Celebrity Fashions Ltd.
|BSE: 532695||Sector: Industrials|
|NSE: CELEBRITY||ISIN Code: INE185H01016|
|BSE 00:00 | 20 Mar||9.09||
|NSE 00:00 | 20 Mar||9.40||
|Mkt Cap.(Rs cr)||43|
|Mkt Cap.(Rs cr)||43.42|
Celebrity Fashions Ltd. (CELEBRITY) - Director Report
Company director report
The Directors have pleasure in presenting the 29th Annual Report of theCompany along with the Audited Financial Statements of the Company for the financial yearended 31st March 2018.
The Company's performance during the year as compared with previous year is summarizedbelow:
(Rs. In Crores)
The clothing Export scenario continued to be fiercely competitive. Textile and clothingexports slid 0.4% in the last financial year (2017-18) to $ 35 billion as apparel exportsfell. While exports of cotton yarn fabrics and made ups grew 4% outbound apparelshipments registered a 4% decline reducing from $ 17.3 billion to $ 16.7 billion. Garmentexports from Vietnam and Bangladesh were increasing whereas Garment production in Indiahas declined in the last 10 months. As pricing are too competitive great effort isnecessary to bag orders. Furthermore Duty Drawback element also reduced by about 70%during the period.
IMF said India's growth is expected to rise from 6.7% in 2017-18 to 7.3% in 201819 and7.5% in 2019-20 as the effects of demonetization and the introduction of the goods andservices tax fade.
The performance of the Company has to be viewed from the context of the back drop ofthe business conditions that it was compelled to operate during the year.
Pursuant to the notification issued by the Ministry of Corporate Affairs datedFebruary 16 2015 relating to the Companies (Indian Accounting Standards) Rules 2015 theCompany has adopted "IND AS" with effect from 1st April 2017 with transitiondate of 1st April 2016. Accordingly the financial statements for the year 2017-18 havebeen prepared in compliance with the Companies (Indian Accounting Standards) Rules 2015.
The Company has turned in a satisfactory performance in the year 2017-18 with a netRevenue from operations at Rs.203.54 crs reflecting ~ 6 percent rise vis-a-vis Rs.192.05crs recorded in the previous year. The Operating EBITDA stood at Rs.12.80 crs againstRs.8.97 crs the previous year.
A detailed analysis of the financial results is given in the Management Discussion andAnalysis Report which forms part of this report.
CHANGES TO SHARE CAPITAL
Allotment of Equity Shares on Preferential basis upon conversion of Warrants:"During the financial year 2016-17 the Company has issued and allotted 5696756Warrants at a price of Rs.11.41 (including premium of Rs.1.41 per Warrant) per Warrant topromoters and Managing Director convertible into equivalent number of Equity Shares onpreferential basis in accordance with and in terms of the provisions of Sections 39 42and 62(1)(c) of the Companies Act 2013 read with rules framed thereunder Chapter VII ofthe SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009 as amended fromtime to time and other applicable laws. Out of the 5696756 warrants allotted 3505696Warrants were converted into equivalent number of Equity Shares during the year underreview.
Consequent upon allotment of 3505696 equity shares on preferential basis the paid upequity share capital of the Company has been increased from Rs.420712490/- to Rs.455769450.
The entire issue proceeds were utilized for Augmenting Long Term Capital and forgeneral corporate purpose. This equity infusion reiterates the promoter's commitmenttowards the business of the company and confidence in its growth prospects and willstrengthen the balance sheet of the company.
In view of the loss for the year under review no amount is proposed to be transferredto the reserve(s) and your Directors have not recommended payment of any dividend for theyear under review.
TRANSFER TO RESERVES
During the year under review the Company has not transferred any amount to thereserves.
FINANCE AND ACCOUNTS
The financial statements have been prepared in accordance with Indian AccountingStandards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules 2015read with Section 133 of Companies Act 2013 (the Act') and other relevantprovisions of the Act. The financial statements up to and for the year ended March 312017 were prepared in accordance with the Companies (Accounting Standards) Rules 2006notified under Section 133 of the Act (Previous GAAP'). The financial statements forthe year ended March 31 2018 is the first financial statements of the Company under IndAS.
Due to the losses incurred by the Company in the earlier years there is no provisionfor Income Tax. The Company has recognized Deferred Tax Asset in unabsorbed depreciationand accumulated losses to the extent of corresponding deferred tax liability on thedifference between the book balances and written down value of fixed assets under IncomeTax.
During the year under review the Company has not accepted or renewed any fixeddeposits from the public falling under Section 73 of the Act read with the Companies(Acceptance of Deposits) Rules 2014. Thus as on March 31 2018 there were no depositswhich were unpaid or unclaimed and due for repayment.
CASH FLOW STATEMENT
In conformity with the provisions of Section 134 of Companies Act 2013 and Regulation34 2(c) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theCash flow statement for the year ended 31st March 2018 forms part of thisAnnual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All the transactions with the related parties entered during the year were in theordinary course of business and on Arm's length basis. Details of such transactions aregiven in the accompanying financial statements. The Company has framed a policy on RelatedParty Transactions and the same has been displayed in the Company's website www.celebritygroup.com
Further the prescribed details of related party transactions of the Company in FormNo. AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts)Rules 2014 is given in Annexure II to this Report.
SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES
The Company does not have any subsidiary or associate or joint venture company.
CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS
The Corporate Governance Report and Management Discussion & Analysis which formspart of this Report are set out as separate Annexures together with the Certificate fromthe Secretarial Auditors of the Company regarding compliance of conditions of CorporateGovernance as stipulated in Schedule V of Regulation 34(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
COMPLIANCE WITH CODE OF CONDUCT
The Company has framed a Code of Conduct for all the members of the Board and SeniorManagement personnel of the Company. The Code of Conduct is available on the Company'swebsite: www.celebritygroup.com . All members ofthe Board and senior management personnel have affirmed compliance to the Code as on March312018.
As stipulated under Regulation 34 (3) and Schedule V (D) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 a declaration Signed by Mr. Charath RamNarsimhan Managing Director to this effect is annexed to the report on Corporategovernance which forms part of this annual report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In compliance with the requirements of Section 135 and Schedule VII of the CompaniesAct 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014 asamended the Board of Directors have constituted a CSR Committee. The details of theCommittee are provided in the Corporate Governance Report which forms part of this AnnualReport.
As there have been carry forward losses provisions of Section 135 of Companies Act2013 pertaining to Corporate Social Responsibility are not applicable to the Company.
The contents of the CSR Policy of the Company as approved by the Board on therecommendation of the CSR Committee is available on the website of the Company and can beaccessed through the website www.celebritygroup.com .
ESTABLISHMENT OF VIGIL MECHANISM
Pursuant to Section 177 (9) of Companies Act 2013 and Regulation 22 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Company has a vigilmechanism established to enable all employees and the directors to report in good faithabout any violation of the Policy. The Audit Committee of the Board oversees thefunctioning of Whistle Blower Policy. The Whistle Blower Policy covering all employees anddirectors is hosted in the Company's Website www.celebritygroup.com .
DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors:
During the year the board at its meeting held on 05th April 2017 based on therecommendation of the Nomination & Remuneration Committee appointed Mr. VidyuthRajagopal who was actively involved in all spheres of the management of the Company asJoint Managing Director from the position of the whole-time director.
The board on the recommendation of Nomination and Remuneration Committee at itsmeeting held on 11th December 2017 reviewed the remuneration payable to Joint ManagingDirector effective 01st October 2017 within the overall limits prescribed in Schedule Vof the Companies Act 2013.
During the year the board at its meeting held on 11th December 2017 re-appointed Mr.Charath Ram Narsimhan as Managing Director of the Company effective 13th February 2018to hold the office for a period of five years on such terms and conditions subject to theapproval of the shareholders at the AGM.
Key Managerial Personnel:
Pursuant to Section 203 of the Companies Act 2013 Mr. S. Venkataraghavan wasappointed as Chief Financial Officer (Key Managerial Personnel) of the Company with effectfrom 27th May 2017 in place of Mrs. L. Visalakshi who resigned from the services of theCompany with effect from 26th May 2017.
DECLARATION BY INDEPENDENT DIRECTOR
The Company has received necessary declarations from all the Independent Directors ofthe Company confirming that they continue to meet the criteria of Independence asprescribed under Section 149(6) of the Companies Act 2013 and Regulation 16 & 25 ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 as amended extract of the AnnualReturn of the Company in the prescribed Form MGT-9 is annexed as Annexure- III to thisAnnual Report.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met Six (6) times during the financial year 2017-18 i.e. 05thApril 2017 26th May 2017 18th August 2017 08th September 2017 11th December 2017 and13th February 2018. The intervening gap between the meetings was within the periodprescribed under the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The details of all Board/ Committee meetings held aregiven in the Corporate Governance Report.
Pursuant to Section 177 (8) of Companies Act 2013 the particulars relating to theComposition terms of reference and other details about the Audit Committee has beendetailed in the Corporate Governance Report which forms part of this Annual Report.
During the year all the recommendations of the Audit Committee were accepted by theBoard.
The Audit Committee reviews the adequacy and effectiveness of the Company's internalfinancial controls so that the ultimate objective of Zero Surprise Risk controlledOrganization is achieved.
The Remuneration policy of the company has been structured to match the market trendsof the industry qualifications and experience of the employee and responsibilitieshandled by them.
The Policy inter alia provides for the following:
a) attract recruit and retain good and exceptional talent;
b) list down the criteria for determining the qualifications positive attributes andindependence of the directors of the Company;
c) ensure that the remuneration of the directors key managerial personnel and otheremployees is performance driven motivates them recognises their merits and achievementsand promotes excellence in their performance;
d) motivate such personnel to align their individual interests with the interests ofthe Company and further the interests of its stakeholders;
e) ensure a transparent nomination process for directors with the diversity of thoughtexperience knowledge perspective and gender in the Board; and
f) fulfill the Company's objectives and goals including in relation to good corporategovernance transparency and sustained long term value creation for its stakeholders.
Particulars pertaining to constitution of the Nomination and remuneration Committee andits terms of reference has been detailed in the Corporate Governance Report which formspart of this Annual Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the provision ofSection 186 of the Companies Act 2013.
MATERIAL CHANGES & COMMITMENTS
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of thisReport
An annual performance evaluation of all Directors the Committees of Directors and theBoard as a whole for the year under review was carried out. For the purpose of carryingout performance evaluation assessment questionnaires were circulated to all Directors andtheir feedback was obtained and recorded.
REPORT AS PER SECTION 134 READ WITH RULE 8 AND SUB RULE 5 OF COMPANIES (ACCOUNTS) RULES2014
Change in nature of business if any: NIL
The name of Companies which have become or ceased to be its subsidiaries JointVentures or associate companies during the year: NIL
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY
The Company was not in receipt of any orders from the regulator / courts / tribunalsimpacting the going concern status of future operations of the Company.
The Company was in receipt of the notice / order from statutory authorities during theyear for claim not acknowledged as debts by the company. The details of the same have beenprovided in Note 38 of the financial statements.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. To maintain its objectivity and independence the InternalAudit function reports to the Chairman of the Audit Committee of the Board & to theChairman & Managing Director. The Internal Auditor monitors and evaluates the efficacyand adequacy of internal control system in the Company its compliance with operatingsystems accounting procedures and policies at all locations of the Company. Based on thereport of internal audit function process owners undertake corrective action in theirrespective areas and thereby strengthen the controls. A report of Auditors pursuant toSection 143(3) (i) of the Companies Act 2013 certifying the adequacy of InternalFinancial Controls is annexed with the Auditors report.
DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY
Pursuant to section 134 (3) (n) of the Companies Act 2013 the company has framed RiskManagement Policy which lays down the framework to define assess monitor and mitigatethe business operational financial and other risks associated with the business of theCompany. The Company has been addressing various risks impacting the Company in ManagementDiscussion and Analysis Report which forms part of this Annual Report.
During the year under review the company has not identified any element of risk whichmay threaten the existence of the company.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTOR
In compliance with the requirements of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has put in place a familiarization programmefor the Independent Directors to familiarize them with their role rights andresponsibility of the Directors the working of the Company nature of the Industry inwhich the Company operates business model etc.
The details of such familiarization programmes for the Independent Directors aredisclosed on the website of the Company www.celebritygroup.com .
M/s SRSV & Associates Chartered Accountants Chennai have been appointed as theStatutory Auditors of the Company from the conclusion of the 28th AnnualGeneral Meeting till the conclusion of 33rd Annual General Meeting of theCompany in place of M/s Anil Nair & Associates Chartered Accountants Chennai andM/s. CNGSN & Associates LLP Chartered Accountants Chennai the Joint Auditors of theCompany.
The Annual Accounts of the Company including its Balance Sheet Statement of Profit andLoss and Cash Flow Statement including the Notes and Schedules to the Accounts have beenaudited by M/s. SRSV & Associates Chartered Accountants Chennai.
The Statutory Auditors' Report does not contain any qualification reservation oradverse remark on financial Statements of the Company. The Auditors' Report is enclosedwith the financial statements in this Annual Report.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with Rule 9of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed M/s. BP & Associates Practicing Company Secretaries as theSecretarial Auditors of the Company to undertake the Secretarial Audit for the financialyear 2017-18. The Secretarial Audit Report for the financial year 2017-18 does not containany qualification reservation or adverse remark or declaimer which requires anyexplanation/comments by the Board. Secretarial Audit Report given by Secretarial Auditorsis annexed with the report as Annexure IV.
Pursuant to Section 138 of the Companies Act 2013 read with rule 13 of The Companies(Accounts) Rules 2014 and all other applicable provisions (including any amendmentthereto) if any of the Companies Act 2013 and as recommended by the audit committee M/s.RVKS & Associates Chartered Accountants Chennai were appointed as the InternalAuditors of the company for the Financial Year 2017-18.
The audit conducted by the Internal Auditors is based on an internal audit plan whichis reviewed each quarter in consultation with the Audit Committee. These audits are basedon risk based methodology and inter alia involve the review of internal controls andgovernance processes adherence to management policies and review of statutorycompliances. The Internal Auditors share their findings on an ongoing basis during thefinancial year for corrective action. The Audit Committee oversees the work of InternalAuditors.
The equity shares of the Company are listed on the Stock Exchanges viz. BSE Limitedand The National Stock Exchange of India Limited. The Company has paid the applicablelisting fee to the Stock Exchanges within the stipulated time.
DISCLOSURE UNDER SECTION 67 (3) (C) OF THE COMPANIES ACT 2013
No disclosure is required under Section 67 (3) (c) of the Companies Act 2013 read withRule 16(4) of Companies (Share Capital and Debentures) Rules 2014 in respect of votingrights not exercised directly by the employees of the Company as the provisions of thesaid section are not applicable.
PARTICULARS OF EMPLOYEES
Disclosure with respect to the remuneration of directors and employees pursuant toSection 197(12) of the Companies Act 2013 read with Rule 5(1) 5(2) and 5(3) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed asANNEXURE-I.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
During the financial year 2017-18 no unpaid or unclaimed dividend was required to betransferred to IEPF.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.
The Company has in place a Policy on Prevention Prohibition and Redressal of SexualHarassment and Non-discrimination at Work Place in line with the requirements of SexualHarassment of Women at the Workplace (Prevention Prohibition & Redressal) Act 2013.All employees (permanent contractual temporary trainees) are covered under this policy.
An Internal Complaints Committee (ICC) was set up to redress the complaints receivedfrom women regarding sexual harassment and discrimination at workplace.
During the year ended 31st March 2018 the ICC did not receive any complaintpertaining to sexual harassment/discrimination at the work locations.
DIRECTORS' RESPONSIBILITY STATEMENT
As required by Section 134(3)(c) and 134(5) of the Companies Act 2013 the Directorsto the best of their knowledge and ability confirm that:-
a) in the preparation of the annual accounts for the financial year ended 31 st March2018 the applicable accounting standards had been followed along with proper explanationrelating to material departures;
b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;
c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
d) the Directors had prepared the annual accounts on a going concern basis;
e) 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) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors and external consultants including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed bymanagement and the relevant board committees including the audit committee the board isof the opinion that the Company's internal financial controls were adequate and effectiveduring financial year 2017-18.
CONSERVATION OF ENERGY / TECHNOLOGY ABSORPTION / FOREIGN EXCHANGE
A. Conservation of Energy:
The operations of the Company are not energy-intensive. However wherever possible theCompany strives to curtail the consumption of energy on a continuing basis.
B. Technology absorption: Not applicable.
C. Foreign Exchange Earning and Outgo :
a. Total Foreign exchange earned (FOB Value) : '173.53 Crs
b. Total Foreign exchange outgo : ' 43.42 Crs
The Company is in compliance with the Secretarial Standards on Meetings of the Board ofDirectors (SS - 1) and General Meetings (SS - 2) issued by The Institute of CompanySecretaries of India.
The Directors wish to convey their gratitude and appreciation to all the employees fortheir valuable contribution during the year. They would also like to place on record theirappreciation for the continued co-operation and support received by the Company during theyear from bankers financial institutions business partners and other stakeholders.
For and on behalf of the Board Sd/-
Date: 28th May 2018
ANNEXURE - I TO BOARD'S REPORT PARTICULARS OF EMPLOYEES:
A. Disclosure with respect to the remuneration of Directors and employees as requiredunder Section 197 of the Companies Act 2013 and Rule 5 of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is as follows:
a) Ratio of remuneration of each director to the median remuneration of all theemployees of the company for the financial year 2017-18:
* Mr. Vidyuth Rajagopal appointed as Joint Managing Director with effect from 05thApril 2017.
b) Details of Percentage increase in the remuneration of each director CFO CEO CS orManager if any in the Financial Year 2017-18.
* Mr. S. Venkataraghavan appointed as Chief Financial Officer with effect from 27th May2017.
c) Percentage increase in the median remuneration of all employees in the financialyear 2017-18: 7.74 %
d) The number of permanent employees on the rolls of the company as on 31st March 2018:3127
e) Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and any exceptionalcircumstances for increase in the managerial remuneration:
Average increase in remuneration is 21.5% for Managerial Personnel (KMP) & 8 % foremployees other than Managerial Personnel.
f) Affirmation that the remuneration is as per the Remuneration Policy of the Company:
It is affirmed that the remuneration paid to the Directors Key Managerial Personneland senior management is as per the Remuneration Policy of the Company.
g) Information as per Section 197(12) of the Companies Act 2013 read with Rule 5(2)& 5(3) of Companies (Appointment and remuneration of Managerial Personnel) Rules 2014forming part of the Directors Report for the year ended March 31 2018: Not Applicable
For and on behalf of the Board Sd/-
Date: 28th May 2018