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Bombay Dyeing and Manufacturing Company

BSE: 500020|NSE: BOMDYEING|ISIN: INE032A01023|SECTOR: Textiles - Processing
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Directors Report Year End : Mar '18    Mar 17

The Directors have pleasure in presenting their Report on the business and operations of the Company along with the audited financial statements for the year ended 31st March, 2018.

1. FINANCIAL RESULTS

(Rs. in crore)

Particulars

Financial Year ended

Standalone

Consolidated

31/03/2018

31/03/2017

31/03/2018

31/03/2017

GROSS TURNOVER AND OTHER INCOME

2744.00

2100.60

2744.00

2100.60

Profit before Finance Cost, Depreciation, Amortization expenses and Exceptional item

632.83

351.35

632.83

351.35

Less: Finance Costs

412.51

368.45

412.51

368.45

Profit/(Loss) before Depreciation, Amortization expenses and Exceptional item

220.32

(17.10)

220.32

(17.10)

Less: Depreciation and Amortization expenses

29.88

34.09

29.88

34.09

PROFIT/(LOSS) BEFORE TAX AND EXCEPTIONAL ITEM

190.44

(51.19)

190.44

(51.19)

Less: Exceptional item

153.25

67.48

153.25

45.81

Add: Share of profit of equity accounted investees

-

-

0.77

0.05

PROFIT/(LOSS) BEFORE TAX

37.19

(118.67)

37.96

(96.95)

Less: Tax (net)

2.78

29.57

2.78

29.57

PROFIT/(LOSS) AFTER TAX

34.41

(148.24)

35.18

(126.52)

Add: Other Comprehensive Income

284.76

604.73

284.76

604.73

Total Comprehensive Income

319.17

456.49

319.94

478.21

Add: Balance in Statement of Profit and Loss of Previous Year (Incl. OCI)

SURPLUS AVAILABLE FOR APPROPRIATIONS

Appropriations to:

(25.72)

(469.78)

(26.26)

(492.04)

Dividend

14.46

10.33

14.46

10.33

Dividend Distribution Tax

2.94

2.10

2.94

2.10

Balance carried to Balance Sheet (Incl. OCI)

276.05

(25.72)

276.28

(26.26)

Previous year figures have been regrouped where necessary and have been re-stated as per Ind AS.

2. COMPANY RESULTS AND DIVIDEND

The Company has drawn up its accounts for the first time under Ind AS. The figures for the previous year have been suitably adjusted, as appropriate to conform to the Ind AS requirements.

The Company’s turnover and other income for the year was Rs.2,744.00 crore as against Rs.2,100.60 crore in the previous year. The profit after tax is Rs.34.41 crore as against a loss of Rs.148.24 crore in the previous year. The profit for the current year would have been even higher but for an exceptional provision of Rs.153.25 crore made in regard to the perceived doubtful recovery of advance made to the Company’s Joint Venture, P.T. Five Star Textile Indonesia, spelt out in detail in Note 41 to the accounts.

During the year the Company successfully rationalised number of lenders to improve operating efficiency. This greatly helped management of large volume of cash outflows. In this process it will also help tightly monitor and control finance costs in future.

The construction of the two towers at Island City Center (“ICC”), Dadar, by Bombay Realty, is nearing completion and handover to the buyers will be done as committed which will generate net cash inflows thereby easing the company’s debt burden.

Polyester Staple Fibre (“PSF”) industry saw a sluggish growth of 3% in volume in the country, which was mainly met through new capacities commissioned during the year. Continuing cheap imports from China disrupted the domestic market impacting the Company’s PSF business. The PSF Division will continue to focus on innovative product mix and cost reduction initiatives in order to counter these factors.

Home & You, the Company’s Retail business, will be investing in design expansion, owning the digital printing space through TVC media campaigns to reinforce its leadership position. Sales channels proliferation will be a thrust area. The Company would be launching new franchise model and explore high volume institutional business in the current year.

Having regard to the above, your Directors have recommended a higher dividend of Rs.1/- per equity share of Rs.2/- each which is subject to shareholders’ approval.

3. CONSOLIDATED FINANCIAL RESULTS

As stipulated by Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations, 2015”), the Company has prepared Consolidated Financial Statement in accordance with the applicable accounting standards as prescribed under the Companies (Accounts) Rules, 2014 of the Companies Act, 2013 (“the Act”). The Consolidated Financial Statement reflects the results of the Company and that of its associates. As required under Regulation 34 of Listing Regulations, 2015, the Audited Consolidated Financial Statement together with the Independent Auditors’ Report thereon is annexed and forms part of this Report.

The summarized Consolidated Financial Statement is provided above in point No. 1 of this Report.

4. BOMBAY REALTY

Bombay Realty had a highly satisfactory year. With the receipt of the regulatory approvals and the consequent pick up in construction activity, the Division is now fully geared to complete the construction as per schedule and ensure timely delivery of the two ICC towers.

The revenues from real estate activity as per Ind AS reporting for FY 2017-18 adopted during the year were Rs.1182.91 crore as compared to Rs.515.28 crore in FY 2016-17, reporting a growth of 130% over last year. The business is poised to become the single largest revenue earning Division of the Company on topline basis and will be a substantial contributor to the bottom line growth of the Company.

The Division is complying with the Real Estate (Regulation and Development) Act, 2016 (“RERA”) requirements and giving the clients a transparent and fully compliant project information, the promise of timely delivery with world class construction quality and amenities. The increased pace of construction will mean completion of two ICC towers within a record construction time of 42 months. The construction of the slum project at ICC is ready for delivery.

The ICC flats are uniquely positioned in market and the demand for the units has picked up substantially driving faster sales in an otherwise struggling real estate market impacted by changing policy framework, the demonetization effect and general economic slowdown. Ever growing enquiries and higher footfalls are likely to result in increased sales and the resultant cash flow.

The Division is well poised to monetise its assets both in ICC and WIC and with the DCR 2034 enhancing the land potential for development; it is looking at forging additional projects in the coming year.

With the experience of successfully executing the two large ICC projects, the Division is aiming to becoming a best in class with a name to reckon with in the real estate industry.

5. HOME & YOU

For first half of the year under report the Division experienced revenue pressure led by weak market demand. However, there was recovery in the latter half of the year with revival of general trade channel, which was showing de-growth in the first six months and reported growth of 24% in the second half. Modern trade channel opened 842 stores by end of the financial year. The coming year shows even more promise when the Division will look to consolidate leadership position by owning digital bed sheet platform as well as through the launch of innovative make your own bed sheet campaign.

6. POLYESTER DIVISION

The Division achieved a turnover of Rs.1,251.95 crore during the year as compared to Rs.1,214.45 crore in the previous year. In volume terms, there was an increase of slightly over 3 %. The raw material and PSF prices remained volatile during the year tracking the movement in petrochemicals and crude oil prices. The average capacity utilization was 93%, significantly better than the industry average capacity utilization of below 80%.

The sluggish market sentiment in the domestic polyester staple fibre industry was reflected in an overall growth of 3% compared to the previous year. New capacities of around 12% of existing capacity, became fully operational during the year far exceeding the growth in domestic demand resulting in underutilization of domestic capacity. Increased volatility in raw material prices, surplus production capacities and imports at significantly lower prices has posed challenges to the Company’s Polyester business, which it will seek to counteract with innovative product mix and cost reduction initiatives.

7. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company’s Associates and Joint Venture (in Form AOC-1) is forming part of the Consolidated Financial Statement.

8. FIXED DEPOSITS

During the year, the Company repaid the deposits aggregating to Rs.0.80 crore.

Total deposits outstanding as on 31st March, 2018 amounted to Rs.77.09 crore out of which 80 deposits aggregating Rs.0.47 crore had matured, but remained unclaimed.

9 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as “Annexure A”.

10. RELATED PARTY TRANSACTIONS

There were no materially significant transactions with related parties during the financial year under review, which were in conflict with the interest of the Company. Suitable disclosure as required by the Accounting Standards (Ind AS 24) has been made in the notes to the Financial Statement.

As required under Regulation 23 of SEBI (Listing Obligations and Disclosures) Regulations, 2015, the Company has formulated a policy on Related Party Transactions which has been put up on the website of the Company: http://www.bombaydyeing.com/ pdfs/corporate/corporatepdf11.pdf

11. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statement.

12. INSURANCE

All the properties including buildings, plant and machinery and stocks have been adequately insured.

13. REPORTING OF FRAUDS BY AUDITORS

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143 (12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Directors’ Report.

14. ANNUAL RETURN

The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in form MGT - 9 in “Annexure B” of this Report.

15. DIRECTORS AND KEY MANAGERIAL PERSONNEL

At the Annual General Meeting (AGM) of the Company held on 10th August, 2017, the members of the Company appointed Mr. Vinesh Kumar Jairath as an Independent Director for a term of five years with effect from 9th February, 2017 and Mr. Keki M. Elavia, as an Independent Director for a term of five years with effect from 22nd May, 2017. Dr. (Mrs.) Minnie Bodhanwala was also appointed in the said AGM, as a Non-Executive, Non-Independent Director, liable to retire by rotation with effect from 29th March, 2017.

Mr. Ishaat Hussain ceased to be a Director of the Company w.e.f 10th August, 2018. The Board places on record its appreciation towards valuable contribution made by Mr. Ishaat Hussain during his tenure as a Director of the Company.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Nusli N. Wadia (DIN: 0 0 015731) retires by rotation and is eligible for reappointment.

By the Notification dated 9th May, 2018, Securities and Exchange Board of India (“SEBI”) amended the Listing Regulations, 2015 by incorporating Regulation 17(1A) in the Listing Regulations, 2015 to be effective from 1st April, 2019. According to the said Regulation, no listed company shall appoint or continue the directorship of a person who has attained age of 75 years unless special resolution is passed to that effect.

Mr. Nusli N. Wadia is 74 years as on date and therefore, a special resolution is proposed in ensuing Annual General Meeting for continuation of holding office of Non- Executive Director of the Company, by Mr. Nusli N. Wadia, who will be above the age of 75 years as on 1st April, 2019 to comply with the above amendment.

Similarly, Mr. A. K. Hirjee, Mr. S. M. Palia, Mr. S. S. Kelkar and Mr. R. A. Shah have also attained the age of 75 years. However, Mr. S. M. Palia and Mr S. S. Kelkar have expressed their desire to step down from the Board during the financial year 2018-19. Therefore, it is proposed to pass special resolutions at the ensuing AGM of the Company for continuation of remainder term of only Mr. A. K. Hirjee (DIN: 00044765) and Mr. R. A. Shah (DIN: 00009851) i.e. upto 7th August, 2019.

Necessary resolutions for re-appointment/continuation of Directorship past the age of 75 years, of aforesaid Directors have been included in the notice of the ensuing AGM and requisite details have been provided in the explanatory statement of the notice. The Board recommends their re-appointment/ continuation as Directors of the Company.

All the Independent Directors have given a declaration that they meet the criteria of independence as laid down under Section 149 of the Act and affirmed compliance with Wadia code of conduct as required under Regulation 26(3) of SEBI (LODR) Regulations, 2015.

For the Non-Executive Directors, apart from reimbursement of expenses incurred in the discharge of their duties, the remuneration that these directors were entitled to under the Act as Non-Executive Directors and the remuneration that a NonExecutive Director may receive for professional services rendered to the Company through a firm in which he is a partner, none of these directors have any other pecuniary relationship with your Company.

Seven Board Meetings were duly convened and held during the year and the details of Board/Committee meetings held are provided in the Corporate Governance Report. The gap between meetings was within the period prescribed under the Companies Act, 2013 and Listing Regulations.

Key Managerial Personnel

During the year under review, Mr. Pushpamitra Das, Chief Financial Officer, resigned with effect from 30th June, 2017.

Mr. Vishnu Peruvemba, was appointed as the Chief Financial Officer (“CFO”) of the Company at the Board Meeting held on 8th November, 2017. He joined as CFO of the Company w.e.f. 5th January, 2018.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of Listing Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance and that of its statutory committees viz. Audit Committee, Stakeholder Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee and that of the individual Directors. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Nomination and Remuneration Policy

The Board has adopted, on recommendation of the Nomination & Remuneration Committee, a policy for selection and appointment of Directors, Senior Management and their remuneration. A brief detail of the policy is given in the Corporate Governance Report and also posted on the website of the Company: http://www. bombaydyeing.com/pdfs/corporate/corporatepdf09.pdf

16. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

a) in the preparation of the Annual Accounts, the applicable accounting standards have been followed and there are no material departures;

b) they have 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 of the Company for that period;

c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the Annual Accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external consultant(s) and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2017-18.

17. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulation 17(7) of Listing Regulations, 2015, the Management Discussion and Analysis Report is given in “Annexure C” to this Report.

18. CORPORATE GOVERNANCE

A separate report on Corporate Governance pursuant to Regulation 34(3) of Listing Regulations, 2015, read with Part C of Schedule V thereof along with a certificate from the Statutory Auditors of the Company regarding compliance of the conditions of Corporate Governance are annexed to this Report as “Annexure D”.

19. BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2) of Listing Regulations, 2015, the Business Responsibility Report (“BRR”) of the Company for FY 2017-18 is forming part of this Report as “Annexure E”.

20. PARTICULARS OF EMPLOYEES

The details of remuneration of directors, KMPs and employees as required under Section 197 of the Companies Act, 2013 (“the Act”), read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as “Annexure F”. However, as per the provisions of Section 136 of the Act, the Annual Report is being sent to the Members and others entitled thereto, excluding the information on employees’ remuneration particulars as required under Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, which is available for inspection by the Members at the Registered Office/Corporate Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof such Member may write to the Company in this regard.

21. AUDITORS

Statutory Auditors

Pursuant to Section 139 of the Companies Act, 2013 the Company’s Auditors, M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants, Mumbai retire at the ensuing Annual General Meeting of the Company. The Company proposes to appoint, M/s. Bansi S. Mehta & Co. (Firm Registration No. 100991W) as the Statutory Auditors of the Company for a period of 5 years from the conclusion of 138th Annual General Meeting until the conclusion of 143rd Annual General Meeting. They have confirmed their eligibility under Section 141 of the Act and the Rules framed there under for appointment as Auditors of the Company.

As required under Regulation 33 of Listing Regulations, 2015, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records of the Company are required to be audited. The Directors, on the recommendation of the Audit Committee, appointed M/s. D. C. Dave & Co., Cost Accountants, to audit the cost accounts of the Company for the financial year ending 31st March, 2019 on a remuneration of Rs.5,00,000/-(Rupees Five Lakh) plus out of pocket expenses and applicable taxes. The remuneration payable to the Cost Auditor is required to be ratified by the shareholders at the ensuing AGM.

Secretarial Auditors

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 has appointed Parikh & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor is annexed herewith as “Annexure G”.

Internal Auditors

At the Board Meeting held on 14th May, 2018, M/s. Ernst & Young, Chartered Accountants, were re-appointed as the Internal Auditors of the Company for financial year 2018-19.

22. SIGNIFICANT OR MATERIAL ORDERS

There were no significant and material orders passed by the regulators or courts or tribunals, which would impact the going concern status and the Company’s operations in future.

23. MATERIAL CHANGES

There was no reportable material event in the Company during the year.

24. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal Audit plays a key role in providing an assurance to the Board of Directors with respect to the Company having adequate Internal Financial Control Systems. The Internal Financial Control Systems provide, among other things, reasonable assurance of recording the transactions of its operations in all material respects and of providing protection against significant misuse or loss of Company’s assets. Details about the adequacy of Internal Financial Controls are provided in the Management Discussion and Analysis Report.

25. INDIAN ACCOUNTING STANDARDS (Ind AS)

Your Company has adopted Indian Accounting Standards (“Ind AS”) for the accounting period beginning on 1st April, 2017 pursuant to Ministry of Corporate Affairs Notification dated 16th February, 2015 notifying the Companies (Indian Accounting Standard) Rules, 2015.

26. CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013, comprising of four Directors including Independent Directors.

For the current financial year 2017-18, as the average profit for the last three years is negative, the Company decided not to spend any amount on CSR. However, the unspent CSR amount of Rs.4 lakh of the previous year was spent for CSR activity during the financial year (Refer Annexure - H).

27. AUDITORS QUALIFICATIONS

Statutory Auditors’ Report and Secretarial Auditors’ Report do not contain any qualification, reservation or adverse remark.

28. RISK MANAGEMENT POLICY

The Company has formulated a Risk Assessment & Management Policy. Your attention is drawn to the Report on Corporate Governance for details.

29. AUDIT COMMITTEE

The Audit Committee of the Company comprises of 6 Independent Directors. The composition of directors and other details are provided in the Corporate Governance Report of the Company. The Company has established a vigil mechanism through the Committee, wherein the genuine concerns can be expressed by the employees and directors. The Company has also provided adequate safeguards against victimisation of employees who express their concerns. The Company has provided the details of the vigil mechanism in the Whistle Blower Policy in the Corporate Governance Report and also posted these on the website of the Company: http://www.bombaydyeing.com/pdfs/corporate/ Whistle_Blower_Policy.pdf

30. APPRECIATION

The Directors express their appreciation to all employees of the various divisions for their diligence and contribution to performance. The Directors also record their appreciation for the support and co-operation received from franchisees, dealers, agents, suppliers, bankers and all other stakeholders. Last but not the least, the Directors wish to thank all shareholders for their continued support.

On behalf of the Board of Directors

Place: Mumbai NUSLI N.WADIA

Date: 14th May, 2018. Chairman

Source : Dion Global Solutions Limited
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