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BPL Ltd.

BSE: 500074 Sector: Consumer
NSE: BPL ISIN Code: INE110A01019
BSE 13:02 | 18 Jul 48.00 -1.55
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NSE 12:49 | 18 Jul 48.00 -1.75
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OPEN 53.00
PREVIOUS CLOSE 49.55
VOLUME 34443
52-Week high 121.75
52-Week low 47.50
P/E 32.00
Mkt Cap.(Rs cr) 235
Buy Price 48.00
Buy Qty 339.00
Sell Price 48.15
Sell Qty 252.00
OPEN 53.00
CLOSE 49.55
VOLUME 34443
52-Week high 121.75
52-Week low 47.50
P/E 32.00
Mkt Cap.(Rs cr) 235
Buy Price 48.00
Buy Qty 339.00
Sell Price 48.15
Sell Qty 252.00

BPL Ltd. (BPL) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting their report along with the audited accountsfor the year ended March 31 2017.

REVIEW OF OPERATIONS

Your Company continues to grow in the online consumer electronics sector despite anever-challenging macro-economic environment high competition and the recent effects ofdemonetization. From the commencement of its online business in 2015 the Company's growthhas more than doubled to emerge as amongst the leading brands in the online TV and WashingMachine segments. Positive product reviews and strong brand pull have helped BPL edge pastmany international and Indian brands resulting in your Company posting an income of Rs.155.18 Crores for the year 2016-17 as compared to Rs.56.82 Crores for the previous year.Profit for the year has been Rs.53.38 Crores (before provisions & taxation).

Your Company's financial performance for the year under review is summarized below:

(Rs. in crores)

Particulars Year Ended
31.03.2017 31.03.2016
Net Sales and other income 174.23 56.82
Profit/Loss before Tax 53.38 14.23
Deferred Tax Asset/Provision 0.31 (22.68)
Profit/Loss after Tax (including Profit/Loss from discontinuing operations) 53.07 (8.45)
Balance Reserve at the beginning of the period 20.71 29.16
Balance of Reserve at the end of Period 73.78 20.17
EPS - Basic 10.86 (1.73)
- Diluted 10.86 (1.73)

DIVIDEND

Your Directors regret their inability to recommend any dividend on equity shares of theCompany 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 do not apply.

However a dividend of Rs. 0.001 per share on the preference shares has beenrecommended as per the terms of the issue covered by the approved Scheme of Arrangement.

E-COMMERCE AND DIGITAL RETAIL IN INDIA

Globally e-commerce is on a growth path with China being the largest followed by theUS and India. The total global online sales in 2016 was US$ 681 billion.

It is expected that approximately 1/5th of total retail sales will take place online by2021 in Asia Pacific with 78 percent of that coming from mobile up from 63 percent in2016.

India is poised to see more people join the Internet over the next 15 years than anyother country. The prospect of 1 billion people online by 2030 sets the stage for enormoussurge in e-commerce. As penetration levels are still very low and with a push frome-commerce companies to reach into mini metros and rural areas India's e-commercebusiness will be on a high growth path for the next 10 years.

Your company is watchful of the pace of digital transformation taking place andconstantly endeavors to position itself to benefit from the developments in the yearsahead.

FUTURE OUTLOOK

As part of the Company's online strategy the company made a strategic shift from itsearlier channel partner to Amazon in May 2017. The initial months of operations have seena very positive acceptance of the BPL brand. Despite being on the new platform and withlimited product reviews BPL products have consistently emerged as "Top Sellers"in key categories on Amazon.

Encouraged by the response so far your Company is soon targeting to be a leader in thecategories that it operates in.

The Company has also recently widened its product range to include multiple models ofLED televisions Top & Front load Washing Machines Microwave Ovens and Airconditioners. In the months ahead BPL has plans to introduce many new products such asSmart Televisions high-end side-by-side Refrigerators new models in Washing machines& Microwave ovens Air purifiers and Sound bars. BPL's target is to grow by over 25%in 2017-18 and in the next 3 years reach a target of over Rs. 500 Crores.

Both Amazon and BPL have partnered to provide customers across India a trusted andconvenient way to shop for BPL's fast growing product range. The company also offersinstallation services and pan India service support. To make it more affordable customersalso have the option of interest free EMI solutions and exchange offers on selectproducts.

RISKS AND CONCERNS

E-commerce platforms offer very low entry barriers to Chinese and other multi-nationalelectronic & appliances brands who are able to make an easy entry in the Indianmarket. With deep pockets for high marketing spends these brands are also able to investheavily on visibility and affordability campaigns. The on-going price war amongst thevarious e-commerce companies is another concern as it puts pressure on BPL to offerproducts at extremely competitive rates and at the same time maintaining highest qualitylevels. Since most of the components are imported there is an additional risk ofinternational price fluctuations for these components and the possibility of adverse USDollar exchange rates.

PRINTED CIRCUITS BOARD (PCB) BUSINESS

The PCB industry in India at present consists of single sided double sided&multi layer PCBs. Your Company is engaged in manufacturing of single sided PCBs. Themajor market for this comes from the Lighting segment (LED) consumer electronics basictelecom equipments low-end power conversion and auto electronics industry. During theyear 2016-17 the segment wise contributions to the total PCB business is as under:

Segment %
TV 17
Lighting 50
Power Conversion 20
Automotive 8
Others 5
Total 100

Your Company was able to cope with the competition & sustain a growth of 18% overthe previous year with EBIDTA of around 23%.

Further PCB industry is witnessing sizeable growth in the led lighting/powerconversion sector the market in this segment is expected to grow around 20% this year.Your company intends to reap benefits from this growth and accordingly the turnover ofPCB business is expected to increase by 19% during the current fiscal year.

RISKS AND CONCERNS

Your company faces strong competition from other manufacturers with greater installedcapacity and economies of scale as well as greater financial resources and pricingflexibility. Your company is mindful of these factors and is taking various measures toprotect its market share and price competitiveness.

SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

Your company has no subsidiaries or joint ventures during the period under review.

Consequent to non-participation by the Company in the recently concluded 'rights issue'of BPL Medical Technologies Private Limited (BMTPL) the percentage of equity shareholdingof your Company in BMTPL has dropped to 15.88%. In view of this BMTPL is no longer anAssociate Company and accordingly no consolidation of accounts required for the financialyear 2016-17.

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 had 93 employees as on March 31 2017.

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 : Duringthe period under review your Company utilized foreign exchange worth Rs.49.56 Crores andforeign exchange earning was nil

CORPORATE GOVERNANCE

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 T Velupillai & Co Chartered Accountants in this regard forms part ofthe Annual Report.

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 ofCompanies Act 2013 and Rules framed there in Circulars and Guidelines issued by theCentral Government and other authorities from time to time.

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 also convened a separate meeting and evaluatedthe performance of the Board the non-independent directors and the chairman. Performanceevaluation criteria is as per the policy available at the web linkhttp://www.bpl.in/investor-relations/ policies/ policy-on-board-evaluation.pdf.

DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS

Pursuant to Section 149(6) of the Companies Act 2013 and SEBI (LODR) Regulations2015 Mr. Suraj Lal Mehta and Capt. Subbarao Prabhala 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 explanation relating to material departures;

b) that the Directors had selected such accounting policies and applied themconsistently and made judgments 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.

DIRECTORS

In accordance with the provisions of the Companies Act 2013 Mr. Ajit G NambiarDirector retires by rotation and being eligible offers himself for re-appointment.

NUMBER OF MEETINGS OF BOARD OF DIRECTORS

The Board of Directors have met six times and Independent Directors once during theFinancial Year 2016-17 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 2016 -17 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 Chairman & Managing Director Mr. S.V. Ganesh Chief FinancialOfficer and Mrs. Chitra.M.A Company Secretary & Compliance Officer are the KeyManagerial personnel of the Company pursuant to Section 203 of the Companies Act 2013.Mr. D Krishnan who was the Secretary of the Company had retired on 31st October 2016.

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 in FormNo. 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.

DEPOSITS

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.

AUDITORS REPORT

The explanations or comments of the Board on every qualification reservation oradverse remark or disclaimer made by the Auditor in their report have been furnished byway of an addendum.

SHARE CAPITAL

The paid up Equity Share Capital of the Company as on 31st March 2017 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 2017 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 2016-17. 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 2016-17.

Out of the Preference Share Capital of Rs.169.58 Crores issued 6365170 Preferenceshares of Rs.100/- each amounting to Rs.63.65 Crores were to be redeemed in installmentsas on 31 st March 2017. The Company is in the process of obtaining requisite approvalsfrom the holders of such preference shares and National Company Law Tribunal (NCLT) forissuing further redeemable preference shares equal to the amount of such unredeemedpreference shares in accordance with the provisions of Section 55 of the Companies Act2013.

RISK MANAGEMENT

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 in 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 Committee wasset up to formulate and monitor the CSR Policy. However the Company's average net profitfor last 3 years computed as per the provisions of Section 135(5) of Companies Act 2013being a negative amount the Company does not qualify for contribution towards CSRActivities.

Disclosure 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 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- Chairperson
Capt.S.Prabhala- Member
Mr. Ajit G Nambiar- Member (Rs. 21686676/-)
3. Average net profit of the Company for last three financial years
4. Prescribed CSR Expenditure Since the average net profit of the Company for last three years being negative the Company does not qualify for spending on the CSR activities.
5. Details of CSR spent during the year Not Applicable as per the explanations given in point No.4 above.
6. Reasons for not spending 2% of the average net profit of the last three financial years Due to non-availability of of the Company's average net profit for the last three years the Company was not able to spend on any CSR 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 Not Applicable

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).

STATUTORY AUDITORS

M/s T Velupillai & Co. Chartered Accountants Bangalore will be retiring asauditors of the Company by the end of 53rd Annual General Meeting of the Company. It istherefore proposed to appoint M/s. MKUK Associates Chartered Accountants as the Auditorsof the Company for 5 consecutive years from the FY 2017-18. The Company has received acertificate from the Auditors to the effect that their appointment would be in accordancewith the provisions of Section 139 of the Companies Act 2013.

COST AUDITORS

The Company's business during the year under review was not covered under the CostAudit Rules nor had the Governmentnotifiedthecompanytoappointacostauditorforthesaidperiod.

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 2016-17 and the SecretarialAudit Report is annexed herewith and forming part of the report.

EXTRACT OF THE ANNUAL RETURN

Pursuant to Section 134 (3) (a) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 the extract of the Annual Return isannexed herewith and forming part of the report (Annexure-II).

SEXUAL HARASSMENT

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.

ACKNOWLEDGEMENTS

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
Bangalore Ajit G Nambiar
10 th August 2017 Chairman & Managing Director
DIN: 00228857

ADDENDUM TO BOARD'S REPORT

I) Explanations to the qualifications/adverse remarks of the Statutory Auditors on theStandalone Audited Financial Statements

a) Undisputed amounts payable in respect of Customs Duty amounting to Rs. 116.11 Lakhswas outstanding as at 31st March 2017 for a period of more than six months from thedates on which they became payable.

The Company will settle the amount outstanding as and when the demands are raised.However it will not have any adverse impact on the financials of the company since thecompany will be able to settle the same upon its demand through its internal accruals.

II) Explanations to the qualifications/adverse remarks of the Secretarial Auditor

a) Point No.(i) Filing of Annual Performance Report with RBI.

The Company's overseas joint venture - M/s.Kleer Industries Inc USA has beenin-operative for a long period.

The Company is in the process of closure of this joint venture and submitting requisiteapplication with RBI in this regard.

For & on behalf of the Board of Directors
Ajit G Nambiar
10 th August 2017 Chairman & Managing Director
Bangalore DIN: 00228857