A details pertaining to the composition of the Board and its committees are provided inthe Corporate Governance Report which is a part of this report.

The company has been employing women employees in various grades within its offices andfactory premises. The company has constituted an Internal Compliant Committee as requiredunder the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 to redress any complaints received from employee(s) of the Company. The Companyis strongly opposed to sexual harassment and all the employees are made aware about theconsequences of 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 2021.

Securities and Exchange Board of India (SEBI) vide its notification dated 5th May 2021notified SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment)Regulations 2021 made Regulation 21 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2021 with regard to Risk Management Committee applicable to top1000 listed entities based on market capitalization calculated as on 31st March 2021.Thus provisions with regard to Risk Management Committee became applicable to the companyfrom 5th May 2021.

c. Evaluations

Pursuant to the provisions of Companies Act 2013 and rules made thereunder and inaccordance with the Listing Regulations the Board has carried out an annual performanceevaluation of its own and of the Board Committees.

Independent Directors had shared their views amongst themselves the performance ofnon-independent directors and the Board as a whole taking into account the views ofexecutive and non-executive directors.

d. Policy on Directors' Appointment and Remuneration and other details

The Company's policy on directors' appointments 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 RemunerationPolicy is also available on the website of the Company.

15. Auditors

a. Statutory Auditor

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 32nd Annual GeneralMeeting. However their appointment as Statutory Auditors of the company is subject toratification by the members at every Annual General Meeting.

The resolution for ratification of appointment of the said Auditors is included in theNotice of Annual General Meeting for seeking approval of members.

b. Cost Auditor

Pursuant to the provisions of the Section 148(1) of the Companies Act 2013 read withthe Companies (Cost Records and Audit) Rules 2014 the Company is required to have theaudit of its cost records.

M/s. Poddar & Co. Cost Accountants Mumbai was appointed as Cost Auditor of theCompany for conducting the cost audit for the financial year 2020-21.

The Board after considering the recommendations of its Audit Committee appointed theaforesaid firm as cost auditors for the financial year 2021-22 and appropriate resolutionsin this connection has been included in the Notice of Annual General Meeting. The saidauditor have furnished a consent letter regarding their eligibility for appointment asCost Auditor of the Company.

c. Secretarial Auditor

The Board of Directors has appointed M/s. ND & Associates Practicing CompanySecretary Mumbai as Secretarial Auditor of the Company for the financial year 2020-21and secretarial audit report for the financial year ended 31st March 2021 issued by thesecretarial auditor forms part of this report.

16. Statutory Audit Report Secretarial Audit Report and Cost Audit Report

The statutory auditor's report secretarial auditor's report and the cost auditor'sreport do not contain any qualification reservations or adverse remarks or disclaimer.Secretarial audit report is attached to this report.

17. Extract of Annual Return

The Annual Return of the Company as on 31st March 2021 in Form MGT - 7 in accordancewith Section 92(3) of the Companies Act 2013 read with the Companies (Management andAdministration) Rules 2014 is available on the website of the Company

18. Loans Guarantees and Investments

The particulars of loans guarantee or investments given/made during the financial yearunder review and governed by the provisions of Section 186 of the Companies Act 2013 havebeen furnished in Annexure I which forms part if this Annual Report.

19. Deposits

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.

20. 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.

21. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 the Board of Directors to thebest of its knowledge and ability confirm that:

i) in the preparation of the annual financial statements for the year ended March312021 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;

ii) have selected such accounting policies and applied them consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the company for that period;

iii) have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

iv) have prepared the annual accounts on a going concern basis;

v) have laid down internal financial controls to be followed by the Company and suchinternal financial controls are adequate and operating effectively;

vi) have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively;

vii) that systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company the work performed by the internal statutoryand secretarial auditors and external consultants including the audit of internalfinancial controls over financial reporting by the statutory auditors and the reviewsperformed by management and the relevant board committees including the audit committeethe Board is of the opinion that the Company's internal financial controls were adequateand effective during FY 2020-21.

22. Internal Financial Controls and Compliance Framework

Internal financial control over financial reporting have been designed to providereasonable assurance with regards to recording and providing reliable financialinformation and complying with applicable accounting standards. These controls arereviewed periodically and the Company continuously tries to verify these controls toincrease its reliability.

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.

23. BRIL Employee Stock Option Scheme

The Board of Directors of the company at their meeting held on 26th June 2020 and themembers of the company at their meeting held on 29th September 2020 approved BRILEmployee Stock Option Scheme 2020 ("BRIL ESOS 2020") for grant of stock optionsto 'Eligible Employees' of the company. The scheme was introduced for eligible employeesof the company with an objective to motive employees giving them opportunity toparticipate and gain from the company's performance thereby acting as a retention tool aswell as align the efforts of such talent towards long term value creation of theorganization.

24. 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.

25. Vigil Mechanism and Reporting of Frauds

The Company has framed Vigil Mechanism/Whistle Blower Policy ("Policy") toenable Directors and employees to report genuine concerns or grievances unethicalbehavior and irregularities fraud if any which could adversely affect the Company'soperations to the Audit Committee Chairman.

There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and/or Board under Section 143(12) ofthe Act and Rules framed thereunder.

26. 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 provided in Annexure II which forms part of this Annual Report.

27. 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 were 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.

28. Business Responsibility Report

Pursuant to Regulation 34(2)(f) of the Listing Regulations the Business ResponsibilityReport initiatives taken from an environmental social and governance perspective in theprescribed format is available as a separate section of this Annual Report.

29. 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.

30. Listing

The company's shares are listed on the BSE and the applicable listing fees have beenpaid.

31. 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 are covered under the provisions of the said rules.

The ratio of the remuneration of each director to the median employees' remunerationand other details in terms of Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is provided in Annexure III which forms part of this Annual Report.

32. 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.

Salient features of the CSR policy and the details of activities as required underCompanies (Corporate Social Responsibility Policy) Rules 2014 is provided in AnnexureIV forming part of this report. The CSR Policy is available on the website of thecompany.

33. Disclosure Requirements

As per SEBI Listing Regulations the Corporate Governance Report with the Auditors'Certificate thereon and the Management Discussion and Analysis including the BusinessResponsibility Report are attached which form part of this report.

The Company has devised proper systems to ensure compliance with the provisions of allapplicable secretarial standards issued by the Institute of Company Secretaries of Indiaand that such systems are adequate and operating effectively.

34. 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.

35. Acknowledgements

The Board of Directors place on record sincere gratitude and appreciation to all theemployees at all levels for their hard work solidarity cooperation and dedication duringthe year.

The Board conveys its appreciation to its principal's customers shareholderssuppliers as well as vendors bankers business associates regulatory and governmentauthorities for their continued support.

Cautionary Statement

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 theseforward-looking statements will be realised although we believe we have been prudent inmaking any assumptions. We undertake no obligation to publicly update any forwardlookingstatements whether as a result of new information future events or otherwise.

For and on behalf of the Board
Anup Jatia Sandeep Chokhani
Executive Director Director
Place: Mumbai
Dated: 26th August 2021 Dated: 27th August 2021