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Binny Mills Ltd.

BSE: 535620 | NSE: | Series: NA | ISIN: INE160L01011 | SECTOR: Textiles - General

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Annual Report

For Year :
2016 2015 2014 2013

Director’s Report

To the Members

The Directors have pleasure in presenting the Ninth Annual Report and the Audited Accounts of your company for the year ended 31st March 2016.

FINANCIAL RESULTS

31st March 2016 Rs.

31st March 2015 Rs.

Revenue from operations & other income

7,98,69,541

7,17,69,409

Profit / (Loss) before Depreciation

1,01,48,167

98,86,524

Depreciation

3,16,500

2,45,946

Profit / (Loss) before Tax

98,31,667

96,40,578

Provision for Tax (including Deferred tax)

36,85,873

32,83,848

Profit / (Loss) after Tax

61,45,794

63,56,730

OPERATIONS

As the members may be aware, pursuant to the Demerger Scheme of Binny Ltd, the Agencies and Services Undertaking of Binny Ltd was transferred to and vested in the Company, with effect from 1st Jan 2010, the Appointed Date as per the Demerger Scheme.

The company operates in 4 divisions’ viz., Warehousing, Showrooms, Agencies and Bintex. The Warehousing division has rented its warehouses and is deriving rental income from it. The Showrooms are engaged in retail selling of textile materials. The Agencies division is engaged in the business of selling Tarpaulin, rain coats and bags. The Bintex division is engaged in selling textile materials, particularly uniform materials, bed spreads, and other textile varieties.

For the year 2015-16, the Rental income from Warehousing division was Rs.208.36 lakhs as against Rs. 186.15 lakhs in the previous year, an increase by about 12%. The sales made by the Showrooms division was Rs.19.31 lakhs as against Rs. 22.63 lakhs in the previous year, the Agencies division did not make any sale during the year as also in the previous year and the Bintex division Rs.470.89 lakhs as against Rs. 503.33 lakhs in the previous year.

The aggregate amount of revenue from Rent, Sales and operating income were Rs.798.70 lakhs as against Rs. 717.70 lakhs in the previous year. The Company has earned a Net Profit (before tax) of Rs.98.31 lakhs as against Rs.96.40 lakhs in the previous and a Net Profit (after tax) of Rs.61.45 lakhs as against a Net Profit of Rs.63.56 lakhs in the previous year.

PREFERENCE SHARES

The 5,88,000 (9.75%) Cumulative Redeemable Preference Shares (CRPS) of Rs.5/- each, aggregating to Rs.29,40,000/- which are redeemable on or before 30th June 2016 was redeemed on 25th July 2016 along with the arrears of cumulative preference share dividend on those shares amounting to Rs. 28,66,500/-.

The 28,14,18,142 (9%) CRPS of Rs.5/- each aggregating to Rs.140,70,90,710/- are redeemable on or before 12th May 2020.

Preference share dividend is payable on the CRPS from the date of original allotment of shares by Binny Ltd. The holders of the CRPS have preferential right to dividend over the equity share holders, as and when dividend is declared by the company. The Preference share dividend in arrears for 9% CRPS, as at 31st March 2016 is Rs.115,10,97,874/-.

Since the Company is in the process of consolidating its operations, the company could not find enough resources to pay dividend this year. Hence, the company is not recommending preference dividend this year.

DIVIDEND ON EQUITY SHARES

As stated for Preference Dividend, since the Company is in the process of consolidating its operations, the company could not find enough resources to pay dividend this year. Hence, the company is not recommending dividend on the equity shares this year.

COMPANY’S PERFORMANCE

Considering the difficult macro-economic conditions and challenging business environment, the Company’s performance during the year under review was satisfactory.

FUTURE PLANS

The Company has plans to improve its sales performance in the Textile Division by focusing on whole sale customers while retaining the existing retail customers. The Company has plans to procure bulk orders for its Textile division in order to improve the sales and profit. The Company has plans to modernize its showrooms at Bangalore and Kolkata to attract new customers for its retail textile sale. The Company also has plans to sell new varieties of textile materials to attract younger generation customers.

ECONOMIC AND BUSINESS ENVIRONMENT

The Indian economy is currently passing through a phase of relatively slow growth. However, this should not cloud the fact that over the nine-year period beginning from the year 2005-06 the average annual growth rate was 7.7 percent. A bleak global economic outlook and the resultant export contraction are challenges to the Indian economy. But good monsoon rains that are forecast this year would provide an impetus to the economy.

The Indian economy has been the fastest growing among major economies at least for the past three quarters in the financial year 2015-16.

The Central Government’s flagship initiatives like ‘Make in India’, ‘Start-up India’ and the national Intellectual Property Rights (IPR) Policy are likely to get a major fillip later this year in terms of additional Budgetary allocation. The Department of Industrial Policy and Promotion (DIPP) - the nodal agency for industrial corridors and the above mentioned flagship initiatives has begun work on revamping its schemes. In the Financial Year 2017 Budget, the ‘Make in India’ has an allocation of Rs.325.35 crores while the Start-up India initiative does not have any separate allocation. With these programmes gaining traction, the business environment is expected to get the much needed boost.

OUTLOOK AND OPPORTUNITIES

The textiles industry has made a major contribution to the national economy in terms of contribution to the GDP and net foreign exchange. Its share in the nation’s GDP is 6% and 13% in exports. The textiles is the second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on the improvement of India’s economy.

The strengths of the textile industry are:

-Availability of low cost and skilled manpower provides a competitive advantage to the industry.

-Availability of large varieties of cotton fibre and has a fast growing synthetic fibre industry.

-India is one of the largest exporters of yarn in international market.

-Growing economy and potential domestic and international market.

-Industry has large and diversified segments that provide a wide variety of products.

The opportunities that exists for the textile industry are:

-Emerging retail industry and malls.

-Elimination of quota restriction leads to greater market.

-Growth rate of domestic textile industry.

-Shifting towards branded readymade garment.

-Product development and diversification.

The vision of the industry is:

-In the domestic market, sustaining an annual growth rate of 12% should not be difficult.

-This implies that with a 12% Compound Annual Growth Rate in domestic sales the industry should reach a production level of US $ 350 billion by the year 2024-25 from the current level of about US $ 100 billion for the domestic market.

Your directors expect that with estimates of better GDP growth rate, the Company’s strong business model, innovative fund management and marketing techniques, continued confidence and support of the suppliers and customers, your Company should achieve better performance in the year 2016-17.

BOARD OF DIRECTORS

Shri V. Sengutuvan, Director, (DIN 00053629), retires by rotation at this Annual General Meeting and being eligible offers himself for reappointment.

The information required to be given to the shareholders, pursuant to regulation 36 (3) of the Listing Regulations, about the director being re-appointed, is given in the Report on Corporate Governance which forms part of the Annual Report.

Director resigned during the year:

Smt Nidhya R. Guhan, Director, (DIN 06969627) Independent director and woman director on the Board, resigned on 29th February 2016, citing personal reasons.

Present term of office of Managing Director:

The present term of appointment of Shri V. Rajasekaran as Managing Director of the Company is up to 12th May 2020.

DISCLOSURES AS PER SECTION 134 OF THE COMPANIES ACT, 2013 READ WITH RULE 8(5) OF THE COMPANIES (ACCOUNTS) RULES, 2014

Extract of Annual Return:

The extract of Annual Return in the Form No. MGT 9 is annexed to the Directors’ Report as Annexure I. Number of meetings of the Board:

There were four Board meetings held during the year. The details of the Board meetings and the Committee meetings are given in the Report on Corporate Governance which forms part of the Annual Report.

Directors’ Responsibility Statement:

To the best of their knowledge and belief and according to the confirmation and explanations obtained by them, your Directors make the following statement in terms of Section 134(5) of the Companies Act, 2013.

i) That in the preparation of the Annual Accounts, for the year ended 31st March 2016, the applicable Accounting Standards had been followed along with proper explanation for material departures, if any;

ii) That the selected accounting policies were applied consistently and judgments and estimates that are reasonable and prudent were made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year ended 31st March 2016 and of the profit of the Company for that period;

iii) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safe guarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv) That the annual accounts for the year ended 31st March 2016 had been prepared on a going concern basis.

v) Internal financial controls had been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and;

vi) Proper systems to ensure compliance with the provisions of all applicable laws had been devised and that such systems were adequate and operating effectively.

Declaration by Independent Directors:

The Board has received the declaration from all the Independent Directors as per the requirement of section 149(7) of the Companies Act, 2013 and the Board is satisfied that all the Independent Directors meet the criterion of independence as mentioned in section 149(6) of the Companies Act, 2013.

Company’s policy on Directors appointment and remuneration:

In accordance with section 178(4) of the Companies Act, 2013 and pursuant to Part D of Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (henceforth referred to as ‘the Listing regulations’), the Nomination and Remuneration Committee has put in place the policy on diversity of Board of directors for appointment of directors taking into consideration the qualification and wide experience of the directors in the fields of textiles trading, banking, finance, administration and legal apart from compliance of legal requirements of the Company. The policy on diversity of Board of directors is annexed to the Directors’ Report as Annexure II.

The Nomination and Remuneration Committee has laid down remuneration criteria for the directors, key managerial personnel and other employees in the Nomination and Remuneration Policy. It has also laid down, in the Nomination and Remuneration Policy, the evaluation criteria for performance evaluation of the directors including independent directors. The Nomination and Remuneration Policy is annexed to the Directors’ Report as Annexure III pursuant to section 178(4) of the Companies Act, 2013.

Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made in the Auditors’ Report and in the Secretarial Audit Report:

The Auditors’ Report to the Shareholders for the year under review does not contain any qualification, reservation, or adverse remark or disclaimer. The Secretarial Audit Report, given by a Company Secretary in practice, states that the Company has to appoint Key Managerial Personnel as prescribed under section 203 of the Companies Act, 2013 and the Rules made there under. The Company is advised to appoint one more independent Director and fill up the vacancy caused by the resignation of Women Director. The Company is taking all effective steps to appoint the Key Managerial Personnel and a Woman Director who will also be an Independent Director.

Particulars of loans, guarantees or investments under section 186 of the Companies Act, 2013:

There are no loans made, guarantees given or security provided or securities of any other body corporate acquired, during the year, under section 186 of the Companies Act, 2013.

Particulars of contracts or arrangements with related parties:

The Related Party Transactions (RPT’s) entered into by the Company are given in Note No.35 of the Notes on Accounts attached to the Financial Statements forming part of this Annual Report. These transactions were entered into in the ordinary course of business and on an arm’s length basis and were in compliance with the provisions of the Companies Act, 2013 and Regulation 23 of the Listing Regulations. There are no contracts or arrangements with Related Parties referred to in section 188 (1) of the Companies Act, 2013. There are no materially significant related party transactions made by the Company with the Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. None of the directors have any pecuniary relationships or transactions with the Company except for the payment of sitting fees. There are no particulars of RPT’s to be disclosed in Form AOC-2.

The statement of RPT’s is placed before the Audit Committee and the Board on a quarterly basis. Omnibus approval was obtained for the transactions of repetitive nature.

The Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board is uploaded on the Company’s website www.bmlindia.com

The state of the Company’s affairs:

The state of the Company’s affairs is explained in the paragraph ‘operations’ in the Directors’ Report.

The amount, if any, carried to reserves:

The Company has not transferred any amount to reserves.

The amount, if any, which it recommends, should be paid by way of dividend:

The Board is not recommending payment of any dividend on the Preference shares and the equity shares issued by the Company.

Material changes and commitments, if any, 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 report:

There are no material changes and commitments affecting the financial position of the Company, that have occurred between the end of the financial year of the Company to which the financial statements relate and the date of report viz., for the period from 31st March 2016 to 29th July 2016.

Conservation of energy, technology absorption, foreign exchange earnings and outgo:

The information pursuant to section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is as follows:

a. The Company has no activity involving conservation of energy or technology absorption.

b. The Company does not have any foreign exchange earnings and outgo.

Risk Management Policy:

The Company has framed a Risk Management Policy to identify, communicate and manage material risks across the organization. The policy also ensures that responsibilities have been appropriately delegated for risk management. Key Risk and mitigation measures are provided in the Management Discussion and Analysis Report annexed to the Directors’ Report.

The details about the policy developed and implemented by the Company on Corporate Social Responsibility initiatives taken during the year:

The provisions of section 135 of the Companies Act, 2013 are not applicable to the Company. Hence, the Company has no Corporate Social Responsibility Policy. However, pursuant to good corporate governance practice, your company demands adherence of social responsibility coupled with creation of value in the larger interest of the society. Your company and its dedicated employees continue to contribute towards several worthwhile causes. Your company aims to enhance the quality of life of the community in general and has a strong sense of social responsibility. Your Company and its employees have participated in welfare activities of the community.

Statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors:

Pursuant to the provisions of section 134(3)(P) of the Companies Act, 2013 and regulation 17(10) of the Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually, as well as the evaluation of the working of its various Committees. The manner in which the evaluation has been carried out has been explained in the Report on Corporate Governance.

The financial summary or highlights:

The financial summary is given in the Paragraph ‘Financial Results’ in the Directors’ Report.

The change in the nature of business, if any:

There is no change in the nature of business.

The details of directors or key managerial personnel who were appointed or have resigned during the year:

There were no directors or key managerial personnel who were appointed during the year. During the year Smt Nidhya R. Guhan, Director, (DIN 06969627) Independent director and woman director on the Board, resigned on 29th February 2016, citing personal reasons.

The names of companies which have become or ceased to be Subsidiaries, joint ventures or associate companies during the year:

There are no companies which have become or ceased to be Subsidiaries, joint ventures or associate companies during the year.

The details relating to deposits, covered under Chapter V of the Companies Act, 2013 and details of deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013:

The company has not accepted any deposits covered under Chapter V of the Companies Act, 2013.

The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future:

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.

The details in respect of adequacy of internal financial controls with reference to the Financial Statements:

The Company’s well defined organizational structure, documented policy guidelines, defined authority matrix and internal financial controls ensure efficiency of operations, protection of resources and compliance with the applicable laws and regulations. Moreover, the Company continuously upgrades its systems and undertakes review of policies. The internal financial control is supplemented by regular reviews by management and standard policies and guidelines to ensure reliability of financial and all other records to prepare the financial statements and other data. The Audit Committee reviews the internal financial controls and also monitors the implemented suggestions.

Disclosure under section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

DISCLOSURES BY A LISTED COMPANY UNDER RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year:

Since no director of the Company is in receipt of remuneration from the Company there are no particulars to be furnished.

The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

There is no increase in the remuneration to the aforesaid personnel in the financial year 2015-16.

The percentage increase in the median remuneration of employees in the financial year:

There is no increase in the median remuneration of employees in the financial year 2015-16.

The number of permanent employees on the rolls of the Company:

There are 14 permanent employees on the rolls of the Company as at 31 March 2016.

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year viz., 2015-16 and its comparison with the percentile increase in the managerial remuneration:

There is no managerial remuneration paid during the financial year 2015-16. There was increase in the salaries of employees during the financial year 2015-16 from July 2015 onwards. The annual employee cost has increased during the year by 4%.

The key parameters for any variable component of remuneration availed by the directors:

The directors were not paid any remuneration during the financial year 2015-16.

STATEMENT OF EMPLOYEES’ PARTICULARS

The particulars required to be furnished under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is as follows:

During the year, there are no employees drawing remuneration of Rs.60 lakhs or more per annum or Rs.5 lakhs or more per month, or was in receipt of remuneration which, neither in the aggregate nor at a rate, which in the aggregate, is in excess of that drawn by the Managing Director or holding, either by himself or along with his spouse and dependent children, not less than 2% of the equity shares of the Company.

AUDITORS

M/s T. Selvaraj & Co., Chartered Accountants, Chennai, the Statutory Auditors of the company, retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment for the year 20162017. Certificate has been received from them to the effect that their re-appointment as statutory auditors of the Company, if made, would be within the limits prescribed under Sections 139 & 141 of the Companies Act, 2013. They have also confirmed that they hold a valid peer review certificate as prescribed under regulation 33(1) (d) of the Listing Regulations. The Directors recommend their reappointment. Members are requested to consider their re- appointment. If reappointed they will hold office until the conclusion of the next Annual General Meeting of the company.

The Auditors’ Report to the Shareholders for the year under review does not contain any qualification.

SECRETARIAL AUDIT

The Board had appointed Shri K. Elangovan, M/s Elangovan Associates, Company Secretaries in Practice, Chennai, (Certificate of Practice No.3552) Membership No. (FCS 1808) to carry out Secretarial Audit under the provisions of section 204 of the Companies Act, 2013 for the financial year 2015-16. The Secretarial Audit Report is annexed to this report as Annexure IV.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

Pursuant to section 177 (9) and (10) of the Companies Act, 2013 and regulation 22 of the Listing regulations, the Company has formulated and established a Whistle Blower Policy / Vigil Mechanism providing a mechanism under which an employee and director of the Company may report violation of personnel policies of the Company, unethical behavior, suspected or actual fraud, violation of Company’s code of conduct or ethics policy.

The Vigil Mechanism provides for adequate safeguards against victimization of directors / employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. It also ensures standards of professionalism, honesty, integrity and ethical behavior. The Whistle Blower Policy / Vigil Mechanism is uploaded on the Company’s website www.bmlindia.com

ANNEXURES TO THE DIRECTORS’ REPORT

1. The Extract of Annual Return in Form MGT-9 - Annexure I

2. The Policy on Board Diversity - Annexure II

3. The Nomination and Remuneration Policy - Annexure III

4. Secretarial Audit Report - Annexure IV; and

5. Auditors’ Certificate on Corporate Governance Compliance - Annexure V ATTACHMENTS TO THE DIRECTORS’ REPORT

The Management Discussion and Analysis Report

The Management Discussion and Analysis Report, pursuant to regulation 34 (2) (e) and Schedule V of the Listing Regulations, is given as a separate Report and this report is part of the Directors’ Report.

The Report on Corporate Governance

The Report on Corporate Governance, pursuant to regulation 34 (3) and Schedule V of the listing regulations, together with Auditors’ Certificate on Corporate Governance, the certificate duly signed by the Managing Director on the Financial Statements of the Company for the year ended 31st March 2016 as submitted to the Board of Directors at their meeting held on 30th May 2016 and the declaration by the Managing Director regarding compliance by the Board members and senior management personnel with the Company’s Code of Conduct is included as a separate section in the Annual Report.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation for the continued co-operation and support extended by all concerned persons and authorities for the smooth and efficient functioning of the Company.

For and on behalf of the Board

V.R. Venkataachalam

Chairman

Registered Office:

No.4, (Old No.10) Karpagambal Nagar,

Mylapore,

Chennai 600 004.

Date: 29th July 2016

Director’s Report