The Directors have pleasure in presenting the 28th Annual Report of the Company alongwith the Audited Financial Statements of the Company for the financial year ended 31stMarch 2017.
The Company's performance during the year as compared with previous year is summarizedbelow:
(Rs. in Crores)
|Particulars ||FY 2016-17 ||FY 2015-16 |
|Revenue From operations ||191.17 ||197.31 |
|Gross Profit / (Loss) before interest and depreciation ||8.16 ||11.01 |
|Interest ||6.34 ||8.65 |
|Profit / (Loss) before depreciation and tax ||1.82 ||2.36 |
|Depreciation ||7.01 ||8.05 |
|Profit / (Loss) before Exceptional and Extra-ordinary items ||(5.19) ||(5.69) |
|Exceptional Item - Expense / (Income) ||8.22 ||(27.09) |
|Extra-Ordinary Item ||- ||- |
|Profit/(Loss) after Exceptional and Extra-ordinary items ||(13.41) ||21.40 |
|Profit/ (Loss) before tax ||(13.41) ||21.40 |
|Provision for Taxation ||- ||- |
|Profit / (Loss) after tax ||(13.41) ||21.40 |
|Balance brought forward from previous year ||(43.77) ||(65.17) |
|Balance carried to Balance Sheet ||(57.18) ||(43.77) |
Indian Exports have been shrinking since December 2014 to September 2016 due to weakglobal demand and slide in oil prices. India's exports reversed the negative trend in June2016 when it grew 1.3% after remaining in the red for 18 months. However shipments againfell 0.3% in August and 6.8% in July.
The government is aiming at lifting India's share in global exports to 5% by 2020 fromjust 1.6% now. But rising protectionism in the US is threatening to keep exports subdued.
US President Donald Trump's "America First" restrictive policies coupled withBritain's surprise Brexit vote last year to leave the European Union has clouded theglobal trade outlook.
Amidst the above scenario the Company began the year with the cascading effect of theChennai floods impacting the earnings in terms of incremental costs of execution and theconsequential loss of revenue opportunities for the first half of the financial year.Nevertheless the sustained marketing efforts coupled with internal productivityimprovements and costs rationalization ensured improved earnings in the subsequentquarters of the financial year.
The year also witnessed the successful relocation of partial capacities to a DTA unitfrom its MEPZ premises. The relocated unit was on Trial run during the Fourth Quarter andcommenced commercial production in May 2017. This relocation is expected to benefit thecompany with incremental export incentives and also help rejigging the overall businessportfolio of the Company. The Company recorded revenues of Rs.191.17 crs for the financialyear ending 31st March 2017 as compared to Rs.197.31 crs the previous year. The OperatingEBITDA stood at Rs.8.16 crs against Rs.11.01 crs the previous year with the dropattributed to the first two quarters of the financial year. orotherwise Further duringthe year the company's earnings was impacted with one-off events of arrear minimum wagesshort settlement of Flood Claim and retrospective levy of interest on loans by theCompany's lender.
The Minimum Wages revision by the Tamilnadu Government effective December 2014 wasupheld by the Hon'ble High Court of Madras accordingly the Company paid Rs.5.78 crs asarrears of wages during the year.
The insurance claim submitted by the Company on account of Chennai Floods was finallysettled by the Insurer in April 2017. The claim was short settled by Rs.1.14 crs and theimpact of short receipt was recorded under additional depreciation and material costs.
The company's banker during the course of the year had reset the interest on Term loansand has levied interest above the rates specified in the restructuring package sanctionedto the Company in November 2012. This has resulted in the Company being liable for aninterest differential amounting to Rs.2.44 crs on Term loans availed upto March 31 2016.
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
During the year the following changes were effected in the Share Capital of theCompany:-
a) Increase in Authorised Share Capital
The Authorised Share Capital of the Company was increased from Rs.70 Crores to Rs.80Crores.
The Share Capital of the Company as on 31st March 2017 is as below:
|Authorised Share Capital || |
|54000000 Equity Shares of Rs.10 each ||540000000 |
|26000000 1% Cumulative Redeemable Preference || |
|Shares of Rs.10 each ||260000000 |
|Subscribed and Paid-up Capital || |
|42071249 Equity Shares of Rs.10 each ||420712490 |
|25104500 1% Cumulative Redeemable Preference || |
|Shares of Rs.10 each ||251045000 |
The above increase in authorised share capital was approved by shareholders by way ofpostal ballot dated 12th February 2017.
b) Preferential Issue of Equity Shares
During the year under review the Company made preferential issue of 3500000 equityshares to Promoter Director & Managing Director at Rs. 11.41/- each (includingpremium of Rs. 1.41/- each) as per the SEBI (ICDR) Regulations and other applicableprovisions of the Companies Act 2013. Out of the 3500000 equity shares issued theboard of directors at their meeting held on 04th March 2017 have allotted 3067484 equityshares on preferential basis to the Promoter Director and Managing Director of theCompany.
Consequent upon allotment of 3067484 equity shares on preferential basis the paid upshare capital of the Company has been increased from Rs. 641082650/- toRs.671757490/-.
The preferential issue of equity shares were approved by shareholders by way of postalballot dated 12th February 2017.
The entire issue proceeds were utilized for Augmenting Long Term Capital and forgeneral corporate purpose.
c) Preferential Issue of Convertible Warrants
The preferential issue of 6500000 Warrants convertible into equivalent number ofequity shares of Rs.10 each at a price of Rs. 11.41/ each (including premium of Rs. 1.41/each) was approved by the board of directors on 06th January 2017 for issuance to thepromoter directors and Managing Director as per the provisions of SEBI (ICDR) Regulationsand in accordance with the applicable provisions of the Companies Act 2013. Out of the6500000 convertible warrants issued the board of directors at their meeting held on04th March 2017 have allotted 5696756 warrants on preferential basis to the PromoterDirectors and Managing Director of the Company.
The preferential issue of Convertible warrants were approved by shareholders by way ofpostal ballot dated 12th February 2017.
In view of loss for the year under review no amount is proposed to be transferred tothe 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 reserves.
FINANCE AND ACCOUNTS
The financial statements have been prepared in compliance with the requirements of theCompanies Act and Generally Accepted Accounting Principles (GAAP) in India. The managementaccepts responsibility for the integrity and objectivity of these financial statements aswell as for various estimates and judgments used therein. The estimates and judgmentrelating to the financial statements have been made on a prudent and reasonable basis inorder that the financial statements reflect in a true and fair manner the form andsubstance of transactions and reasonably present our state of affairs and profits/(losses) for the year.
The Accounts of the Company have been prepared on the basis of going concernconcept'. The Company continue to focus on cash generation. The focus is on improvingoperating efficiencies and cost savings and to improve the financial health of theCompany.
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.
The Company has repaid instalments of Term loans amounting to Rs.2.41 crs during thecurrent year.
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 2017 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 2017 forms part of this Annual
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 websitewww.celebritygroup.com Further the prescribed details of related party transactions ofthe Company in Form No. AOC-2 in terms of Section 134 of the Act read with Rule 8 of theCompanies (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 formpart of this Report are set out as separate Annexures together with the Certificate fromthe auditors of the Company regarding compliance of conditions of Corporate Governance asstipulated in Schedule V of Regulation 34(3) of the SEBI (Listing Obligations andDisclosure 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 of the Board and senior management personnel have affirmed compliance tothe Code as on March 31 2017.
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 regarding compliance with the Code of Conduct by all theDirectors and Senior Management Personnel of the Company 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. Thecontents of the CSR Policy of the Company as approved by the Board on the recommendationof the CSR Committee is available on the website of the Company and can be accessedthrough 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
Appointment of Directors
The Board of Directors of the Company at their meeting held on 1st August 2016 basedon the recommendation of the Nomination and Remuneration Committee has appointed Mr.Vidyuth Rajagopal (DIN: 07578471) and Mr. K.Sridhar (DIN: 02916536) as Additionaldirectors of the Company.
Pursuant to the provisions of Section 149 of the Companies Act 2013 Mr. K. Sridhar(DIN: 02916536) was appointed as a Director of the Company in the previous Annual GeneralMeeting of the Company held on 30th September 2016 to hold office as an IndependentDirector for a period of 5 (Five) years up to 31st July 2021.
Mr. Vidyuth Rajagopal (DIN: 07578471) was appointed as Whole Time Director of theCompany at the previous Annual General Meeting of the Company held on 30th September 2016to hold office as a Whole Time Director for a period of 3 (Three) years up to 31st July2019.
Mr. Vidyuth Rajagopal has been re-designated as Joint Managing Director of the Companyw.e.f 05th April 2017.
Appropriate resolution seeking your approval to the aforesaid re-designation isappearing in the Notice convening the 28th AGM of your Company.
Appointment of KMP
Pursuant to Section 203 of the Companies Act 2013 Mr. A. Rishi Kumar was appointed asa Company Secretary & Compliance Officer w.e.f 30th May 2016.
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 & COMMITTEES
The Board of Directors met Six (6) times during the financial year 2016-17 i.e. on30th May 2016 01st August 2016 12th November 2016 06th January 2017 13th February 2017and 04th March 2017. The gap between any two Board meetings does not exceed 120 days asprescribed under the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 The particulars of Meeting of all committees held duringthe financial year 2016-17 are given in the Corporate Governance Report of the Companywhich forms part of this
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. Duringthe year all the recommendations of the Audit Committee were accepted by the Board.
NOMINATION AND REMUNERATION COMMITTEE POLICY
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 the constitution of the Nomination and remuneration Committeeand its terms of reference has been detailed in the Corporate Governance Report formingpart 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. The details of the investments made by the companyare given in the notes to the financial statements which forms part of this Annual Report.
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
Pursuant to provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annual evaluationof the Board as a whole various Committees Directors individually and the Chairman. Thestatement including the manner in which the evaluation exercise was conducted is includedin the Corporate Governance Report which forms part of this Annual Report.
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 34 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 there by 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. Adequate systems and processescommensurate with the size of the Company and of its business are put in place to ensurecompliance with the provisions of all applicable laws and such systems and processes areoperating effectively.
Audit Committee and Board of Directors of the Company were appraised on the performanceof the IFC.
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 and mitigate the businessoperational financial and other risks associated with the business of the Company. TheCompany has been addressing various risks impacting the Company in Management Discussionand 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 Anil Nair & Associates Chartered Accountants Chennai and M/s. CNGSN &Associates LLP Chartered Accountants Chennai the Joint Auditors of the Company retireat the ensuing Annual General Meeting.
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. Anil Nair & Associates Chennai and M/s CNGSN & Associates LLPChennai. 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.
Mandatory Auditor Rotation
M/s Anil Nair & Associates Chartered Accountants Chennai and M/s. CNGSN &Associates LLP Chartered Accountants Chennai the Joint Auditors of the Company havealready completed more than ten years as Statutory Auditors of the Company.
In view of the Mandatory Rotation of Auditor requirement and to ensure smoothtransition and also to comply with SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 it is proposed to appoint M/s. SRSV & Associates CharteredAccountants as Statutory Auditors for a period of 5 continuous years. The tenure of theiroffice will commence from the conclusion of the 28th Annual General Meeting till theconclusion of the 33rd Annual General Meeting of the Company subject to their appointmentin the ensuing Annual General Meeting as per the process laid down under the CompaniesAct 2013 and rules made thereunder and subsequent ratification at every Annual GeneralMeeting.
Pursuant to the Section 204(1) of the Companies Act 2013 read with Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/s. BP & Associates Practicing Company Secretaries as the SecretarialAuditors of the Company for conducting the Secretarial Audit for the financial year2016-17. The Secretarial Audit Report for the financial year 2016-17 does not contain anyadverse remark qualification or reservation or declaimer which requires anyexplanation/comments by the Board. The Secretarial Audit Report is annexed as Annexure -IV which forms the part of this Annual Report.
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 2016-17.
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 National Stock Exchange of India Limited. The Company has paid the applicable listingfee 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 as required under Section 197(12) of the Companies Act 2013 read with Rule 5(1) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed as Annexure - I to thisAnnual Report.
Statement containing Particulars of Employees pursuant to Section 197(12) of theCompanies Act 2013 read with Rule 5(2) and Rule 5(3) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 also annexed in Annexure - I which formspart of this Annual Report.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
During the financial year 2016-17 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 Compliants Committee (ICC) has been set up to redress the complaintsreceived from women regarding sexual harassment and discrimination at workplace. Duringthe year ended 31st March 2017 the ICC did not receive any complaint pertaining tosexual harassment / discrimination at the work location.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Sections 134(3)(c) and 134(5) of the Companies Act 2013the Directors to the best of their knowledge and ability confirm that:-
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitand loss of the company for that period;
c) they have 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) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively and f)they have devised proper systems to ensure compliance with the provisions of allapplicable 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 financialfinancial reporting by the statutory auditors and the reviews performed by management andthe relevant board committees including the audit committee the board is of the opinionthat the Company's internal financial controls were adequate and effective during Fy2016-17.
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) ||Rs. 154.70 Crores |
|b. Total Foreign exchange outgo ||Rs. 36.73 Crores |
Directors wish to extend their sincere thanks to all employees customers suppliersinvestors lenders and other organizations for the faith reposed and valuable supportprovided by them to the Company and its Management.
| ||For and on Behalf of the Board |
| ||Sd/- |
| ||Venkatesh Rajagopal |
|Place : Chennai ||Chairman |
|Date : 26th May 2017 ||(DIN: 00003625) |