and Management Discussion & Analysis
Your Directors have pleasure in presenting their report along with the audited accountsfor the year ended March 31 2019.
REVIEW OF OPERATIONS
In line with the Government's Make in India impetus and the potentialopportunity that this offers domestic component suppliers your company decided to upgradeits thirty year old Printed Circuit Board (PCB) manufacturing plant during the year. PCB'sremain at the core of every electronic product and therefore is a basic requirement ofcompanies looking to shift to domestic manufacture. Over the course of the year yourcompany has replaced its entire PCB manufacturing plant with state-of-the art automatedlines from Taiwan and Japan. The plant has also been provided with necessary utilityinfrastructure and environmentally friendly effluent treatment facilities. This new lineis now installed and is expected to be commissioned by September 2019. Your company'smanagement is confident that this new PCB plant will vastly improve BPL's prospects as atier 1 PCB supplier to the Electonics Manufacturing Services (EMS) Lighting PowerConversion and Automotive industries.
BPL's consumer business continues to grow steadily and made up for the shortage ofmanufacturing output resulting from the PCB plant upgradation process. In addition toTelevisions Washing Machines Microwave ovens Air conditioners and Side-by-SideRefrigerators the company also added Dishwashers and Audio products like sound bars andBluetooth speakers to the line-up. BPL remains a top seller across categories and soldacross more pin codes than most other online only brands. To ensure post purchase customercare BPL added its own service infrastructure across all southern states increased thenumber of languages supported in our call centre and launched its own CRM and Service Appsfor better product support. We believe that these investments will differentiate BPL overmultiple new entrant brands that have little or no customer care infrastructure in India.BPL also ensures that it fully complies with various government regulations such as BISBEE and the recently introduced E-Waste Management rules.
For the year 2018-19 your company posted gross revenues of Rs.143.22 Crores andoperating profits of Rs. 3.70 Crores (before provisions & taxation). Your Company'sfinancial performance for the year under review is summarized below:
| || ||(Rs in crores) |
|Particulars ||Year Ended |
| ||31.03.2019 ||31.03.2018 |
|Net Sales and other income ||143.22 ||140.32 |
|Profit before Tax ||3.70 ||22.62 |
|Deferred Tax ||2.77 ||15.27 |
|Profit after Tax ||0.93 ||7.35 |
|EPS - Basic ||0.19 ||1.50 |
|- Diluted ||0.19 ||1.50 |
Your Directors express their inability to recommend any dividend on equity shares ofthe Company since your Company needs to fund new business initiatives additional productlines and a surge in business levels.
Since there was no unpaid/unclaimed Dividend declared and paid last year theprovisions of Section 125 of the Companies Act 2013 and rules framed thereunder do notapply.
However a dividend on the Preference Shares has been recommended as per the terms ofthe issue covered by the approved Scheme of Arrangement.
In view of the Government's recently announced e-commerce policy and the potentialrestrictions that this may have on e-commerce platforms your company is exploring theoptions of entering off-line markets in addition to the online channel. This will mitigateany risk from a possible slowdown of online sales and will also cater to the growingdemand for consumer durables in semi-urban markets. In the initial phase the company willlook to enter Southern States where BPL has created its own service infrastructure. Plansalso include selling products into Tier 2 and upcountry regions which have little or noconflict with e-commerce channels. Your company's management is confident that BPL has asignificant advantage over other brands sold in the region both in terms of brandrecognition and customer experience. In view of this change in channel strategy yourcompany will add select products such as Direct Cool Refrigerators and large sized SemiAutomatic Washing Machines which appeal to the target market. The company will also offera wider range of LED televisions and also have Smart TV versions of all popular sizes.
Your company's management firmly believes that the new channel strategies combinedwith an expanded and improved service network will help the company maintain growth inthe Consumer Durables business years ahead. Furthermore with the imminent commissioningof BPL's upgraded PCB plant the company is confident of sustainable and profitable growthof the business. BPL will also soon explore other Make in India initiativesboth for inhouse consumption and EMS.
RISKS AND CONCERNS
The global trade tensions the recessionary trends of the Indian economy burgeoningunemployment and the resultant policy changes by the government continue to pressure ourindustry. Moreover frequent changes in import duty tariffs have made it difficult to planexpansions for most companies. While on one side the government encourages domesticmanufacture Free Trade Agreements (FTAs) with neighbouring countries allows duty freeimports that makes Indian companies less competitive.
It is hoped that as the economy stabilises and trade conflicts subside there will be aprolonged period of policy stability and growth of the industry. Most of these risks andconcerns stem from factors beyond our direct control.
SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
Your company has no subsidiaries joint ventures or associate companies.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the Regulators or Courts orTribunals impacting the going concern status and company's operations in the future.
SAFETY HEALTH AND ENVIRONMENT
Safety Committees at the manufacturing unit are functioning properly to ensure safe andhealthy work environment.
Safety Health and Environmental requirements as per rules have been adhered to at theunit. Shop in-charge personnel and all security staff have been given sufficient on thejob training in the use of safety equipments. Necessary consent(s) have been obtained frompollution control Board with respect to Water and Air. Fire Fighting equipments and waterhydrant system are installed inside the factory for safety of all personnel and to meetany eventuality.
The Company has126 employees as on March 31 2019.
Conservation of energy technology absorption and foreign exchange earnings and outgo
a) Conservation of Energy:
Though not a large-scale user of energy your Company continues to explore severalmeasures to conserve scarce resources and protect the environment.
These include water recycling waste recycling solder fumes control and power factorImprovement.During the year under review in view of working capital constraints yourcompany has not made any capital investment on energy conservation equipments.
b) Technology Absorption:
Electronics technology is changing rapidly and continuous efforts are required to keeppace with it. However due to financial and manpower constraints your company has notbeen able to invest in R&D during the year under review. It is hoped that withimprovement in top line and bottom line in the coming year your company will be able tofocus on this important area.
c) Foreign Exchange earnings and outgo: During the period under review your Companyutilized foreign exchange worth Rs.133.58 Lakhs and foreign exchange earning was nil.
Your Company reaffirms its commitment to corporate governance and is fully compliantwith the conditions of Corporate Governance as stipulated in SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. A separate section on compliance with theconditions of Corporate Governance and certificate from the Statutory Auditors of theCompany -M/s MKUK & Associates Chartered Accountants in this regard forms part ofthe Annual Report.
BOARD PERFORMANCE EVALUATION
The Company has during the year conducted an evaluation of the Board as a whole itscommittees and the Individual Directors including the independent directors as stipulatedin the Nomination and Remuneration policy adopted by the Company. The evaluation wascarried out through different evaluation forms which covered among the evaluation of thecomposition of the Board/Committee its effectiveness activities governance and withrespect to the chairman and the individual directors their participation integrityindependence knowledge impact and influence on the Board.
The Independent Directors of the Company have also convened a separate meeting on 23rdMay 2018 and evaluated the performance of the Board the non-independent directors and thechairman. Performance evaluation criteria is as per the policy available at the web linkhttp://www.bpl.in/investor-relations/policies/policy-on-board valuation.pdf.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION POLICY
Policy on Directors appointment is to follow the criteria as laid down under theCompanies Act 2013 BPL Code of Conduct for Board of Directors and senior managementpersonnel and the Uniform Listing Agreement with stock exchanges and good corporatepractices. Emphasis is given to persons from diverse field or professions.
Guiding policy on remuneration of Directors Key Managerial Personnel and Employees ofthe company is that:
Remuneration to Key Managerial Personnel Senior Executives Managers Staff andworkmen is industry-driven and takes into account their performance and factors such as toattract and retain quality talent.
For Directors it is based on the shareholders resolutions provisions of the CompaniesAct 2013 and Rules framed there in Circulars and Guidelines issued by the CentralGovernment and other authorities from time to time.
DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS
Pursuant to Section 149(6) of the Companies Act 2013 and SEBI (LODR) Regulations2015 Capt. Subbarao Prabhala and Mr. Suraj Lal Mehta the Independent Directors of thecompany have made a declaration to the Company confirming the compliance of the conditionsstipulated in the aforesaid section.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements of Section 134 (1) (c ) of the Companies Act 2013 and onthe basis of explanations and compliance certificates given by the executives of thecompany and subject to disclosures in the annual accounts and also on the basis ofdiscussions with the statutory auditors of the company from time to time we state asunder:
a) that in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanations relating to material departures;
b) that the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit of the company ended as on that date;
c) that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;
d) that the Directors had prepared the annual accounts on a going concern basis.
e) that the Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively and
f) that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
The Board of Directors at its meeting held on 19th March 2019 on the recommendationsof Nomination and Remuneration Committee has approved the re-appointment of Mr. Ajit GNambiar as Chairman & Managing Director of the Company for a period of 3 years (witheffect from 1st April 2019) pursuant to provisions of Section 196 of the Companies Act2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014(including any statutory modifications or re-enactment(s) thereof for the time being inforce) and subject to the approval of the shareholders of the Company in the ensuingAnnual General Meeting.
In accordance with the provisions of the Companies Act 2013 and Articles ofAssociation of the Company Mrs. Anju Chandrasekhar Director retires by rotation andbeing eligible offers herself for reappointment. Her re-appointment will be placed as oneof the items of agenda in the ensuing Annual General Meeting.
In accordance with provisions of Sections149 150 152 and any other applicableprovisions of the Companies Act 2013 and the Companies (Appointment and Qualification ofDirectors) Rules 2014 (including any statutory modification(s) or re-enactment thereoffor the time being in force) read with Schedule IV to the Act and Regulation 17(1)(A) ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and based onthe recommendations of Nomination and Remuneration Committee your company hasre-appointed Capt. S Prabhala and Mr.Suraj L Mehta as the independent directors of theCompany for a further period of 5 years at the meeting of the Board of Directors held on12th August 2019. These appointments are subject to the approval of shareholders by wayof special resolutions at the forthcoming Annual General Meeting. A detailed justificationas required under SEBI (LODR) Regulations 2015 has been stated in the explanatorystatement in the Notice convening the Annual General Meeting of the members of the companywhich forms part of this Annual Report.
NUMBER OF MEETINGS OF BOARD OF DIRECTORS
The Board of Directors have met five times and Independent Directors once during theFinancial Year 2018-19 and details of date of meetings are available in the CorporateGovernance report section which forms part of the annual report.
DETAILS OF COMMITTEE OF DIRECTORS
Composition of Audit Committee Nomination & Remuneration Committee StakeholdersRelationship Committee and Corporate Social Responsibility Committee; number of meetingsof each committee during the financial year 2018-19 and meetings attended by each memberof the committee as required under the Companies Act 2013 are provided in CorporateGovernance Report section which forms part of the annual report.
KEY MANAGERIAL PERSONNEL
Mr. Ajit G. Nambiar is the Chairman & Managing Director of the company. Mr. S.V.Ganesh Chief Financial Officer (CFO) and Mrs. Chitra. M.A Company Secretary &Compliance Officer were the Key Managerial personnel of the Company pursuant to Section203 of the Companies Act 2013.
Mr. S Ranganathan has been appointed as CFO of the company with effect from 1st April2019 in place of Mr. S V Ganesh who resigned as CFO on 28th March 2019. Mrs. Chitra M Aresigned as Company Secretary & Compliance Officer on 31st March 2019 and thecompany is in the process of recruiting a person to fill this post.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The particulars of every contract or arrangements entered into by the Company withrelated parties referred to in sub-section (1) of Section 188 of the Companies Act 2013including certain arm's length transactions under third proviso thereto are disclosed inForm AOC- 2 which forms part of the annual report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The details of loans guarantees and investments covered under the provisions ofSection 186 of the Companies Act 2013 are given in the notes to the Financial Statements.
The Company has not accepted any deposits from the public and hence the provisions ofthe Companies Act 2013 and Rules framed thereunder are not applicable to the company.
The paid up Equity Share Capital of the Company as on 31st March 2019 stood atRs.48.88 Crores comprising 48884818 Equity Shares of Rs.10/- each fully paid up. Thepaid-up Preference Share Capital of the Company as on 31st March 2019 was Rs.169.59Crores consisting of 16958682 Redeemable Preference Shares of Rs.100/- each.
The Company has not issued any Sweat Equity Shares or granted any Employee Stock Optionduring the Financial Year 2018-19. The Company has not made any provision of money for thepurchase of or subscription for shares in the Company under any Scheme.
The provisions of Rule 4 (4) of Companies (Share Capital and Debentures) Rules 2014are not applicable to the company since no Equity Shares have been issued by the Companywith differential rights during the Financial Year 2018-19.
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuing basis. These arediscussed at the meetings of the Audit Committee and the Board of Directors of theCompany. The Company's internal control systems are commensurate with the nature of itsbusiness and the size and complexity of its operations. Significant audit observations andfollow up actions thereon are reported to the Audit Committee.
WHISTLE BLOWER/VIGIL MECHANISM POLICY
The Company has put in place a Whistle Blower/ Vigil Mechanism Policy to provide anopen and transparent working environment and to promote responsible and secure whistleblowing system for directors and employees of the company to raise any concern. The policybroadly cover instances of unethical behaviour actual or suspected fraud or violation ofthe company's code of conduct alteration of documents fraudulent financial reportingmisappropriation/ misuse of company's assets manipulation of company's data pilferage ofproprietary information abuse of authority etc. The policy provides safeguard againstvictimization of Director(s)/employee(s) who raise the concern and have access to theChairman of Audit Committee who is entrusted to oversee the whistle blower mechanism. Thepolicy is available on the website of the company.
MANAGEMENT DISCUSSION & ANALYSIS
Your Directors have covered the Management Discussion & Analysis as required underthe Corporate Governance requirements as a part of the Board's Report at appropriateplaces to avoid duplication and overlapping of the contents of the said two reports.
INTERNAL CONTROL AND THEIR ADEQUACY
Your Company has adequate internal financial control systems and checks which ensurethat all assets are safeguarded and that all transactions are recorded and reportedproperly.
The Internal Financial Control Systems are supplemented by extensive programme ofinternal audit conducted by external qualified Chartered Accountants. The Company has alsoput in place effective Budgetary Systems.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has constituted Corporate Social Responsibility Committee which iscomprised of three members out of which one is an Independent Director. The Committeewas set up to formulate and monitor the CSR Policy. The Company's average net profit forlast 3 years computed as per the provisions of Section 135(5) of Companies Act 2013 wasRs. 5.68 lakhs. The Company has already spent certain amount on CSR activities and thedetails of which are available in Annexure-A.
Disclosures on CSR Activities as per Rule 9 of Companies (Corporate SocialResponsibility Policy) Rules 2014 are as tabled below:
|1.A brief outline of the Company's CSR Policy including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSR policy and project or programs ||The Company's CSR Policy intends to |
| ||i. Promote education including employment enhancing vocation skills especially among children and women. |
| ||ii. Eradicate hunger poverty and malnutrition and |
| ||iii. Promote healthcare and sanitation. |
|2.The Composition of the CSR Committee ||Mrs. Anju Chandrasekhar- Chair person Capt.S.Prabhala- Member Mr. Ajit G Nambiar- Member |
|3.Average net profit of the Company for last three financial years ||Rs. 28433421/- |
|4.Prescribed CSR Expenditure (two percent of the amount as in item 3 above ||The Company was required to spend an amount of Rs. 568558/- towards CSR activities. However the Company has spent a sum of Rs. 3.70 lacs on CSR activities during the current financial year. |
|5.Details of CSR spent during the year || |
|a) Total amount to be spent for the financial year ||Rs. 568668/- |
|b) Amount unspent if any ||Rs. 198168/- |
|c) Manner in which the amount spent during the financial year ||As detailed in Annexure - A |
|6.In case the Company has failed to spend the two percent of the average net profit of the last three financial years or any part thereof the reasons for not spending the amount in its Board report. ||The Company has spent a sum of Rs. 3.70 lacs on CSR activities out of Rs. 5.68 Rs. 5.68 lacs. The Company will be contributing the balance CSR amount to "PM Nations Relief Fund" to meet flood relief activities. |
|7.A responsibility Statement of the CSR Committee that the implementation and monitoring of CSR policy is in compliance with CSR objectives and the policy of the company ||The spending on CSR activities by the Company are covered under Schedule VII of the CA 2013 and further notifications from MCA from time to time and the implementation and monitoring of CSR Policy is in compliance with CSR objectives and Policy of the company. |
Annexure - A
|SI. No Project or Activities ||Sector ||Locations (District/State) ||Amount outlay (budget) ||Amount spent (Rs.) ||Cumulative expenditure upto the reporting period (Rs.) ||Amount spent: (Direct or through implementing agency) |
|1. Rural Education Project ||Education ||Haliyal Uttara Kannada District Karnataka ||NA ||200000/- ||200000/- ||Through Cherysh Trust |
|2. Kids health improvement ||Healthcare ||Bangalore Karnataka ||NA ||50000/- ||50000/- ||Through Aster Sick Kids Foundation |
|3. Flood Relief Activity ||Socio Economicof development ||Kottayam Kerala ||NA ||100000/- ||100000/- ||Through Rotary Club Kottayam |
|4. Blood donation ||Healthcare camp ||Bangalore Karnataka ||NA ||20000/- ||20000/- ||Through National Service Scheme of MSRIT Bangalore |
|5. Food for poor ||Poverty ||Doddaballapur Karnataka ||NA ||500/- ||500/- ||Through Ambedkar Charitable Trust |
|Total || || || ||370500/- ||370500/- || |
|Ajit G Nambiar ||Anju Chandrasekhar |
|Member - CSR Committee ||Chair Person - CSR Committee |
PARTICULARS OF EMPLOYEES
Pursuant to Rule 5 of the Companies (Appointment and Remuneration) Rules 2014 adisclosure on remuneration related information of employees Key Managerial Personnel andDirectors is annexed herewith and forms part of the report (Annexure-I).
M/s. MKUK & Associates Chartered Accountants are the Auditors of the Company forfive consecutive years from the FY 2017-18.
An extract of Annual Return in the prescribed format is displayed on the Company'swebsite: www.bpl.in under the head Investor Relations.
The Company has complied with all the applicable Secretarial Standards.
SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 read with Section 134(3) of the CompaniesAct 2013 your company has appointed Mr. Madhwesh.K a Practicing Company Secretary asSecretarial Auditor of the Company for the Financial Year 2018-19 and the SecretarialAudit Report is annexed herewith and forming part of the report.The explanations of theBoard on every qualification reservation or adverse remark or disclaimer made by theAuditor in his report have been furnished by way of an addendum.
The Company's business during the year under review was not covered under the CostAudit Rules nor had the Government notified the company to appoint a cost auditor for thesaid period.
ANTI SEXUAL HARASSMENT POLICY
The Company has in place an AntiSexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013 aiming at prevention of harassment of employees and lays down theguidelines for identification reporting and prevention of sexual harassment. A Committeehas been set up to redress complaints received regarding sexual harassment. All employees(permanent contractual temporary trainees) are covered under this Policy.
During the year under review there were no complaints pertaining to sexual harassment.
The Board wishes to record its appreciation of the continued support and hard work ofthe employees at all levels. The Board also acknowledges continued co-operation receivedfrom Dealers Suppliers Customers Banks Government Departments Financial InstitutionsChannel Partners and Shareholders.
| ||For and on behalf of the |
| ||Board of Directors |
| ||Ajit G Nambiar |
|12th August 2019 ||Chairman & Managing Director |
|Bengaluru ||DIN: 00228857 |