Monte Carlo Fashions Ltd.
|BSE: 538836||Sector: Industrials|
|NSE: MONTECARLO||ISIN Code: INE950M01013|
|BSE 00:00 | 22 Feb||357.85||
|NSE 00:00 | 22 Feb||357.30||
|Mkt Cap.(Rs cr)||778|
|Mkt Cap.(Rs cr)||777.61|
Monte Carlo Fashions Ltd. (MONTECARLO) - Director Report
Company director report
To The Members
Your Directors are pleased to present the Tenth (10th) Annual Report of theCompany along with the Audited Financial Results for the year ended March 312018.
Financial Results for the year under review are summarized below:
(Rs. In Lakhs)
Your Company has adopted Ind AS with effect from April 01 2017 pursuant to anotification dated February 16 2015 issued by the Ministry of Corporate Affairsnotifying the Companies (Indian Acounting Standard) Rules 2015. The reconciliation andthe effect of the transition as per GAAP vis-a-vis Ind AS has been provided in Note No. 39of the Notes to the Accounts in the Financial Statements.
In the Financial Year 2017-18 Your Company registered a steady growth of around 11% inthe revenue from operations that has been increased to ' 64639.05 Lakhs from ' 58538.08Lakhs achieved last year. The Net Profit for the period has also risen sharply by about35% to ' 5972.14 Lakhs as compared to ' 4415.64 Lakhs of the previous year. The otherincome of the Company for the said Financial Year stood at ' 1768.01 Lakhs. Since duringthe year there was no major capital expenditure the Depreciation Expenses have reducedfrom year to year on proportionate basis. This year the expenditure on advertisement was '2484.29 Lakhs as compared to ' 2992.34 Lakhs incurred last year. However since thedenominator i.e the top line has gone up the overall percentage has been reduced. Also itis the endeavor of the company that it should be debt free. Therefore no long term freshdebt has been raised and rather it has been reduced to ' 1281.98 Lakhs after paying offthe installments during the year.
Your Company being one of the leading branded apparel Company has successfully expandedits horizon by introducing new product ranges. It has created a comprehensive range ofwool and cotton cotton blended knitted and woven apparels and home furnishing throughsome of its ranges under umbrella brand name "Monte Carlo" such as LuxuriaDenim Alpha and Tweens etc. During the reporting period the Company had also launchedits Fitness and Fashion wear range in the name of "ROCK IT". The basic ideabehind it was to introduce garments having an ideal combination of fitness and fashion.Initially the products were sold through the e-commerce platforms and after consideringthe acceptability of the products and also to push its sales the Company has decided tomarket its new products through other distributing channels.
One of our key strengths has been our wide and growing distribution network with a widepresence across India through 2500 plus Multi Brand Outlets (MBOs) 236 Exclusive BrandOutlets (EBOs) and 207 national chain store outlets. Majority of the Company's revenuescomes from MBOs and franchise EBOs where we primarily sell on pre-orders and outrightbasis. By virtue of this business model there is no major inventory risk and we remainadequately insulated from the normal hazard sales in the branded apparel business.
The Authorized Share Capital of your Company as at 31st March 2018 stands at '250000000 divided into 25000000 Equity Shares of ' 10/- each. Further there was nochange in the Company's Issued Subscribed and Paid-up Equity Share Capital. As at 31stMarch 2018 the Issued Subscribed and Paid-up Equity Share Capital of the Company stoodat ' 2173.21 Lakhs divided into 21732064 Equity Shares of ' 10/- each.
There was neither any issue of Equity shares with differential rights as to dividendvoting or otherwise nor grant of any stock options or sweat equity under any scheme duringthe year under review.
DIVIDEND ON EQUITY SHARES
Based on the Company's performance wherein it has earned a Net Profit of Rs. 5972.14Lakhs your Board recommends a dividend of Rs. 12/- per Equity Share (Previous Year Rs.10/-) of Rs. 10/- each (i.e 120%) for the approval of the members at the ensuing AnnualGeneral Meeting. The final dividend on equity shares if declared by the members wouldinvolve a cash outflow of around Rs. 3143.90 Lakhs (including dividend tax).
TRANSFER TO RESERVES
The Company has earned a total Profit after Tax of Rs. 5972.14 Lakhs out of which asum of Rs. 1791.64 Lakhs (30% of the profit after tax) has been transferred to SpecialReserve maintained for the purpose of future expansions and acquisitions.
Your Company has transferred a sum of Rs. 2052.16 Lakhs to the General Reserve out ofthe profits of the Company. MATERIAL CHANGES AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes or commitments affecting the financial position of theCompany which have occurred between the end of the financial year of the Company i.e 31stMarch 2018 and the date of this report.
During the year under review your Company has not accepted any deposits as envisagedunder Section 73 of the Companies Act 2013 and rules made there under.
SUBSIDIARY JOINT VENTURES OR ASSOCIATE COMPANIES
Your Company does not have any Subsidiary Joint Ventures or Associate Company.
BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNELS
The Board of Directors presently consists of 12 (Twelve) Directors including a Chairman& Managing Director 4 (Four) Executive Directors 1 (One) Non Executive NonIndependent Director and 6 (Six) Independent Directors.
In terms of the provision of Section 149 of the Companies Act 2013 and Regulation 17of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations") your Company have 3 (Three) Women Directors on the Board namely Smt.Ruchika Oswal (DIN:00565979) Smt. Monica Oswal (DIN:00566052) and Dr. Manisha Gupta (DIN:06910242).
The Board consists of a balanced profile having specialization in different fields thatenable them to address various business needs of the Company while placing very strongemphasis on corporate governance.
During the year under review Dr. Sailen Kumar Chaudhuri (DIN: 01021930) IndependentDirector of the Company had resigned from the Directorship w.e.f. 07.02.2018 due tohealth issues. Also the Board of Directors in its meeting held on 25.05.2018 had acceptedand approved the resignation tendered by Dr.Yash Paul Sachdeva (DIN: 02012337) asIndependent Director of the Company due to pre-occupation and personal circumstances. TheBoard placed on record the valuable services rendered by both Dr. Sailen Kumar Chaudhuriand Dr. Yash Paul Sachdeva during their tenure and expressed its deep sense ofappreciation and gratitude for the same.
Further the Board in its meeting held on 25.05.2018 had appointed Sh. Rishabh Oswal(DIN: 03610853) as an Additional Director and was designated as an Executive Director fora period of 5 years w.e.f. 01.06.2018 subject to the approval of Members at the ensuingAnnual General Meeting of the Company. Also the Board has taken note of Sh. Paurush Roy(DIN: 03038347) Non-Executive Director Non Independent Director of the Company being anIndependent Director of the Company for a term of 3 consecutive years w.e.f. 25.05.2018.For the year commencing from 01.04.2018 Sh. Paurush Roy qualifies conditions to be anIndependent Director. Accordingly it has been decided by the Board that henceforth hewill be deemed to be an Independent Director and his appointment as an IndependentDirector is subject to the confirmation by the members in the forthcoming Annual GeneralMeeting after considering the Explanatory Statement attached to the notice calling AnnualGeneral Meeting.
Re-appointment of Executive Director
During the year under review the members at their Ninth (9th) Annual GeneralMeeting (AGM) held on 29th September 2017 had the re-appointed Sh. SandeepJain (DIN: 00565760) as an Executive Director of the Company for a term of five yearsw.e.f. 01.08.2017.
Retirement by Rotation
In accordance with the provisions of Section 152(6) of the Companies Act 2013 Smt.Ruchika Oswal (DIN: 00565979) and Smt. Monica Oswal (DIN: 00566052) Executive Directorsof the Company being longest in the office since their last appointments/re-appointments shall retire at the forthcoming Annual General Meeting and being eligibleoffers themselves for re-appointment on the same terms and conditions on which they wereappointed/ re-appointed.
In compliance with Regulation 36(3) of Listing Regulations and Secretarial Standardsbrief resumes of all the Directors proposed to be appointed / re-appointed are attachedalong with the Notice calling the ensuing Annual General Meeting.
Statement of declaration from Independent Directors
All the Independent Directors of the Company have given their respective declarationsthat they meet the criteria of Independence as provided in Section 149(6) of the Act andRegulation 16(1)(b) of the SEBI Listing Regulations.
Key Managerial Personnel (KMP's)
The Board of Directors had accepted the resignation of Sh. Raman Kumar as ChiefFinancial Officer of the Company w.e.f. 13.11.2017.
The following persons are the Key Managerial Personnel (KMP's) of the Company as atMarch 312018 in terms of provisions of Section 203 of the Companies Act 2013 and rulesmade there under:
NUMBER OF BOARD MEETINGS HELD
The Board meets at regular intervals to discuss and decide on policy and strategy apartfrom other business discussions. However in case of a special and urgent business needthe Board's approval is taken by passing resolution(s) through circulation as permittedby law which is confirmed in the subsequent Board Meeting.
During the Financial Year 2017-2018 the Board met on 4 (Four) occasions viz. May 302017 August 18 2017 November 07 2017 and February 07 2018. The intervening gapbetween the meetings was within the period prescribed under the Companies Act 2013.
COMMITTEES OF THE BOARD
The Company has constituted the following committees in compliance with the CompaniesAct 2013 and the Listing Regulations (erstwhile Listing Agreement).
1. Audit Committee;
2. Nomination and Remuneration Committee;
3. Stakeholders Relationship Committee and
4. Corporate Social Responsibility Committee.
Due to changes occured in the composition of the Board by virtue of resignation ofDr.Yash Paul Sachdeva (DIN: 02012337) and take note of Sh. Paurush Roy (DIN: 03038347)being an Independent Director various Committees of which they were the Chairperson(s)/Member(s) were reconstituted by the Board in its meeting held on 25.05.2018. Afterdetailed discussion about the requirements laid down under Companies Act 2013 and SEBI(LODR) Regulations 2015 the Board reconstituted all the relevant Committees such asAudit Committee Nomination and Remuneration Committee Stakeholders RelationshipCommittee and Corporate Social Responsibility Committee.
Apart from the aforesaid Committees of the Board the Company has also constitutedShare Transfer Committee. All these Committees have been established as a part of the bestcorporate governance practices. There have been no instances where the Board has notaccepted any recommendation of the aforesaid Committees. The details in respect to theCompositions Powers Roles and Terms of Reference etc. are provided in the CorporateGovernance Report forming part of this Report.
ANNUAL BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 the Board has carried out anannual evaluation of its own performance that of its committees and individual directors.Further the Independent Directors of the Company met once during the year on February 072018 to review the performance of the Non-executive Directors Chairman of the Company andperformance of the Board as a whole. Composition of Board / Committees Quality and timelyflow of information frequency of meetings and level of participation in discussions weresome of the parameters considered during the evaluation process.
DIRECTOR'S RESPONSIBILITY STATEMENT
In compliance of Section 134(3)(c) of the Companies Act 2013 it is hereby confirmedthat:
a) In the preparation of the annual accounts for the year ended March 312018 theapplicable accounting standards have been followed along with proper explanation relatingto material departures;
b) The directors have 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 of the Company for that period;
c) The directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) The directors have prepared the annual accounts on a going concern basis;
e) The directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and
f) The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
Your Company has an adequate system of internal financial control commensurate with itssize and scale of operations procedures and policies ensuring orderly and efficientconduct of its business including adherence to the Company's policies safeguarding ofits assets prevention and detection of frauds and errors accuracy and completeness ofaccounting records and timely preparation of reliable financial information.
Based on the framework of Internal Financial Controls and compliance systemsestablished and maintained by the Company work performed by the Internal AuditorsStatutory Auditors and Secretarial Auditors and External Consultants including audit ofinternal financial controls over financial reporting by the Statutory Auditors and thereviews performed by the management and the Audit Committee the Board is of the opinionthat Internal Financial Controls of the Company were adequate and effective during theyear under review.
NOMINATION AND REMUNERATION POLICY
The Nomination and Remuneration Policy adopted by the Company lays down aframeworkinrelation to selection appointment/ reappointment of Directors Key Managerial Personneland Senior Management alongwith their remuneration. It also lays down criteria fordetermining qualifications positive attributes independence of director(s) and othermatters provided under sub section (3) of section 178 of the Companies Act 2013.
The said Policy is available on Company's website and the web link for the same is
BUSINESS RISK MANAGEMENT
Pursuant to Section 134(3)(n) of the Companies Act 2013 your management at regularintervals evaluates various risks faced by the Company which could affect its businessoperations or threaten its existence. Major risks identified by the businesses andfunctions from time to time are systematically addressed through mitigating actions on acontinuing basis.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has formulated a Vigil Mechanism/ Whistle blower Policy to encourageemployees to report matters about unethical behaviour actual or suspected fraud orviolation of Company's code of conduct without the risk of subsequent victimisation anddiscrimination. The details of the same are explained in the Corporate Governance Reportand the said policy is also posted on the website of the Company i.e.www.montecarlocorporate.com .
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Board has constituted a CSR Committee constituted under Section 135 of theCompanies Act 2013. As per the adopted CSR policy the Company is committed to certainCSR initiatives in the fields of Medical Relief and Research EnvironmentalSustainability Education and Social Upliftment etc. in collaboration with its GroupCompanies through the Implementing Agency i.e Oswal Foundation.The said policy isavailable at
During the concerned Financial Year the Company had tied up with Oswal Foundation forundertaking its CSR obligations. Based on the discussions with the foundation the Companyidentified the project for setting up the Eye Care Center in a charitable hospital forwhich estimate amount of expenditure was of Rs. 8-10 Crores. However the project had tobe deferred by the said charitable medical institution. The Company also made efforts toidentify projects in other areas. However it was not able to identify meaningfulprojects finalize implementation agencies and the target beneficiaries which would havecreated a visible impact on the society.
Due to the aforementioned reasons the Company was not able to spend its CSR amountduring the year. The Company remains committed towards the noble cause of socialdevelopment and has accordingly decided to carry forward the unspent amount of FinancialYear 2017-18 to the next year. In pursuance thereof the Company in association withOswal Foundation has already begun helping to run the charitable hospital for the purposesof diagnosis & treatment besides other charitable activities under CSR alreadyapproved.
Accordingly the company has now issued a cheque of Rs. 302.92 Lakhs which includesthe amount of Rs. 156.20 Lakhs of CSR liability for Financial Year 2017-18 in favour ofOswal Foundation for the purposes of CSR including promotion of charitable hospital beingrun by Mohan Dai Oswal Cancer Treatment & Research Foundation.
The Annual Report on CSR activities as required under Companies (Corporate SocialResponsibility Policy) Rules 2014 including a brief outline of the Company's CSR Policyis set out as Annexure-A forming part of this Report.
RELATED PARTY TRANSACTIONS
All the transactions entered into by the Company with its related parties during theyear under review were in the "ordinary course of the business" and on "anarm's length basis" none of which was "material" in accordance with theCompany's Related Party Transactions Policy. Accordingly the disclosure of Related PartyTransactions as required under Section 134(3)(h) of the Companies Act 2013 in Form AOC-2is enclosed as Annexure-B. Further there are no materially significant related partytransactions made by the Company with Promoters Key Managerial Personnel or otherdesignated persons which may have potential conflict with interest of the Company atlarge.
Prior approval of the Audit Committee was also obtained for all the transactionsentered into during the year 2017-18 by the Company with its Group Companies. The detailsof all the related party transactions are placed before the Audit Committee and Board forits consideration and ratification on quarterly basis. Moreover the Company has alreadyaccorded the approval of Members at its Annual General Meeting held on 29thSeptember 2017 for all the transactions entered into by the Company during the FinancialYear 2017-18 with its related parties in its ordinary course of business.
The details of the transactions entered with Related Parties during the year areprovided in the Company's Financial Statements at Note No. 38 of the Notes to Accounts inaccordance with the relevant Accounting Standard.
Your Company has framed a Policy on Related Party Transactions for purpose ofidentification and monitoring of such transactions inline with the requirements of theCompanies Act 2013 and Listing Regulations and the said policy is available at
PARTICULARS OF LOANS GUARANTEE OR INVESTMENTS
The Company has not given any loan guarantee or made any investment covered under theprovisions of Section 186 of the Companies Act 2013. However the detail of investmentsmade by the Company is given in the notes to the Financial Statements.
SIGNIFICANT OR MATERIAL ORDERS PASSED BYTHE REGULATORS OR COURTS
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.
EXTRACT OF ANNUAL RETURN
In terms of provisions of Section 92(3) and Section 134(3)(a) read with Rule 12 ofCompanies (Management and Administration) Rules 2014 the extract of the Annual Return inform MGT-9 as at 31.03.2018 is annexed herewith as Annexure-C to this report. Also thecopy of Annual Return for the Financial Year ended 31.03.2017 duly filed with theRegistrar of Companies in terms of Section 92 of the Companies Act 2013 has been placedon the website at http://www.montecarlocorporate.com/pdf/Form-MGT-7-2016-17.pdf.
INTERNAL CONTROL SYSTEM & ITS ADEQUACY
Your Company has developed a well defined Internal Control System commensurate with thesize scale and complexity of its operations. The internal audit function is entrusted toM/s Gupta Vigg & Co. Chartered Accountants who were appointed as Internal Auditorsby the Board in terms of Section 138 of the Companies Act 2013 and rules made thereunder. The Internal Auditors monitors and evaluates adequacy of internal control system inthe Company its compliance with operating systems accounting procedures and policies ofthe Company. Significant audit observations are addressed to the Audit Committee and theCommittee thereafter reviews the adequacy and effectiveness of the internal controlsystems and suggests various measures to improve and strengthen the same.
The Company is committed to follow the best Corporate Governance practices includingthe requirements under the SEBI Listing Regulations and the Board is responsible to ensurethe same from time to time. The Company has duly complied with the Corporate Governancerequirements. Further a separate section on Corporate Governance in compliance with theprovisions of Regulation 34 of the Listing Regulations read with Schedule V of the saidregulations alongwith a Certificate from a Practicing Company Secretary confirming thatthe Company is and has been compliant with the conditions stipulated under SEBI (ListingObligations and Disclosure Requirements) Regulation 2015 forms part of the Annual Report.
Statutory Auditors & Auditor's Report
M/s Walker Chandiok & Co. LLP (Firm Registration No: 001067N / N500013) CharteredAccountants were appointed as Statutory Auditors of the Company in the 7thAnnual General Meeting (AGM) to hold office up to the conclusion of the 12th AGMsubject to ratification by shareholders each year at the AGM.
As per Section 40 of the Companies Amendment Act 2017 enforced on 7th May2018 by the Ministry of Corporate Affairs the appointment of Statutory Auditor is notrequired to be ratified at every AGM still the Board of Directors proposed theratification of appointment of M/s Walker Chandiok & Co. LLP as the StatutoryAuditors by the shareholders of the Company to hold the office from the conclusion of theforthcoming Annual General Meeting till the conclusion of 11th Annual GeneralMeeting of the Company in true sense of the resolution passed by the shareholders intheir 7th AGM as recommended by the Audit Committee.
The Company has obtained from Auditors a written consent and a certificate as requiredunder the Section 139 of the Companies Act 2013 to the effect that their reappointmentif made would be within the limits and in accordance with the criteria specified underSection 141 of the Companies Act 2013.
The Auditor's Report on the Annual Accounts of the Company for the year under review isself explanatory and requires no comments. Further there are no adverse remarks orqualification in the report that calls for Board's explanation. During the year underreview there were no frauds reported by Auditors under Section 143(12) of Companies Act2013.
M/s PS. Dua & Associates Company Secretary in whole time practice are appointedas Secretarial Auditor of the Company to conduct Secretarial Audit for the Financial Year2018-19 pursuant to the provisions of Section 204 of the Companies Act 2013 andCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
There has been no qualification reservation adverse remark or disclaimer given by theSecretarial Auditor in his Report for the year under review and therefore does not callfor any further comments. The Secretarial Audit Report for the financial year 2017-18 isannexed as Annexure-D to this report.
In terms of the Companies (Cost Records and Audit) Amendment Rules 2014 the Companyis not covered under the purview of Cost Audit.
GOODS AND SERVICES TAX (GST)
The Goods and Services Tax (GST) is a landmark reform which will have a lasting impacton the economy and on businesses. Your Company has successfully implemented and migratedto GST followed by the changes across operations have been made keeping in mind thechanges that GST has brought in.
LISTING OF EQUITY SHARES
The Equity Shares of the Company are listed on BSE Limited (BSE) and National StockExchange of India Limited (NSE) Mumbai and the listing fees for the Financial Year2018-2019 have been duly paid to both the Stock Exchanges.
DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy against sexual harassment in line with the provisions of Sexual Harassment of Womenat Workplace (Prevention Prohibition and Redressal) Act 2013 and the rules framedthereunder. During the Financial Year 2017-18 the Company has not received any complaintson the same and hence no complaint was pending as at 31st March 2018.
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34(3) read with Schedule V of the Listing Regulations is presentedseparately and forms part of this Annual Report.
DISCLOSURE OF REMUNERATION OF DIRECTORS AND EMPLOYEES OFTHE COMPANY
Information as required under Section 197(12) of the Companies Act 2013 read with Rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014and a statement showing the names and other particulars of the employees drawingremuneration in excess of the limits set out in Rule 5(2) and 5(3) of the Companies(Appointment & Remuneration of Managerial Personnel) Rules 2014 is annexed hereto asAnnexure-E and forms part of this report.
CONSERVATION OF ENERGYTECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo pursuant to
Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of the Companies(Accounts) Rules 2014 is annexed as
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS
During the year under review your Company has duly complied with applicable provisionsof the Secretarial Standards on meetings of the Board of Directors (SS-1) and GeneralMeetings (SS-2).
HUMAN RESOURCE & INDUSTRIAL RELATIONS
During the year under review your Company enjoyed cordial relationship with theworkers and employees at all levels of the organisation. A detailed section on HumanResources/lndustrial Relations is provided in the Management Discussion and AnalysisReport which forms part of this Annual Report.
ACKNOWLEDGEMENT & APPRECIATION
Your Board is grateful to express its deep sense of gratitude and appreciation to allthe Shareholders Customers Vendors Bankers Financial Institutions and BusinessAssociates of the Company for their continued support during the relevant financial year.Your Board acknowledges support and cooperation received from all the regulatoryauthorities of the Central Government and State Government respectively.
It also express its sincere appreciation of the employees at all levels for beingencouraged to meet several challenges encountered and look forward to their valuablesupport and commitment in the times ahead.
For and on behalf of Board of Directors