REPORT OF THE DIRECTORS TO THE MEMBERS The Directors are pleased to present their 68th Annual Report on the business and operations of the Company together with the Audited Accounts for the financial year ended March 31, 2015. GENERAL OUTLOOK OF INDUSTRY AND ECONOMY: The economic recovery in our business segments has not materialized as anticipated. This has adversely affected the demand for our products and continues to put immense pressure on our margins. Given the pace of economic revival that we have seen during the past year, we expect a subdued business environment at least during the course of the financial year 2015-16. We would continue to take appropriate internal measures to mitigate the impact of the continued adverse macro factors. During the year under review, there has been consistent focus to maintain our market shares although this has, in some cases, resulted in lower margins. As we await the impending capex cycle and the associated recovery of the business cycle, we will take efforts to balance our market presence while maintaining margins. To ensure that we do not lose sight of growth potential in the future, we have maintained our focus on building capabilities that will help us build better products. We continue to diligently focus on working capital optimization and collection recovery efforts. The Drives & Automation as well as the Elevator Systems business continue to do well. DIVIDEND: In view of the loss during the financial year 2014-2015, the Directors have not recommended payment of dividend for the year ended March 31, 2015. OPERATIONS: For the third successive year, the economy and market conditions were dominated by demand gap, low price realisation, negative growth in the capital goods industry, low levels of investment by government/industry and delays in project execution. The Company had to maintain its operations against this background. Income from Sales and Services for the Company increased from Rs.53748.76 lakhs in the previous year to Rs. 66788.90 lakhs, a rise of 24%. However, the position of over-supply and intense competition took a toll on margins. Consequently in spite of increase in revenue, Company incurred a loss before exceptional items and tax of Rs.3443.14 lakhs as against a loss before exceptional items and tax of Rs. 1342.12 lakhs in the previous year. FINANCE: Tight money market conditions, elongated working capital cycle and substantial erosion in profitability resulted in negative cash flows from operations and caused an increase of f 685.50 lakhs in finance cost for the year. The Company ensured that there was no default in meeting its obligation and maintained a smooth flow of operations. The Free Reserves of the Company as on March 31, 2015 decreased by Rs. 3543.33 lakhs to Rs. 25969.94 lakhs. During the year Rs. 9.24 lakhs was transferred to the Investor Education and Protection Fund. HUMAN RESOURCES AND EMPLOYEE RELATIONS: There is an ongoing emphasis on building a progressive Human Resources culture within the organisation. Structured initiatives to nurture talent and create a working environment that fosters motivation, team-work and result-orientation continue to be addressed. The long term wage agreement with the Union expired on December 31, 2014. Union submitted a new charter of demand for next wage agreement in November 2014. Negotiations for the same are in progress. Productivity levels continued to be subject to continuous monitoring. Employee strength as on March 31, 2015 was 1378 as compared to 1436 in the previous year. DEPOSITS: As on March 31, 2015 the company had no outstanding Fixed Deposits. The Company has neither accepted nor renewed any deposits during the financial year 2014-2015 and in accordance with the provisions of Section 74(1)(b) of the Companies Act, 2013, repaid all its outstanding deposits as on March 31, 2014 aggregating to Rs. 2160.90 lakhs. DISCLOSURE UNDER SECTION 134(3)(I) OF THE COMPANIES ACT, 2013: Except as disclosed elsewhere in this Report, no material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year and the date of this Report. DISCLOSURE OF INTERNAL FINANCIAL CONTROLS: The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the financial year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls. SIGNIFICANT AND MATERIAL ORDERS BY THE REGULATORS OR COURTS OR TRIBUNAL: There are no significant and / or material orders passed by the Regulator(s) or Court(s) or Tribunal(s) impacting the going concern status of the Company and its business operations in future. PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTIES: All contracts/arrangements/transactions entered by the Company during the financial year 2014-2015, with related parties, as defined under Section 188 of the Companies Act, 2013 and the rules made there under and Clause 49 of the Listing Agreement entered into by the Company with the Stock Exchanges, were in the ordinary course of business and on arm's length basis. Consequently no particulars in Form AOC-2 have been furnished. Further, during the year under review, the Company has not entered into any contracts/arrangements/transactions with related parties which could be considered material in accordance with the Related Party Transactions Policy of the Company, which can be accessed by using the following link: <http://www.bharatbijlee.com/doc/RPT-Policy.pdf> Members can refer Note no. 41 to the financial statement which set out the related party disclosures. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES: Particulars of loans, guarantees, investments and securities provided during the financial year under review, covered under the provisions of Section 186 of the Companies Act, 2013, have been provided in the Financial Statements which forms part of this Annual Report. (Please refer Note No. 14, 15 and 17 to the Financial Statements). DISCLOSURE UNDER SECTION 43(a)(ii) OF THE COMPANIES ACT, 2013: The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 has been furnished. DISCLOSURE UNDER SECTION 54(1)(d) OF THE COMPANIES ACT, 2013: The Company has not issued any sweat equity shares during the financial year under review and hence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 has been furnished. DISCLOSURE UNDER SECTION 62(1)(b) OF THE COMPANIES ACT, 2013: The Company has not issued any equity shares under Employees Stock Option Scheme during the financial year under review and hence no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 has been furnished. DISCLOSURE UNDER SECTION 67(3) OF THE COMPANIES ACT, 2013: During the financial year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 and hence no information has been furnished. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL: There was no change in Directorship of the Company during the period under review. Your Company has Nine (9) Directors consisting of four (4) Independent Directors, Three (3) Executive Directors and Two (2) Non-Executive Directors as on March 31, 2015. Further, in accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Shome N. Danani, being longest in the office shall retire at the ensuing 68th Annual General Meeting and being eligible, offers himself for re-appointment. Information on Mr. Shome N. Danani, Director eligible for re-appointment, as required under Clause 49 of the Listing Agreement with Stock Exchanges, is disclosed as part of the Notice dated July 24, 2015 of the ensuing 68th Annual General Meeting. As for the requirement under the provisions of Section 203 of the Companies Act, 2013, the Board of Directors noted that Mr. Nikhil J. Danani, Managing Director, Mr. Nakul P. Mehta, Managing Director, Mr. Shome N. Danani, Executive Director, Mr. Durgesh N. Nagarkar, Company Secretary and Mr. Sandeep M. Tilak, Chief Financial Officer are the Key Managerial Personnel of the Company. DECLARATIONS BY INDEPENDENT DIRECTORS: Pursuant to the provisions of Section 149(7) of the Companies Act, 2013, the Company has received individual declarations from all the Independent Directors, whose names are appended herein below, confirming that they fulfill the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and the rules made there under to hold the office of Independent Director of the Company. 1. Mr. Prakash V. Mehta; 2. Mr. Sanjiv N. Shah; 3. Mr. Jairaj C. Thacker; & 4. Mr. Rajeshwar R. Bajaaj DISCLOSURES RELATED TO BOARD, COMMITTEES AND POLICIES: NUMBER OF MEETINGS OF THE BOARD: The Board of Directors met five (5) times during the financial year ended March 31, 2015 viz., on May 28, 2014, July 25, 2014, September 11, 2014, November 11, 2014 and January 23, 2015, in accordance with the provisions of the Companies Act, 2013 and rules made there under. All the Directors actively participated in the meetings and contributed valuable inputs on the matters brought before the Board of Directors from time to time. Detailed information on the meetings of the Board are included in the Report on Corporate Governance, which forms part of this Board's Report. Additionally, during the financial year ended March 31, 2015 the Independent Directors held a separate meeting in compliance with the requirements of Schedule IV of the Companies Act, 2013 and Clause 49(II)(B)(6) of the Listing Agreement. COMMITTEES OF THE BOARD: NOMINATION AND REMUNERATION COMMITTEE: The Nomination and Remuneration Committee as constituted by the Board of Directors of the Company, has in accordance with the provisions of Section 178(3) of the Companies Act, 2013, formulated necessary policy on appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director. The details of "Nominations and Remuneration Policy" are explained in the Report on Corporate Governance, which forms part of this Report and are also available on the website of the Company (www.bharatbijlee.com). AUDIT COMMITTEE: An Audit Committee as constituted by the Board of Directors of the Company in accordance with the provisions of Section 177 of the Companies Act, 2013, comprises Independent Directors, namely Mr. Sanjiv N. Shah (Chairman), Mr. Prakash V. Mehta and Mr. Jairaj C. Thacker as Members of the Committee. All the recommendations made by the Audit Committee were accepted by the Board. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE: The Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee as per the provisions of Section 135 of the Companies Act, 2013. The Terms of Reference of the CSR Committee are to: i. Formulate and recommend to the Board a Corporate Social Responsibility ('CSR') Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII and the prescribed Rules under Sections 135 of the Companies Act, 2013; ii. Recommend the amount of expenditure to be incurred on the activities referred to in point (i) above; iii. Monitor the CSR Policy of the Company from time to time; iv. Ensure disclosure of CSR Policy in the Boards' Report and on the website of the Company; v. Ensure activities as included in CSR Policy are undertaken and are monitored regularly; vi. Ensure the CSR spend is made in terms of Section 135(5), i.e., at least 2% of the average net profits of the Company made during the 3 annually preceding financial years. The CSR Committee comprises of Mr. Nakul P Mehta as Chairman and Mr. Shome N. Danani and Mr. Jairaj C. Thacker as Members. The CSR Committee has met once in the financial year, i.e., on January 23, 2015, wherein all members were present. The Board has also framed a CSR policy for the Company, on the recommendation of the CSR Committee. The Report on CSR activities as required under the Companies (Corporate Social Responsibility) Rules, 2014, including a brief outline of the Company's CSR Policy, total amount to be spent under CSR Policy for the financial year, amount unspent and the reason for the unspent amount, is set out at Annexure I, forming part of this Report. ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD: Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the evaluation of all the Directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the Report on Corporate Governance, which forms part of this Report. RISK MANAGEMENT POLICY: The Board of Directors of the Company have approved Risk Management Policy and Guidelines, wherein all material risks faced by the Company are identified and assessed. Moreover in the said Risk Management Policy the Board has defined a structured approach to manage uncertainty, cultivating the same in their decision making pertaining to all business divisions and corporate functions. For each of the risks identified, corresponding control are assessed and policies and procedures are put in place for monitoring, mitigating and reporting risks on periodic basis. VIGIL MECHANISM POLICY: The Board of Directors of the Company have, pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Vigil Mechanism Policy" for Directors and employees of the Company, to report their genuine concern of any violations of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports etc. The details of "Vigil Mechanism Policy" are available on the website of the Company (<http://www.bharatbijlee.com/doc/> BBL-WHISTLEBLOWER-POLICYpdf). PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE: As per the requirement of Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made there under, the Board of Directors has constituted the Internal Complaints Committee ('ICC') at the Registered Office, Works and at all the Regional Offices of the Company to deal with the complaints received by the Company pertaining to gender discrimination and sexual harassment at workplace. DIRECTORS' RESPONSIBILITY STATEMENT: In terms of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, the Board of Directors hereby confirms that: a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures b. such accounting policies have been selected and applied consistently and the Directors have 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 as at March 31, 2015 and of the Profit and Loss of the Company for the year ended on that date; c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. the annual accounts of the Company have been prepared on a going concern basis; e. internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. REPORTING ON FRAUDS: There were no frauds reported by the Auditors under sub section (12) of Section 143 of the Companies (Amendment) Act, 2015, to the Audit Committee, Board of Directors or to the Central Government and hence no information has been furnished in this regard. PARTICULARS OF EMPLOYEES AND REMUNERATION: Information as required under the provisions of Section 197(12) of the Companies Act, 2013 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out in Annexure II hereto, which forms part of this report. CORPORATE GOVERNANCE: A separate report on Corporate Governance along with Auditor's Certificate on its compliance, have been furnished in the Annual Report and forms part of this Board Report. MANAGEMENT DISCUSSION AND ANALYSIS (MDA) REPORT: A separate report on MDA forms part of the Annual Report. AUDITORS AND THEIR REPORTS: The matters pertaining to Auditors and their Reports are appended below OBSERVATIONS OF STATUTORY AUDITORS ON THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED MARCH 31, 2015: The Auditor's report does not contain any qualification, reservation or adverse remark or any Disclaimer. STATUTORY AUDITORS: M/s. Dalal & Shah, Chartered Accountants, bearing Firm Registration No. 102021W, have been appointed as Statutory Auditors of the Company for a period of three (3) years from the conclusion of the 67th Annual General Meeting up to the conclusion of the 70th Annual General Meeting. Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, their appointment as Statutory Auditors upto the conclusion of 70th Annual General Meeting is required to be ratified by the members at every Annual General Meeting. Necessary resolution for ratification of appointment of the said Auditors is included in the Notice of the ensuing 68th Annual General Meeting. The consent of the Auditors along with certificate under Section 139 of the Companies Act, 2013 have been obtained from the Auditors to the effect that their appointment, if made, shall be in accordance with the prescribed conditions and that they are eligible to hold the office of Auditors of the Company. SECRETARIAL AUDIT REPORT: Pursuant to the provisions of Section 204 of the Companies Act, 2013, your Company has appointed M/s N. L. Bhatia & Associates, Practicing Company Secretaries, as its Secretarial Auditor to conduct the secretarial audit of the Company for the financial year 2014-2015. The Report on Secretarial Audit for the financial year 2014-2015, in Form MR-3 forms part of this Board Report. As regards the observation made by the Secretarial Auditor on CSR spend in the said secretarial audit report, please refer Annexure I - Annual Report on CSR Activities, the Board of Directors have explained that due to the loss incurred by the Company in the last three (3) financial years, the required amount of CSR spend has not been carried out. COST AUDITORS: Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Notifications/Circulars issued by the Ministry of Corporate Affairs from time to time and as per the recommendation of the Audit Committee, the Board of Directors at their meeting dated May 15, 2015 have appointed M/s. P.M. Nanabhoy, Cost Accountants as the Cost Auditors of the Company for the financial year 2015-2016 to audit the cost records of electric motors, power transformers, drives and elevator system products. A resolution for ratification of the payment to be made for such appointment is included in the Notice of the ensuing 68th Annual General Meeting. It may be noted that the Board had appointed M/s. P.M. Nanabhoy, Cost Accountants as the Cost Auditors of the Company for the financial year 2014-2015 to carry out cost audit of the Company. However pursuant to the clarification provided by the Ministry of Corporate Affairs, the Cost Audit for the Company's products was not required for the financial year 2014-2015 and hence the same was not conducted. EXTRACT OF ANNUAL RETURN: Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended March 31, 2015 made under the provisions of Section 92(3) of the Act is attached as Annexure III, which forms part of this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure IV which forms part of this Report. ACKNOWLEDGEMENT: Your Directors would like to express their appreciation for the assistance and cooperation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. Your Directors take on record their deep sense of appreciation to the contributions made by the employees through their hard work, dedication, competence, support and cooperation during this difficult period in the performance of the Company. For and on behalf of the Board of Directors Prakash V. Mehta DIN 00001366 Chairman Date : July 24, 2015 |