Bombay Rayon Fashions Ltd.
|BSE: 532678||Sector: Industrials|
|NSE: BRFL||ISIN Code: INE589G01011|
|BSE 16:01 | 24 Feb||4.15||
|NSE 00:00 | 24 Feb||4.00||
|Mkt Cap.(Rs cr)||132|
|Mkt Cap.(Rs cr)||131.75|
Bombay Rayon Fashions Ltd. (BRFL) - Director Report
Company director report
Your Directors are presenting the Twenty Sixth Annual Report of the Company togetherwith the Audited Annual Accounts for the year ended 31st March 2019.
1. FINANCIAL AND OPERATIONAL PERFORMANCE:
a. Financial Results
Financial and Operational Results of the Company for the year ended 31stMarch 2019 as compared to the previous financial year is summarized below:
(Rs. in crores)
(i) The total sale of the Company for the year under review has dropped drasticallyfrom Rs. 3088.36 crores to Rs. 941.46 crores. The drastic drop in the sales is due togeneral market conditions and tremendous financial stress on the company because of non -availability of working capital for the business. The net loss after tax for the yearunder review was Rs. 1687.26 crores as compared to loss of Rs. 282.07 crores of previousfinancial year. The Company is going through a major restructuring of its debts and alsooperations are getting realigned. In the process of consolidation non- core assets havebeen identified and put for disposal to ease out the liquidity and reduction in debt.
(ii) Assignment of Loans by the lenders of the company:
During the year under review the lenders of the company had opted for assignment oftheir debts to Asset Reconstruction Company once the account of the company turned intoNon Performing Assets (NPA) in their Books. Lenders have opted for assignment of theiroutstanding debt of term loans working capital loans and Optionally ConvertibleDebentures (OCDs) to J M Financial Asset Reconstruction Company Limited (JMFARC) insteadof restructuring the debts as per the resolution plan submitted by the Company.Accordingly out of total borrowings from Banks approximately 75% of total debt is withJMFARC on assignment of loans.
c. Report on Performance of Subsidiaries:
A report on the performance and financial position of each of the subsidiaries areprovided as Annexure - I and forms part of this report.
Additional information on Subsidiary companies:
i. Bombay Rayon Holdings Limited (BRHL)
BRHL holds 100% Equity of foreign subsidiaries i.e. BRFL Italia S.R.L. & BRFLItalia Licensee S.R.L.
BRHL registered a net Profit of Rs.2.26 crores for the year ended March 31 2019.
ii. STI India Limited (STI).
The Company is running the unit of STI on job work basis for the manufacturing of yarnand knitted fabric. The manufactured yarn is used for captive consumption and some part issold in the open market.
STI registered a net Loss of Rs. 5.82 crores for the year ended March 31 2019.
iii. DPJ Clothing Ltd U.K.
DPJ Clothing Limited is engaged in business of wholesale marketing and distribution ofclothing products. However there are no major activities due to global economicconditions.
iv. BRFL Italia S.R.L Italy.
The Company owns the brand 'GURU' for ready- made garments as well as for otheraccessories.
The retail operations being not viable in the current prevailing economic scenarioare totally closed and the company is in process of re- arrangements.
v. BRFL Italia Licensee S.R.L Italy.
BRFL Italia licensee S.R.L is presently having the licenses for brand 'GURU.'
The operations are presently suspended.
vi. BRFL Bangladesh Private Limited.
The Company has not commenced its operations.
d. Consolidated Accounts
The Consolidated Financial Statements of your Company for the financial year 2018-19have been prepared in compliance with applicable provisions of the Companies Act 2013read with the Rules issued thereunder applicable Accounting Standards and the provisionsof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015
(hereinafter referred to as the "Listing Regulations"). The consolidatedfinancial statements have been prepared on the basis of audited financial statements ofyour Company and audited and/or provisional financial statements of its
subsidiaries as approved by the respective Board of Directors of the said Companies.The Consolidated Financial Statement does not include the financials of BRFL Italia S.r.lBRFL Italia Licensee S.r.l DPJ Clothing Limited & BRFL Bangladesh Private Limited asthe financials statements of these companies are not available with the company.
In view of the losses incurred during the year under review the Board of Directors hasnot recommended any dividend for the financial year ended March 31 2019.
f. Transfer to reserve:
In view of loss incurred during the year under review the Board of Directors has notrecommended any amount to be transferred to Reserves.
2. DISCLOSURE OF INTERNAL FINANCIAL
The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate. During the year under review no material orserious observation has been received from the Internal Auditors of
the Company for inefficiency or inadequacy of such controls.
3. PARTICULARS OF LOANS GUARANTEES INVESTMENTS ANDSECURITIES:
Full Particulars of Loans & Guarantees Given Investments made and Securitiesprovided along with the purpose for which the loan or guarantee or security is proposed tobe utilized by the recipient are provided in the financial statement.
4. PARTICULARS OF CONTRACTS/ ARRANGEMENTS/ TRANSACTIONS WITH RELATEDPARTIES:
All contracts / arrangements / transactions falling within the purview of Section 188of the Companies Act 2013 entered into by the Company during the financial year withrelated parties were in the ordinary course of business and on an arm's length basis. Noneof the transactions entered into by the Company with related party were material in natureexceeding the limit 10% of annual standalone/consolidated turnover of the Company.
The particulars of contracts or arrangements with related parties are forming part ofNotes to Accounts in this Annual Report.
All Related party transactions are placed before the Audit Committee and subsequentlybefore the Board for its approval. Omnibus approval is obtained on yearly basis fortransactions which are of repetitive nature as per the policy on Materiality of andDealing with Related Party Transactions. The policy on related party transactions asapproved by the Board of Directors has been uploaded on the website of the Company.
5. PAYMENT TO BANKERS AND STATUTORY AUTHORITIES:
During the year under review there were delays in payment of dues to bankers as wellas to statutory authorities.
6. MATTERS RELATED TO CHANGE IN DIRECTORS AND KEY MANAGERIAL PERSONNEL AND DECLARATIONBY INDEPENDENTDIRECTORS:
a. Changes in Board of Directors & Key Managerial Personnel:
I. Vacation of Office
During the year under review: -
i) Mr. Narayanan Raja Nominee Director of State Bank of India of the Company resignedw.e.f 8th Jan 2019 on assignment of debt to JMFARC by SBI;
ii) Mr. Man Mohan Agrawal Independent Director tendered his resignation w.e.f 28thJan 2019 due to his age & health factors.
II. Appointment of Director
Ms. Manjiri Bhalerao had been appointed as a Nominee Director on the Board of theCompany by Export-Import Bank of India (EXIM) w.e.f 14thFebruary 2019.
III. Changes in the Board of Directors after 31st March 2019:
a) Mr. Arunachalam Arumugham and Mr. Naseer Ahmed Independent Directors of the Companyresigned w.e.f 6th June 2019 and 10th June 2019 due to personalreason;
b) Nomination of Ms. Manjiri Bhalerao was withdrawn w.e.f 16th July 2019 byEXIM on assignment of its debts to JMFARC.
IV. Changes in Key Managerial Personnel (KMP):
There are no changes in the KMPs during the reporting period.
b. Re- appointment of Whole - Time Directors:
Pursuant to the provisions of Section 196 197 203 of the Companies Act 2013 theterms of appointment of whole - time directors viz. Mr. Aman Agrawal Mr. PrashantAgrawal Mr. A. R. Mundra and Ms. Prachi Deshpande expired on 31st May 2019.The Board recommends their re- appointment for further tenure of two years commencing fromJune 1 2019.
Necessary resolutions are included in the notice of ensuing annual general meeting forapproval of members.
c. Directors Retiring by Rotation:
Pursuant to the provisions of Section 152 of the Companies Act 2013 Mr. A. R. Mundraand Ms. Prachi Deshpande Directors shall retire by rotation at the ensuing Annual GeneralMeeting of the Company and being eligible have offered themselves for reappointment. Inaccordance with the provisions of the Act none of the Independent Directors are liable toretire by rotation.
d. Declaration by Independent Directors:
The Company has received and taken on record the declarations received from all theIndependent Directors of the Company in accordance to Section 149(6) of the
Companies Act 2013 confirming their independence vis- a-vis the Company.
7. DISCLOSURES RELATED TO BOARD COMMITTEES ANDPOLICIES:
a. Board Meetings:
Five meetings of Board of Directors were convened during the financial year underreview details of which are furnished in the Corporate Governance report forming part ofAnnual report.
b. Board Committees:
Details of all the following committees constituted by the Board alongwith theircomposition; terms of reference and meetings held during the year are provided in theReport of Corporate Governance which forms part of this Report:
1. Audit Committee
2. Stakeholders' Relationship Committee
3. Nomination and Remuneration Committee
4. Corporate Social Responsibility Committee
5. Risk Management Committee
c. Director's Responsibility Statement:
In terms of Section 134(5) of the Companies Act 2013 in relation to the auditedAnnual Financial Statements of the Company for the financial year ended March 31 2019the Board of Directors hereby confirms that:
a. in the preparation of the annual accounts for the financial year ended March 312019 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
b. such accounting policies have been selected and applied consistently and theDirectors made judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at March 31 2019 and of theLoss of the Company for that year;
c. proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
d. the annual accounts of the Company have been prepared on a going concern basis;
e. internal financial controls have been laid down to be followed by the Company andthat such internal financial controls are adequate and were operating effectively;
f. Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
(I) Vigil Mechanism Policy:
In compliance with the requirements of section 177 of the companies Act 2013 &Regulation 22 of Listing Regulations and as measure of good Corporate Governance practicethe Board has formulated a Vigil Mechanism Policy. The policy comprehensively provides anopportunity for any employee/ director of the Company to elevate any issue concerningbreaches accounting policies or any act resulting in financial or reputation loss andmisuse of office or suspected or actual fraud. The policy is adequate safeguard againstvictimization.
The Board of Directors of the Company has pursuant to the provisions of Section 178(9)of the Companies Act 2013 read with Rule 7 of the Companies (Meetings of Board and itsPowers) Rules 2014 framed "Vigil Mechanism Policy" for Directors and Employeesof the Company to provide a mechanism which ensures adequate safeguards to employees andDirectors from any victimization on raising of concerns of any violations of legal orregulatory requirements incorrect or misrepresentation of any financial statements andreports etc. and the same is also hosted on the website of the Company.
The employees of the Company have the right/option to report their concern/grievance tothe Chairman of the Audit Committee.
The Company is committed to adhere to the highest standards of ethical moral and legalconduct of business operations.
(II) Risk Management Policy:
The Board of Directors of the Company has designed Risk Management Policy andGuidelines to avoid events situations or circumstances which may lead to negativeconsequences on the Company's businesses and define a structured approach to manageuncertainty and to make use of these in their decision making pertaining to all business
divisions and corporate functions. Key business risks and their mitigation areconsidered in the annual/strategic business plans and in periodic management reviews.Corporate Social Responsibility Policy:
The Company has defined policy on Corporate Social Responsibility pursuant to theprovisions of Section 135 of the Act read with Companies (Corporate Social ResponsibilityPolicy) Rules 2014.
The policy is hosted on the website of the Company i.e.
(III) Remuneration Policy
The Company has adopted a Remuneration Policy pursuant to the provisions of section 178of the Companies Act 2013. The policy is hosted on the website of the Company i.e.
e. Annual Evaluation of Directors Committee and Board:
Independent Directors had carried out the annual evaluation of the Directors for thefinancial year 2018-19. The Board of Directors in their meeting has reviewed thecontribution made by each Independent Director by way of their timely advice for bettercorporate governance and compliances under the provisions of the laws as applicable to theCompany.
No commission is proposed to be paid to the Chairman or any of the Directors of theCompany for financial year 2018-19.
f. Details with respect to the Program for Familiarisation of Independent Directors:*
Independent Directors were made familiar with situation of the Company from time totime in duly held Board Meetings during the FY 2018-19. The policy of the Company onFamiliarisation of Independent Directors is placed on the website of the Company i.e.
g. Internal Control Systems:
Adequate internal control systems commensurate with the nature of the Company'sbusiness and size and complexity of its operations are in place and have been
operating satisfactorily. Internal control systems comprising of policies andprocedures are designed to ensure reliability of financial reporting timely feedback onachievement of operational and strategic goals compliance with policies procedureapplicable laws and regulations and that all assets and resources are acquiredeconomically used efficiently and adequately protected.
8. PARTICULARS OF EMPLOYEES ANDRELATED DISCLOSURES:
Pursuant to the Provisions of Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014the requisite details are annexed herewith vide Annexure II.
The Company has no employee coming under the preview of requirement as mentioned inRule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of employees of the Company. In terms of Section 136 (1) of the CompaniesAct 2013 the report and the Accounts are being sent to the members. Any memberinterested in obtaining copy of the same any write to the Company Secretary at theRegistered Office of the Company.
9. CHANGE INCAPITAL:
During the year there was no change in capital structure of the Company.
10. AUDITORS AND REPORTS:
a. Statutory Auditors:
The shareholders of the Company in the Annual General Meeting held on 26thSeptember 2017 had appointed M/s. P R Agrawal & Awasthi Chartered Accountants (ICAIFirm Registration Number 117940 W) as the statutory auditors of the Company for the periodof 5 years i.e. for the period from FY 2017-18 till FY 2021-22.
The Report of the Statutory Auditors on the financial statement for the year ended 31stMarch 2019 does not contain any qualification.
b. Secretarial Audit Report for the year ended 31stMarch 2019:
The Board had appointed M/s. Rathi & Associates Company Secretaries as Secretarialauditors for the financial year 2018-19. The Secretarial Audit Report issued by Rathi& Associates in Form MR-3 forms part of this report and has been marked as AnnexureIII.
The Report of the Secretarial Auditors on the financial statement for the year ended 31stMarch 2019 contains qualification The Board of Directors would like to state that:
i. The accounts of foreign subsidiaries could not get consolidated due tonon-availability of financial statements for the FY 2017-18;
ii. The payment of Annual Listing Fees was delayed due to financial stress on theCompany.
c. Cost Auditors:
Pursuant to the provisions of Section 148 of the Companies Act 2013 read withNotifications/Circulars issued by the Ministry of Corporate Affairs from time to time asper the recommendation of the Audit Committee the Board of Directors at their meetingheld on 14th August 2019 appointed M/s. K. S. Kamalakara & Company CostAccountants as the Cost Auditors of the Company for the financial year 2019-20 at an auditfee of Rs. 200000/- subject to ratification for payment of remuneration by shareholders.
d. Internal Audit and Control:
M/s. Venkatram & Co. Firm Registration No. 004656S Chartered AccountantsInternal Auditors of the Company has carried out internal audit on the areas inconsultation with the Audit Committee and the findings of the Internal Auditors in theirreports are discussed regularly in the meetings of the Audit Committee and correctiveactions have also been taken as per the directions of the Audit Committee members.
11. FRAUD REPORTING:
There have been no instances of fraud reported by the Statutory Auditors under Section143(12) of the Act and Rules framed thereunder either to the Company or to the CentralGovernment.
12. OTHER DISCLOSURES:
Other disclosures as per provisions of Section 134 of the Act read with Companies(Accounts) Rules 2014 are furnished as under:
a. Extract of Annual Return:
Pursuant to the provisions of Section 134(3)(a) of the Companies Act 2013 Extract ofthe Annual Return for the financial year ended 31st March 2019 made under theprovisions of Section 92(3) of the Act is attached as
Annexure IV which forms part of this Report and also placed on the website of theCompany www.bombayrayon.com.
b. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo:
The particulars as required under the provisions of Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in respect ofconservation of energy technology absorption foreign exchange earnings and outgo etc.are furnished in Annexure V which forms part of this report.
c. Corporate Governance and Management Discussion & Analysis Reports:
The Company is committed to maintain the high standards of Corporate Governance andadheres to its requisites set out by the respective authorities. The report on CorporateGovernance as stipulated under the Securities Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 is annexed vide Annexure VI and forms anintegral part of this Annual Report.
Management Discussion and Analysis Report for the year under review as requiredpursuant to the provisions of Regulation 34 (Schedule V (B) of SEBI (LODR)Regulations2015) is annexed herewith vide Annexure VII and forms part of this AnnualReport.
d. General Disclosures:
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions pertaining to these matters during F.Y.2018-19:
a. Acceptance of deposits covered under Chapter V of the Companies Act2013.
b. Issue of equity shares with differential rights as to dividend voting or otherwise.
c. Issue of shares (including sweat equity shares and ESOS) to employees of the Companyunder any scheme.
d. Instances with respect to voting rights not exercised directly by employees of theCompany.
e. Revision of the financial statements pertaining to previous financial years duringthe year under review.
Your Directors further state that:
f. Neither the Managing Director nor the Wholetime Directors of the Company havereceived any remuneration or commission from any of the subsidiary Company.
g. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
h. Except as disclosed elsewhere in this report no material changes and commitmentswhich could affect the Company's financial position have occurred between the end of thefinancial year of the Company and date of this Annual Report.
i. There was no change in the nature of business of the Company during the financialyear under review.
j. Pursuant to the provisions of Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 there are no case pertaining to sexual harassment atworkplace has been reported during F.Y.2018-19.
13. CAUTIONARY STATEMENT:
Statements in the Directors' Report and Management Discussion & Analysis describingthe Company's objectives projections estimates expectations or predication may be"forwardlooking statements' within the meaning of applicable securities laws andregulations actual results could differ materially for those expressed or impliedimportant factors that could make difference to the company's operations include rawmaterial availability and its prices cyclical demand and pricing in the company'sprinciple markets changes in government regulations tax regimes economic developmentswithin India and the countries in which the company conducts business and other ancillaryfactors.
Your Directors take this opportunity to thank the customers shareholders suppliersbankers business partners/associates financial institutions and Central and StateGovernments for their consistent support and encouragement to the business of Company.
Your Directors records with sincere appreciation the valuable contribution made byemployees at all levels and looks forward to their continued commitment to achieve furthergrowth and take up more challenges that the Company has set for the future.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Date: 14th August 2019
Registered Office Address:
3rd floor DLH Mangal Murti Building
Linking Road Santacruz (West) Mumbai-400054.
TEL No: +91 22 61068800 Fax No: 61068830