DIRECTORS' REPORT Your Directors have pleasure in presenting the 28th Annual Report and the Audited Financial Statements of the Company for the financial year ended 31st March, 2015. PERFORMANCE REVIEW During the year under review Company achieved a turnover of Rs. 42394.78 Lacs as against Rs. 31869.57 Lacs in the previous year showing an increase of 33.03%. The Net Profit after tax also increased to Rs. 1406.76 as compared to Rs. 863.85 Lacs in the previous year showing an increase of 62.85%. DIVIDEND Your Directors have recommended a Dividend of Re.1.00/- per paid-up equity share of Rs. 10/- each (i.e. @ 10%) for the Financial Year ended 31st March, 2015. The dividend payout is subject to approval of members at the ensuing Annual General Meeting. RESERVES During the period under review an amount of rupees two crores has been transferred to Reserves of the Company EMPLOYEES STOCK OPTION PLAN The Nomination and Remuneration Committee (erstwhile Remuneration and Compensation Committee) of the Board of Directors of the Company, inter alia, administers and monitors the Employees' Stock Option Scheme of the Company in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('the SEBI Guidelines'). The issuance of equity shares pursuant to exercise of options does not affect the Statement of Profit and Loss of the Company, as the exercise is made at the market price prevailing as on the date of the grant plus taxes as applicable. The Company has received a certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the SEBI Guidelines and the resolution passed by the shareholders. The certificate would be placed at the Annual General Meeting for inspection by members. Disclosures as required under clause 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (the 'SEBI Guidelines') as at 31st March, 2015, are set out in Annexure A to this Report. CONSOLIDATED FINANCIAL STATEMENTS In accordance with the requirements of the Clause-32 of the Listing agreement with the Stock Exchanges and AS-21, AS-23 and AS-27 presented by ICAI, the Consolidated Financial Statements of the Company and its subsidiaries are annexed and forms part of this Annual Report. DETAILS AND PERFORMACE OF SUBSIDIARY COMPANIES AND ASSOCIATE COMPANIES Bhartiya Global Marketing Ltd. It is a global marketing company engaged in export of textile and leather garments. The total revenues of the Company was Rs. 84,27,272/- and the net loss was Rs. 24,74,758/- during the financial year 2014-15. J&J Leather Enterprises Ltd. This company is a tannery to support our leather garments and accessories business through conversion of wet blue leather into finished leather. The total revenues of the Company was Rs. 10,79,58,663/- and the net profit after tax was Rs. 34,458/-during the financial year 2014-15. Bhartiya International SEZ Ltd. To develop sector specific Special Economic Zone (SEZ) of Leather & Leather Products( It is a joint venture between Bhartiya International Ltd. and Andhra Pradesh Industrial Infrastructure Corporation). The total revenues of the Company was Rs. 3,31,57,388/- and the net profit after tax was Rs. 1,28,96,820/- during the financial year 2014-15. Bhartiya Fashion Retail Ltd. The Company had registered a loss of Rs. 25,486/- for the financial year 2014-15. Ultima S.A. Switzerland The Company is engaged in marketing and selling of outwears including leather garments and accessories in Europe. The total revenues of the Company was CHF 1,66,71,012 and the net profit was CHF 7,45,258 during the financial year 2014-15. World Fashion Trade Ltd., Mauritius This Company is engaged in sourcing of outerwear (including leather, PU Garments, Fashion Accessories) and textile product from China, India and Bangladesh for marketing and selling in European and US markets. The Total revenue of the Company was HK$ 4,54,49,136 and the net profit was HK$ 5,15,851 for calander year 2014. Ultima Italia SRL, Italy The Company markets all fashion products including Fur and Leather garments in Italian market through its design and development centre in Italy. The total revenue of the Company was Euro 21,11,443 and the net profit for the financial year 2014-15 was Euro 11,329. BIL Group LLC, USA This Company operates as a wholesale importer and distributor of leather & textile outwears in US market. The net losses was HK$ 3,257 for the calander year 2014. New Subsidiary/Associate Company During the year under review, your company had acquired one company named Design Industry Limited, Hong Kong through its wholly owned subsidiary Ultima S.A. Design Industry Ltd. This Company is engaged in sourcing of outerwear (including leather, PU Garments, fashion accessories) and textile product from China and India for marketing and selling in Europe. The total revenue of the Company was HK$ 2,18,02,838 and the net profit was HK$ 4,14,059. Further the statement containing the salient feature of the financial statement of a Company's subsidiaries and Associate companies as required under first proviso to Sub section (3) of Section 129 of the Companies Act, 2013 is annexed to the annual report at the end. CORPORATE GOVERNANCE As required by Clause-49 of Listing Agreement a Report on Corporate Governance along with a Certificate of Corporate Governance from the Auditors is annexed to this Report. MANAGEMENT DISCUSSION & ANALYSIS The Management Discussion and Analysis Report forms part of this Annual Report. LISTING AGREEMENT The Company's securities are listed at the following Stock Exchanges in India: - 1. BSE Ltd. 2. The National Stock Exchange of India Ltd. The Annual Listing fee for the Financial Year 2015-2016 has already been paid to both the above Stock Exchanges. CASH FLOW STATEMENT As required by Clause-32 of the Listing Agreement a Cash Flow Statement is annexed and forms part of this Annual Report. EXTRACT OF ANNUAL RETURN The details forming part of the Annual Return in form MGT-9, as required under Section 92 of the Companies Act, 2013, forms an integral part of this Report. The same is provided herewith as Annexure B. DIRECTORS The Board of Directors had on the recommendation of Nomination and Remuneration Committee appointed Mrs. Annapurna Dixit as Additional Non-Executive Director on September 18, 2014. It is proposed to appoint Mrs. Annapurna Dixit as Independent Director in terms of Section 149 and other applicable provisions of the Companies Act, 2013, for a period until the conclusion of the 31st Annual General Meeting of the Company to be held in the calander year 2018. Due notice under Section 160 of the Act has been received from Member of the Company proposing the appointment of Mrs. Annapurna Dixit as an Independent Director of the Company at this Annual General Meeting. The Company has received declaration from Mrs. Annapurna Dixit confirming that she meets with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. The Company has further received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company's Articles of Association, Ms. Jaspal Sethi, Director retires by rotation at the ensuing Annual General Meeting and being eligible offers herself for re-appointment. During the year under review, Mr. V. K. Chopra resigned as a Director of the Company with effect from June 19, 2014, since the revised Clause 49 of the Listing Agreement places restrictions on the directorships that an individual can serve as Independent Director in Listed Companies. The Board has placed on record its appreciation for the services rendered by Mr. V. K. Chopra during his tenure as a Director. The details of Directors being recommended for appointment/re-appointment as required in clause 49 of the Listing Agreement are contained in the accompanying Notice convening the ensuing Annual General Meeting of the Company. Appropriate Resolution(s) seeking your approval to the appointment/re-appointment of Directors are also included in the Notice. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a structured questionnaire was prepared in the terms of the Board Evaluation Policy. The questionnaire was prepared after taking into consideration of the various aspects of the Board's functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance. The performance evaluation of the Independent Directors was completed. The performance evaluation of the Managing Director and Non-Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process. NUMBER OF MEETINGS OF THE BOARD During the financial year 2014-15, six Board Meetings of the Company were held. The details of the Meetings of the Board held during the Financial Year 2014-15 forms part of the Corporate Governance report. COMMITTEES The details of the composition of Committees, terms of reference and numbers of Meetings held during the financial year 2014-15 is provided in the Corporate Governance Report. PARTICULARS OF LOANS, GUARANTESS OR INVESTMENTS BY COMPANY Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements. WHISTLE BLOWER POLICY The Company has a Whistle Blower Policy to report genuine concerns or grievances. The Whistle Blower Policy has been posted on the website of the Company (www.bhartiyafashion.com). NOMINATION AND REMUNERATION POLICY The Board of Directors has framed a policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. This policy also lays down the criteria for selection and appointment of Board members. The details of this policy are explained in the Corporate Governance Report. RELATED PARTY TRANSACTIONS All transactions entered with related parties for the year under review were on arm's length basis and in ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus disclosure in the form AOC-2 is not required. Further, there are no material related party transactions during the year under review with Promoters, Directors or Key Managerial Personnel. A statement giving details of all the related party transactions are placed before the Audit Committee and Board for review and approval on a quarterly basis. The Policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web link of the same is www.bhartiyafashion.com SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant and material orders by the Regulators/Courts that would impact the going concern status of the Company and its future operations. DIRECTORS' RESPONSIBILITY STATEMENT To the best of knowledge and belief and according to the information and explanations obtained, your Directors make the following statement in terms of Section 134(3)(c) of the Companies Act, 2013: (a) that in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) that the directors had 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 as at March 31, 2015 and of the profit of the company for the year ended on that date; (c) that the directors had taken proper and sufficient care 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) that the annual accounts have been prepared on a going concern basis; (e) that the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and (f) that the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. STATUTORY AUDIT M/s. Sushil Poddar & Co., Chartered Accountants, (Firm registration No: 014969N) who are the Statutory Auditors of the Company hold office up to the 30th Annual General Meeting. Your directors have recommended their ratification in the ensuing Annual General Meeting. The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. COST AUDIT For the financial year ended 31st March, 2015 the Company will file the Compliance Report within the due period. As per the Companies (Cost Records and Audit) Rules, 2014, Cost Audit is not applicable for the Company for the financial year 2015-16. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company had appointed Mr. Ravichandran K., Practicing Company Secretary (CP No. 3207) to undertake the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report is included as Annexure C and forms an integral part of this report. There is no secretarial audit qualification for the year under review. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has robust system of internal control to provide the reasonable assurance that all information used within the business and for external reporting is adequate. The Company has in house internal audit function manned by experienced Chartered Accountant reporting into Audit Committee. Pursuant to the provisions of Section 138 of the Companies Act, 2013 the internal audit function is entrusted to our in-house audit team. Risk based internal audits as per audit charter approved by audit committee have been conducted during the year with an objective to ensure the: • accuracy of financial reporting, • operating effectiveness, • safeguarding of Company's assets, • compliance to the applicable statutes and company policies and procedures The audit report has been submitted to Audit Committee for consideration. Further, to ensure the completeness the Risk and Control Matrix is maintained for the process audited. With the endeavor to strengthen the internal control mechanism and, accuracy of reporting Company is implementing a ERP specific to the fashion industry. RISK MANAGEMENT The Company has formed Risk Management Committe which identifies, assesses and manages risk at strategic, operational and compliance levels, across business units functions and geographics. The board of directors are informed about the risks or opportunities that could have an adverse impact on the Company's operations or to that could be exploited to maximize the gains. The processes and procedures are in place to act in a time bound manner to manage the risks or opportunities. The risk management process is reviewed and evaluated by the board of directors. Bhartiya International's exposure to foreign currency risk is restricted to its imports and exports. These risks are minimized through well-thought-out financial operations, astute treasury management and effective use of hedge options. CORPORATE SOCIAL RESPONSIBILITY (CSR) As a part of its initiative under the "Corporate Social Responsibility" CSR drive, the Company has undertaken projects in the area of rural development and promoting health care and sanitation. These projects are in accordance with the Schedule VII of the Companies Act, 2013 and the Company's CSR Policy. The report on CSR activities as required under Companies (Corporate Social responsibility Policy) Rules, 2014 is set out as Annexure - D forming part of this report. ENVIRONMENT AND SAFETY The Company is conscious of the importance of environmentally clean and safe operations. The Company's policy requires conduct of operations in such a manner so as to ensure safety of all concerned, compliances environmental regulations and preservation of natural resources. The Company has even devised a Policy on Prevention of Sexual Harassment at workplace with a mechanism of lodging complaints. During the year under review, no complaints were reported to the Board. HUMAN RESOURCES Bhartiya's belief in nurturing talent has engrossed in the DNA of the organization so much so that; most of the key initiative taken by us in the last year has revolved around talent and their development. Last year saw the advent of many policies which have a direct impact on the functioning of an organization and that of an individual like Code of Conduct and Prevention of Sexual Harassment policy . Bhartiya has maintained their philosophy of continuous improvement in acquiring talent, retaining talent and providing a job enriching experience to each individual. Our belief in nurturing fresh talent led us to conceptualize a program to groom the youngsters of today into the leaders of tomorrow. We named this program as the "Budding Leaders". These Budding Leaders brings the fresh thought process and gives a new perspective to look at things at the strategic and operational levels which increases the competitiveness amongst people. With the expansion in business, we worked out various strategies to acquire the best class of talent, which will help us in building the organization of future. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information in accordance with the provision of Section 134(3)(e) of the Companies Act, 2013, read with Rule 8(3), the Companies (Accounts) Rules 2014 for the year ended 31st March 2015 regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo is given in the Annexure (E) forming part of this report. PARTICULARS OF EMPLOYEES: 4 persons employed throughout the year, were in receipt of remuneration of Rs. 60 lac per annum or more amounting to Rs. 3.40 crore and none of the employees employed for the part of the financial year 2015 were in receipt of Rs. 5 lac per month or more. During the financial year 2014-15, the Company had 246 employees. The information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Director's Report for the year ended 31st March, 2015 is given as a separate Annexure to this Report. The above Annexure is not being sent along with this report to the Members of the Company in line with the provision of Section 136 of the Companies Act, 2013. Members who wish to obtain these particulars may write to the Company Secretary at the registered office of the Company. The aforesaid Annexure is also available for inspection by Members at the registered office of the Company, 21 days before the 28th Annual General Meeting and upto the date of the ensuing Annual General Meeting during the business hours on working days. None of the employees listed in the said Annexure is a relative of any Director of the Company. None of the employees hold(by himself or along with his spouse and dependent children) more than two percent of the equity shares of the Company. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND Pursuant to the provisions of Section 205A(5) and 205C of the Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from to time to time on due dates, to the Investor Education and Protection Fund. Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on September 8, 2014 (date of last Annual General Meeting) on the Ministry of Corporate Affairs' website. PUBLIC DEPOSIT The Company has neither invited/ nor accepted any deposits during the year within the meaning of Section 73 of the Companies Act, 2013, read with Companies (Acceptance of Deposit) Rules, 2014. BUSINESS RESPONSIBILITY REPORTING The Business Responsibility Reporting as required by Clause 55 of the Listing Agreement with the Stock Exchanges is not applicable to your Company for the financial year ending March 31, 2015. MATERIAL CHANGES AND COMMITMENTS There are no material changes occurred in between the financial year ended on 31st March, 2015 and date of the report of the company which affects the financial position of the company. ACKNOWLEDGEMENTS: Your Directors are highly grateful for all the help, guidance and support received from the valued customers, suppliers, vendors, other business associates, various government and local authorities as well as the various Banks. The Board places on record its appreciation for the devoted and dedicated services rendered by all the employees in taking the Company forward. For and on behalf of the Board Snehdeep Aggarwal Managing Director Ramesh Bhatia Director Place : New Delhi, date : 25th May, 2015 |