To The Members of Cravatex Limited
Your Directors present the audited Financial Statements of the Company including audited Balance Sheet and the Statement of Profit and Loss together with their Report for the year ended March 31 2019.
|Current Year||Previous Year|
|Rupees in Lacs||Rupees in Lacs|
|Earnings before Finance Cost Depreciation and Taxation||479.72||230.51|
|Less : Finance Cost||101.59||103.80|
|Less : Depreciation||82.92||94.75|
|Profit (Loss) before Exceptional Item||295.21||31.97|
|Profit (Loss) before Tax||295.21||31.97|
|Deferred Tax Asset / (Liability)||11.31||8.06|
|Excess Tax Provision for Earlier years||(10.58)||2.15|
|Profit (Loss) after Taxation||226.44||42.18|
|Other Comprehensive Income / (Loss)||(1.97)||25.49|
|Total Comprehensive Income / (Loss)||224.47||67.67|
STATEMENT OF COMPANY AFFAIRS
The total revenue from operations of the Company for the year under review was Rs.103.95 lacs as against ? 74.08 lacs in previous year while the profit before finance cost depreciation and taxation stood at Rs.479.72 lacs as against Rs.230.51 lacs for the previous year. Profit after tax for the year was Rs.226.44 lacs as against ? 42.18 lacs for the previous year. The total comprehensive income for the year was Rs.224.47 lacs as against ? 67.67 lacs for the previous year.
The Directors are pleased to recommend dividend of Rs.0.40 (4%) per share of Rs.10/- each on 9000000 Non-Convertible Cumulative Redeemable Preference Shares for the financial year ended 2018-19 which would be tax-free in the hands of the Members. The total outflow on dividend account will be ? 43.04 lakhs (excluding Dividend Distribution Tax).
The Directors are also pleased to recommend dividend of Rs.2/- (20%) per equity share of Rs.10/- each for the financial year 2018-19 which would be tax-free in the hands of the Members. The total outflow on dividend account will be 51.68 lakhs (excluding Dividend Distribution Tax).
EQUITY SHARE CAPITAL
The total issued subscribed and fully paid up equity share capital of the Company as on March 31 2019 was Rs.25841600/- divided into 2584160 equity shares of ? 10/- each (listed on BSE).
The unlisted 4% Non-convertible Cumulative Redeemable Preference shares (preference shares) issued by the Company on private placement basis standing as on April 1 2018 was Rs.90000000/- divided into 9000000 preference shares of Rs.10/- each.
The Board of Directors in its meeting held on February 13 2019 redeemed 482500 nos. of preference shares of Rs.10/- each aggregating to Rs.4825000/- out of the sum lying in the profit and loss account of the Company.
Consequent to the said reduction the total preference shares issued by the Company as on March 31 2019 was ? 85175000/- divided into 8517500 preference shares of Rs. 10/- each.
TRANSFER TO RESERVES
The Company has not transferred any amount to the general reserves.
The Company does not have any fixed deposits covered under Chapter V of the Companies Act 2013 as on March 31 2019 and accordingly there were no unclaimed deposits as on that date.
The fixed assets of the Company have been adequately insured.
DIRECTORS & KMP
Mr. Rajiv Batra (DIN 00748729) is retiring by rotation and being eligible offers himself for re-appointment.
Mr. Nabankur Gupta (DIN 00020125) Non-executive Director of the Company ceased to be a Director of the Company on December 7 2018 consequent to his demise. The Board of Directors convey their appreciation for the valuable services rendered by Mr. Gupta during his association with the Company.
Mr. Rajesh Batra (DIN 00020764) was re-appointed as the Managing Director of the Company for a period of three years with effect from June 1 2019 to May 31 2022.
Mr. N. Santhanam (DIN 00027724) and Dr. S.D. Israni (DIN 00125532) were re-appointed as the Independent Directors of the Company for second term of five years with effect from April 1 2019 to March 31 2024.
Mr. H.K. Vakharia (DIN 00020966) and Mr. N.R. Mahalingam (DIN 00035601) ceased to be the Independent Director of the Company consequent to the expiry of their term on March 31 2019.
There are no appointment/cessation of the Key Managerial Persons (KMP) during the financial year ended March 31 2019.
DECLARATION BY INDEPENDENT DIRECTORS
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
The details pertaining to the composition of audit committee are included in the Corporate Governance Report which forms part of this report.
(I) CRAVATEX BRANDS LTD (CBL)
As stated elsewhere the domestic brands business which comprises of the apparel footwear and accessories is a competitive sector with the presence of several global brands and large domestic brands as well as the unbranded sector. Increase in customs duty on footwear as well as a sharp depreciation of the Indian rupee versus the US dollar had an adverse impact on the profitability of the Sports goods business. The regulatory notification on e commerce in February of 2019 modified the rules thereby changing structurally how large e commerce players are permitted to operate in the country.
As regards the wellness business it is a niche business for branded players like CBL. One of the major customer segments for fitness equipment the real estate sector has had a slow down due to a financial crunch as well as the implementation of RERA. The organised pan India gym operators have also slowed down their expansion plans due to severe competition from strong local and regional players.
During the year 2018-19 the domestic economy in general and the consumer goods industry in particular indicated recovery from the temporary setback brought in by demonetisation and GST implementation glitches. As a result despite few negative factors stated above CBL could register considerable improvement over its financial performance over the previous year. The company has vastly improved its market presence in the branded business and the product visibility has expanded to many more points of sale. The retail revamp and thrust initiated in the year has yielded positive results as well. The key management team has been strengthened by augmenting well qualified professional COO CFO and CMO during the year.
For the year ended on 31st March 2019 CBL recorded a total revenue of ? 150.03 Cr indicating a growth of 31% over previous year. It recorded a loss before finance cost depreciation and tax at ? 3.09 Cr vis--vis a loss of ? 13.94 Cr. in the previous year. Slow down in wellness business increase in customs duty and adverse exchange rates (which were offset with a time lag) had an impact on the profitability.
With improved consumer sentiments and stable government expected to be in place by June 2019 leading to a favourable business environment CBL's performance is expected to be better in the ensuing year.
(II) BB (UK) Limited (BBUK)
The principal activity of the company has been designing sourcing and marketing of branded apparel and footwear as a licensee for the Fila brand in the UK and the Middle East. The company operates from UK catering to customers in UK Ireland Middle East etc. The operating performance of BBUK has once again been extra ordinary given that it operates in a mature market which is highly competitive. The company was reported as the 3rd fastest growing company in UK owned by an Indian parent in the CII-Grant Thornton report of 2019. It is a huge achievement by the operating management of the UK subsidiary. Financially as well the subsidiary has delivered excellent results.
During the FY 2018-19 the turnover achieved in INR terms at Rs 567.33 Cr and profit before tax at Rs 27.82 Cr has registered a growth of 134% and 178 % respectively over the previous year. With a view to improving the performance of licensed brands and maintain market edge the company has put in place a perpetual improvement process. The company's performance is expected to show further growth in the ensuing year.
The salient features of the financial statement of the subsidiary is set out in the prescribed Form AOC-1 which forms part of the board report.
The financial statement of the subsidiaries for the financial year ended March 31 2019 will be kept open for inspection for the Members at the Registered Office of the Company during the Company's business hours on any working day upto and including the date of the Annual General Meeting.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act 2013 the Directors state that:
(a) in the preparation of the annual accounts the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance in terms of Regulation 4(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 has been complied with. A separate report on Corporate Governance is being incorporated as a part of the Annual Report along with a Certificate from a Practicing Company Secretary.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report for the year under review as stipulated under Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed and forms a part of this report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required pursuant to Section 134(3)(m) of the Companies Act 2013 read with The Companies (Accounts) Rules 2014 is given in the Annexure I to this Report.
CHANGES IN THE NATURE OF BUSINESS
There is no change in the nature of business carried on by the Company and of its Subsidiary. The Company has not changed the class of business in which the Company has an interest.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.
The Company had adopted the Indian Accounting Standards (IND AS) from April 1 2017 and accordingly the consolidated financial statements have been prepared in accordance with the recognition and measurement principles in IND AS Interim Financial Reporting and those prescribed under the Companies Act 2013 read with the relevant rules issued thereunder and the other accounting principles issued by the Institute of Chartered Accountants of India.
The extract of annual return referred to in Section 92(3) and Section 134(3)(a) of the Companies Act 2013 read with rules made thereunder is placed on the website of the Company at www.cravatex.com/investors.
PARTICULARS OF THE EMPLOYEES
The Information required under Section 197(12) of the Companies Act 2013 read with rules made thereunder is included in this report as Annexure II and forms part of this report.
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a structured questionnaire was prepared after taking into consideration the various aspects of the Board functioning composition and the Board and its committee culture execution and performance of specific duties obligations and governance.
The performance evaluation of the Independent Directors was completed. The performance of the Chairman and Non-Independent Directors were carried out by the Independent Directors. The Board of Directors express their satisfaction with the evaluation process.
NUMBER OF BOARD MEEETINGS
The Company held 4 (four) Board Meetings during the Financial Year 2018-19. These were on May 25 2018 August 14 2018 November 12 2018 and February 13 2019.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of loans guarantees and investments covered under section 186 of the Companies Act 2013 are given in the notes to the financial statement.
WHISTLE BLOWER POLICY
The Company has a whistle blower policy for reporting genuine concerns or grievances. The whistle blower policy has been posted on the website of the Company.
NOMINATION AND REMUNERATION POLICY
Pursuant to the provisions of Section 178 of the Companies Act 2013 and Regulation 19 of the SEBI (LODR) Regulations 2015 the Remuneration Policy has been formulated and adopted by the Board. The broad details are as follows:
PURPOSE OF THE POLICY
(a) To provide guidelines to the Board while identifying persons for appointment as directors / for positions in senior management
(b) To identify and evaluate the suitability of persons for recommending them to the Board for their appointment as directors including managing directors and executive directors as also persons who may be appointed in senior management positions.
(c) To recommend to the Board the Remuneration payable to the Directors Key Managerial Personnel and Senior Management.
The terms of remuneration shall be based keeping in view various aspects including qualifications experience performance commitment leadership skills etc.
(d) To devise plans from time to time to motivate retain and promote talent so as to ensure long term continuity of such personnel and in the process creating competitive advantage for the Company.
ROLE OF THE COMMITTEE
(a) To identify persons who are suitable for appointment as directors.
(b) To recommend the remuneration policy for the directors KMP and senior management. (c) To formulate the criteria for evaluation of Independent Directors and the Board; (d) To devise a policy on Board diversity.
(e) To disclose the remuneration policy and the evaluation criteria in its Annual Report.
(f) To recommend Board about the appointment and removal of directors.
(g) While formulating such a policy the Committee shall ensure that:
- the level and composition of remuneration is reasonable and sufficient to attract retain and motivate directors of the quality required to run the company successfully;
- relationship of remuneration to performance is clear and meets appropriate performance benchmarks.
RELATED PARTY TRANSACTIONS
All related party transactions are placed before the audit committee and board for approval.
The Company has not entered into any contract/arrangement/transaction with its related parties which is not in the ordinary course of business or not at arm's length during the financial year 2018-19. There are no material contract/arrangement/transaction with related parties at arms length basis during the year under review. Accordingly the disclosure relating to Form AOC-2 is not attached separately.
The Company has laid down policies and processes/procedures so as to ensure compliance to Section 188 of the Companies Act 2013 and the corresponding Rules. The details of related party transactions for the financial year 2018-19 are provided in Note 37 of the audited financial statements.
There are no transactions during the financial year under review with any person or entity belonging to the promoter/promoter group which hold(s) 10% or more shareholding in the listed entity.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future.
CORPORATE SOCIAL RESPONSIBILITY
Since the company has reported average losses in the three immediately preceding financial years and not being the specified class of company the provisions of Section 135 of the Companies Act 2013 were not applicable to the Company.
In terms of Section 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company had appointed M/s. Hemanshu Kapadia & Associates Practising Company Secretary to conduct the Secretarial Audit for the financial year 2018-19. The secretarial audit report is included as Annexure III and forms a part of this report.
INTERNAL CONTROL SYSTEMS
Objective evaluation of adequacy and efficiency of internal controls and systems are done by qualified audit firm and monitored closely by the top management. Present control systems are considered as adequate for the size of business.
The risks that the Company is exposed to and the measures taken by the Company to tackle the same are as follows:
|Sr. No.||Risk Description||Key Risk Matrix||Mitigation Measure|
|1||Destruction of properties and assets due to fire etc||Loss of assets resulting in financial loss.||Comprehensive insurance is taken and monitored from time to time for adequacy.|
|2||Loss of income from office premises||Fall in rentals in the market Premises falling vacant||A duly registered Leave and License is contracted with reputed Licensee.|
The are no fraud to be reported as required under Section 134(3)(ca) of the Companies Act 2013.
There are no qualifications reservation adverse remark or disclaimer made by the Auditors of the Company under Section 134(3)(f) of the Companies Act 2013.
The Secretarial Auditors have mentioned in the Secretarial Auditors Report that the Company has not made disclosures as specified in Schedule V(C) Point 2(g) Point 5(b) 5(c) and Point 9(c) of SEBI (Listing Obligation and Disclosure Requirements) Regulation 2015 in the Corporate Governance Report in Annual Report of the Company for the financial year 2017-18. The observations of the Secretarial Auditors have been noted and the details have been incorporated in the annual report for the financial year ended 2018-19.
The Secretarial Auditors have further pointed out that there was delay in issue of share cretificates in few cases pertaining to transfer transmission name deletion and transposition. Further there were two requests for dematerialization of shares which were processed after 21 days. As explained by the Registrar and Share Transfer Agents of the Company there has been delay in the last quarter while processing physical transfer of shares due to surge in volume on account of various SEBI circulars with regards to fixing the deadline for transfer financial year 2018-19. This delays are across the RTA industries which is already reported to SEBI by the RTA Association (RAIN).
M/s. GPS and Associates Chartered Accountants Mumbai (Firm Regd. No. 121344W) were appointed as the Statutory Auditors of the Company in the 65th Annual General Meeting of the Company to hold office for a period of 5 years from the conclusion of the 65th Annual General Meeting until the conclusion of the 70th Annual General Meeting. The said Statutory Auditor shall hold office until the conclusion of the 70th Annual General Meeting.
PREVENTION OF SEXUAL HARASSMENT
The Company is committed to provide a safe and conducive work environment to all women employees. The Company strives hard to ensure that all women employees are treated with dignity and respect and are committed to providing a work environment free of sexual harassment. Pursuant to the Sexual Harassment of Women at Workplace (Prohibition Prevention and Redressal) Act 2013 and rules made thereunder the Company has a Policy for prevention of Sexual Harassment in the Company. This policy is applicable to all women personnel defined in the said act. The Company has complied with the applicable provisions of the aforesaid Act including constitution of the Internal Complaints Committee.
During the financial year 2018-19 there were no cases filed under Sexual Harassment of Women at Workplace (Prohibition Prevention and Redressal) Act 2013.
TRANSFER OF UNCLAIMED SHARES TO IEPF
Section 124(6) of the Companies Act 2013 read with the Investor Education and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 Investor Education and Protection Fund Authority (Accounting Audit Transfer and Refund) Amendment Rules 2017 and General Circular No.12/2017 dated October 16 2017 stipulated that shares on which dividend has not been paid or claimed for 7 consecutive years or more are to be transferred to the Investor Education and Protection Fund (IEPF) a Fund constituted by the Government of India under Section 125 of the Companies Act 2013.
Accordingly the Company had sent individual notices to the respective shareholders at their latest available address in the records of Company and Depositories providing the details of shares which are due for transfer requesting them to claim their unpaid dividends on or before August 31 2018 and avoid the transfer of their shares to IEPF. The Company had also published a newspaper notice in Business Standard in English Language and in Sakal in Marathi Language to this effect. In case where no valid claim was received on or before August 31 2018 the Company would take necessary steps to issue duplicate share certificate (for the shares held in physical mode) and issue delivery instruction slip (for the shares held in demat mode) and transfer the shares to IEPF account. Accordingly 3150 Equity Shares of the Company have been transferred to the Investor Education and Protection Fund (IEPF) during the financial year 2018-19 in accordance with Section 125 of the Companies Act 2013 read with the rules made thereunder.
The Company has complied with all the applicable secretarial standards issued by The Institute of Company Secretaries of India and notified by the Central Government.
As per Section 148(1) of the Act read with the Companies (Cost Records and Audit) Rules 2014 the maintenance of cost records is not mandated for the Company.
Your directors wish to place on record their appreciation for the efforts hard work dedication and commitment put by employees at all levels as also for the valuable support extended by the Members Bankers and other business associates.
For and on behalf of the Board of Directors
Chairman & Managing Director
Place : Mumbai
Dated : May 24 2019
CIN : L93010MH1951PLC008546
Sahas 4th Floor 414/2 Veer Savarkar Marg
Prabhadevi Mumbai-400 025.
Tel. No.: +91 22 66667474 Fax No.: +91 22 24973210
ANNEXURE TO THE DIRECTORS' REPORT
Additional information as required under The Companies (Accounts) Rules 2014.
A. CONSERVATION OF ENERGY
(a) The steps taken on conservation of energy:
The Company has been making optimum use of electrical energy by regular maintenance. Regular watch has been kept to prevent wastage of energy.
(b) Impact on conservation of energy:
(c) The steps taken by the company for utilising alternate sources of energy
None as the Company is not engaged in any manufacturing activities and the energy consumption is insignificant.
(d) The capital investment on energy conservation equipments:
B. TECHNOLOGY ABSORPTION
(i) The efforts made towards technology absorption;
Not Applicable as the Company is not engaged in any Hitech or Manufacturing Activities.
(ii) The benefits derived like product improvement cost reduction product development or import substitution; Not Applicable
(iii) iii) In case of imported technology (imported during the last three years reckoned from the beginning of the financial year) (a) the details of technology imported; (b) the year of import; (c) whether the technology been fully absorbed; (d) if not fully absorbed areas where absorption has not taken place and the reasons thereof; and Not Applicable
(iv) The expenditure incurred on Research and Development.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows are as follows:
|Rupees in Lacs||Rupees in Lacs|
|Earnings: Dividend Income from BB (UK) Limited||275.52||68.48|
DISCLOSURE PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT 2013 AND RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014
1. The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;
|Name of the Director||Ratio of the remuneration of each director to the median remuneration|
|Rajesh Batra||2.36 : 1|
NOTE : a) For calculation of median remuneration the employee count taken is 7 inclusive of employees who have partly served in financial year 2018-19.
b) Apart from Mr. Rajesh Batra Managing Director no other Director is entitled for remuneration and are being paid Sitting Fees for attending Board/Committee Meetings.
2. The percentage increase in remuneration of each Director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year:
|i.||Rajesh Batra||Managing Director||212.00%|
|ii.||Divakar Kamath||President - Corporate Affairs & CFO||(7.00)%|
|iii.||Sudhanshu Namdeo||Company Secretary||9.00%|
3. The percentage increase/(decrease) in the median remuneration of employees in the financial year: 25.14%
4. The number of permanent employees on the rolls of company as on 31.03.19: 7
5. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration:
|Remuneration paid to employees excluding managerial personnel||(30.35)%|
|Remuneration paid to managerial personnel||31.59%|
For calculation of average percentile increase the last financial year employee count was 12 and current financial year employee count was 7.
6. It is hereby affirmed that the remuneration paid is as per the Remuneration Policy of the Company for Directors Key Managerial Persons and Employees.
7. (i) The name of employees who if employed throughout the financial year was in receipt of remuneration for that year which in the aggregate was not less than one crore two lakh rupees : None
(ii) The name of employees who if employed for a part of the financial year was in receipt of remuneration for any part of that year at a rate which in the aggregate was not less than eight lakh and fifty thousand rupees per month ; None
8. The name of every employee of the company who if employed throughout the financial year or part thereof was in receipt of remuneration in that year which in the aggregate or as the case may be at a rate which in the aggregate is in excess of that drawn by the managing director: None