Your Directors take pleasure in presenting the Forty Second Annual Report and theaudited accounts for the financial year ended March 31 2019.
|Financial Results || ||(Rs. in lakhs) |
|Particulars ||Year ended March 31 2019 ||Year ended March 31 2018* |
|Net Sales/ Revenue from Operations (adjusted for taxes) ||56945 ||64271 |
|Profit before finance cost depreciation taxation and exceptional item ||3895 ||4937 |
|Finance Cost ||871 ||728 |
|Depreciation ||1652 ||1502 |
|Exceptional Item (Net) ||0 ||2027 |
|Profit before taxation ||1372 ||4734 |
|Operating Profit before taxation ||1372 ||2707 |
|Tax expense ||482 ||729 |
|Profit after tax ||890 ||4005 |
|Other Comprehensive Income (Net of Taxes) ||64 ||79 |
|PAT with Other Comprehensive Income ||954 ||4083 |
|Earning per share (`) ||6.24 ||28.18 |
During the year under review FY 2018-19 your Company's Net Sales is ` 56945 lakhs asagainst ` 64271 lakhs in the previous year FY 2017-18 and the Profit After Tax (PAT) forthe current fiscal FY 2018-19 is ` 1372 lakhs as against ` 2707 lakhs in the previousyear FY 2017-18. The PAT of previous year i.e. FY 2017-18 included an exceptional item of` 2027 lakhs hence the effective PAT during the previous year on a like for like basiswas ` 1978 lakhs. On the supply side the Industry continued to add capacities but thedemand remained subdued as the Real Estate Industry is yet to pick-up. Increasingcompetition from the fragmented and the unorganized players in the industry apart from thesevere liquidity crunch in the market resulted in downward pressure on prices. On theinput cost front too there was no respite during the year as the gas prices continued totrend upwards further impacting margins.
Your Company has put in concerted efforts on costs optimization and reduction ofGeneral and Administrative expenses to improve the cost base. Improvement of product mixwas also undertaken during the year (contribution of High Value Products now at 40% vs.35% in the previous year) to improve the blended sales realization.
During the year under review your Company focused on talent acquisition so as tostrengthen the key functions. The year saw recruitment and on boarding of Chief SalesOfficer Chief Marketing Officer and Chief Financial Officer. In a departure from thepast your Company has split the Marketing and Sales roles to enable sharp focus on thelong term task of brand recall and engagement. The Company's new Tile Manufacturing line("the new line") at Sikandrabad (U.P.) plant was made operational during theyear under review. The new line is running successfully and is producing large formattiles / slabs viz. Digital Glazed Vitrified Tiles (DGVT) and Polished Glazed VitrifiedTiles (PGVT) to suit the changing customer preferences. State of the art technology hasbeen procured from renowned international brands viz. SACMI KEDA and DLT to deliver highquality products at competitive prices.
Successive New Product Designs (NPD) launches were made to rejuvenate the productrange.
In Q2 FY18-19 the Company launched ~400 new SKUs.
60% new designs were added in GVT
Jumbo Sizes introduced (in mm): 1200x2400 1200x1200 800x1600 Similar rejuvenationof our range has been executed in Wall Tiles as well.
Fusion series New Horizons & Third Fire have been some of the other launches madeduring the year.
To improve product display 47 new Orient Bell Tiles Boutiques (OBTBs) were also addedduring FY 2018-19 in high population density towns. There is an increased emphasis oncreating displays & ambiences for NPD products to improve product salience.
Your Company has spent a significant amount on advertising and promotional eventsparticularly during Q4FY19 as part of the renewed focus on our branding campaign. DigitalMedia campaigns featuring multiple videos and static advertisements were launched acrossmajor platforms and markets. Hoardings were also installed over nearly 100 cities all overthe Country as part of the campaign. Your Company will continue to invest significantly inbranding investments during FY 2019-20 also and the plans for the same are already beingformalized. Print and Electronic Media campaigns are next on the agenda and should drivebrand salience next year.
The financial statements for the financial year ended 31.03.2019 has been prepared incompliance with the Indian Accounting Standards (IND-AS).
Your Directors have recommended a dividend of ` 0.50 per equity share for the financialyear ended March 31 2019. The total outgo of dividend (inclusive of tax of ` 14.64 lakhs)would amount to ` 85.89 lakhs as against ` 85.89 lakhs in the previous year. The dividendpayout is subject to approval of members at the ensuing Annual General Meeting.
Particulars of Loans Guarantees or Investments
Loans Guarantees and Investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements provided in this Annual Report.
Your Company has neither invited nor accepted deposits from the public falling withinthe ambit of Section 73 of the Companies Act 2013 and The Companies (Acceptance ofDeposits) Rules 2014.
Transfer to Reserves
During the year under review no amount was transferred to Reserves.
Particulars of Contracts or Arrangements made with Related Parties
All Related Party Transactions that were entered into during the financial year were onan arm's length basis in the ordinary course of business and were in compliance with theapplicable provisions of the Act and the Listing Regulations. There were no materiallysignificant Related Party Transactions made by the Company during the year that would haverequired Shareholder approval under the Listing Regulations. All Related PartyTransactions are placed before the Audit Committee for approval. Prior omnibus approval ofthe Audit Committee is obtained for the transactions which are repetitive in nature. Astatement of all Related Party Transactions is placed before the Audit Committee for itsreview on a quarterly basis specifying the nature value and terms and conditions of thetransactions. The Company has adopted a Related Party Transactions Policy. The Policy asapproved by the Board is uploaded on the Company's website. Details of the transactionswith Related Parties are provided in the accompanying financial statements. There were notransactions during the year which would require to be reported in Form AOC-2.
Directors and Key Managerial Personnel
During the year under review Mr. R.N. Bansal's term of office as an IndependentDirector of the Company ended on 29.09.2018. His outstanding contribution and support isappreciated by the Board of Directors.
Mr. Madhur Daga shall retire at the forthcoming Annual General Meeting and beingeligible has offered himself for reappointment. The first term of appointment of Mr. P.M.Mathai shall expire on 29th September 2019. Mr. Mathai has given his consent to act asIndependent director for a further term of five years from 30th September 2019 to 29thSeptember 2024. All Independent Directors have given their respective declarations thatthey meet the criteria of independence as laid down under Section 149(6) of the CompaniesAct 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
During the year under review your Company has appointed Mr. Himanshu Jindal as ChiefFinancial Officer (in the category of Key Managerial Personnel) of the Company. Mr.Himanshu Jindal is a qualified Chartered Accountant having more than 15 years of multifacet experience in Corporate Sector having good knowledge in the work areas such asTreasury Banking Finance Risk Management & Insurance and Internal financialcontrols. He is extremely high on diligence organized working and analytical ability. Hestrikes a strong rapport with banking and investor fraternity. His commercial acumenleadership and ability to understand the matters of strategic importance makes himoutstanding performer. Mr. Himanshu Jindal has worked with Companies of repute like PfizerLtd. Cipla Ltd. Cargill Global Trading India Pvt. Ltd. Heidelberg Cement India Ltd. andDen Networks Limited.
Number of meetings of the Board
The Board met seven times during the financial year the details of which are given inthe Corporate Governance Report that forms part of this Annual Report. The intervening gapbetween any two meetings was within the period prescribed by the Companies Act 2013.
Directors' Responsibility Statement
Pursuant to Section 134(3) (c) of the Companies Act 2013 your Directors to the bestof their knowledge and belief and according to the information and explanations obtainedby them make the following statement: (a) that in the preparation of annual accounts forthe financial year ended March 31 2019 the applicable accounting standards have beenfollowed along with proper explanation relating to material departures;
(b) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of your Company as at March 31 2019 andof the profit of your Company for the year ended on that date; (c) that proper andsufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities; (d) that theaccounts for the financial year ended March 31 2019 have been prepared on a goingconcern' basis; (e) that internal financial controls were in place and that such internalfinancial controls were adequate and were operating effectively; (f) that proper systemsto ensure compliance with the provisions of all applicable laws were in place and wereadequate and operating effectively.
The Audit Committee comprises of two Independent Directors namely Mr. Sameer Kamboj(Chairman) Mr. P.M. Mathai (Member) and one Non Independent- Non Executive Director Mr.K.M. Pai (Member). All the recommendations made by the Audit Committee were accepted bythe Board.
The Policy of the Company on Director's appointment and remuneration specifyingcriteria for determining qualifications positive attributes independence of a Directorand other matters provided under sub section (3) of section 178 of the Companies Act2013 adopted by the Board is available on the website of the Company athttps://www.orientbell.com/ statutory-information under the head Policies.
Risk Management Policy
Pursuant to the requirement of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has formed a Risk Management Policy. This policy seeks tocreate transparency minimize adverse impact on the business objectives and enhance theCompany's competitive advantage. The policy defines the risk management approach acrossthe enterprise at various levels including documentation and reporting. The Board ofDirectors reviews the risks appurtenant to the Company periodically and a statement ofrisks is mentioned under the head Management Discussion and Analysis Report of this AnnualReport.
The Risk Management Policy as approved by the Board is uploaded on the Company'swebsite https://www.orientbell. com.
Vigil Mechanism cum Whistle Blower Policy
The Company has formulated a Vigil Mechanism cum Whistle Blower Policy to deal with theinstances of unethical behavior actual or suspected fraud or violation of the Company'sCode of Conduct. It provides for a mechanism for Directors and Employees of the Company toapproach the Chairman of the Audit Committee of the Company or the Director nominated toplay the role of Audit Committee as the case may be in exceptional cases to report suchcases. The Vigil Mechanism cum Whistle Blower Policy of the Company is uploaded on theCompany's website https://www.orientbell.com.
Corporate Social Responsibility
The Corporate Social Responsibility Committee comprises Mr. Madhur Daga (Chairman) Ms.Tanuja Joshi and Mr. Sameer Kamboj (Members). The Committee has formulated and recommendedto the Board a Corporate Social Responsibility Policy ("CSR Policy") indicatingthe activities to be undertaken by the Company which has been approved by the Board. TheCSR Policy may be accessed on the Company's website at https:// www.orientbell.com.
The CSR activities as per the provisions of the Companies Act 2013 may also beundertaken through a Registered Trust. The Company continues to undertake the CSRactivities also through M/s Godavari Foundation a Trust registered under Section 12A ofthe Income Tax Act 1961 (registration no. DIT(E) 268-69/8E/196/90-91). The Companyundertakes initiatives in compliance with Schedule VII to the Act.
The average net profit of the Company computed as per Section 198 of the Act duringthe three immediately preceding financial years (i.e. 2015-16 2016-17 and 2017-18) was
` 224221623/-. It was hence required to spend ` 4484432/- on CSR activities duringthe Financial Year 2018-19 being 2% of the average net profits of the three immediatelypreceding financial years. During the year the Company has spent
` 4486749/- on CSR activities.
The Annual Report on CSR activities is appended as Annexure 1 to the Board's Report.
Code for prevention of Insider Trading Practices
In accordance with the provisions of SEBI (Prohibition of Insider Trading) Regulations2015 your Company has formulated and adopted Code of Conduct for prevention ofInsider Trading' and Code of practices and procedures for fair disclosure ofUnpublished Price Sensitive Information' (hereinafter collectively referred to as"OBL Code of Conduct"). The OBL Code of Conduct is uploaded on the website ofthe company https://www.orientbell.com.
Information pursuant to Section 134(3)(m) of the Companies Act 2013
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under section 134(3)(m) of the Companies Act 2013 read withrule 8 of the Companies (Accounts) Rules 2014 is appended as
Annexure 2 to the Board's Report.
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annual evaluationof its own performance and that of its Committees as well as performance of the Directorsindividually. Feedback was sought covering various aspects of the Board's functioning suchas adequacy of the composition of the Board and its Committees Board culture executionand performance of specific duties obligations and governance and the evaluation wascarried out based on responses received from the Directors.
A separate exercise was carried out by the Nomination and Remuneration Committee of theBoard to evaluate the performance of individual Directors. The performance evaluation ofthe Non-Independent Directors and the Board as a whole was carried out by the IndependentDirectors. The performance evaluation of the Chairman of the Company was also carried outby the Independent Directors. The Directors expressed their satisfaction with theevaluation process.
Employee Stock Option Scheme
During the year under review Orient Bell Employees Stock Option Scheme 2018 wasapproved by the members involving 200000 Employees Stock Options. The Company hasreceived necessary approvals from Stock Exchanges and granted Employees Stock Optionsunder the said scheme.
The information required to be disclosed in terms of the provisions of SEBI (EmployeeStock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 and Companies(Share Capital and Debentures) Rules 2014 is appended as Annexure 3 to the Board'sReport.
Management Discussion and Analysis Report
Management Discussion and Analysis Report' as stipulated under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forming part of this reporthas been given under separate section in the Annual Report.
Corporate Governance Report
As per SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aseparate section on corporate governance practices followed by the Company together acertificate for compliance of the provisions of Corporate Governance from the StatutoryAuditors forms an integral part of this Report.
A copy of the Annual Return is disclosed on the website of the Companyhttps://www.orientbell.com and its web link is https://www.orientbell.com/pub/media/docs/investor/Annual_Return_for_the_year_2018.pdf.
Subsidiaries Associates and Joint Ventures
The Company has no Subsidiary Company or Joint Venture but the Company has twoAssociate Companies viz. M/s Proton Granito Private Limited and M/s Corial CeramicPrivate Limited. As required under the provisions of Section 129 of the Companies Act2013 read with Companies (Accounts) Rules 2014 a statement containing salient featuresof the financial statement of associates in the prescribed format AOC-1 is appended as
Annexure 4 to the Board's Report.
Particulars of Employees
The information as per Section 197 read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 will be provided upon request. Howeveras per the provisions of Section 136 of the Act the Report and Accounts are being sent toall the members excluding the information on particulars of employees which is availablefor inspection by the members at the Registered Office of the Company during businesshours on working days of the Company up to the date of the ensuing Annual General Meeting.Any member interested in obtaining a copy thereof may write to the Company Secretary inthis regard.
M/s B.R. Gupta & Co. Chartered Accountants New Delhi Statutory Auditors of yourCompany have been appointed as such by the Shareholders at the 40th AGM held on 22ndSeptember 2017 to hold office from the conclusion of 40th AGM till the conclusion of 45thAGM to be held in the year 2022. Their appointment was however subject to ratificationby the shareholders in every AGM if required by law. As per the Companies (Amendment)Act 2017 the said requirement of ratification has been dispensed with. Accordingly M/sB.R. Gupta & Co. Chartered Accountants will continue to hold office till theconclusion of 45th AGM to be held in the year 2022 as per Shareholders' approval.
The Auditor's Report read with notes to the accounts referred to in the Auditor Reportare self- explanatory and therefore do not call for any further comments. The Auditor'sReport does not contain any qualification reservation or adverse remark. There is nooffence of fraud reported by the Statutory Auditors under section 143(12) of the CompaniesAct 2013.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Vivek Arora Company Secretaries to undertake the Secretarial Audit of theCompany. The Report of the Secretarial Audit appended as Annexure 5 to the Board'sReport does not contain any qualification reservation or adverse remark.
Compliance with Secretarial Standards issued by ICSI
The Secretarial Standards issued by the Institute of Company Secretaries Of India(ICSI) have been duly complied with by the Company.
Internal Financial Control System
The Company has well in place the Internal Financial Control Framework which isindependently evaluated from time to time by in-house audit function for necessaryimprovement wherever required. The detail in respect of adequacy of internal financialcontrols with reference to the financial statements is mentioned under the head ManagementDiscussion and Analysis Report of this Annual Report.
Material changes and commitments between the end of the financial year and date ofreport
There is no material change and/or commitment held between the end of the financialyear and the date of report affecting the financial position of the Company.
The Company has complied with the provisions relating to the constitution of InternalComplaints Committee and is also having a Policy on Prohibition Prevention and Redressalof Sexual Harassment of Women at Workplace and matters connected therewith or incidentalthereto covering all the aspects as contained under the "The Sexual Harassment ofWomen at Workplace (Prohibition Prevention and Redressal) Act 2013".
Your Directors further states that during the year under review no case was receivedby the Internal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
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.
Your Directors wish to take the opportunity to express their sincere appreciation tothe Central Uttar Pradesh and Karnataka Governments banks financial institutionsChannel Partners staff and all other stakeholders for their whole-hearted support andco-operation. We look forward to their continued support and encouragement.
For and on behalf of Board of Directors of Orient Bell Limited
Madhur Daga K.M. Pai
Managing Director Director
Place : New Delhi
Date: 22nd May 2019