DIRECTORS' REPORT To the members 1. Your Directors have pleasure in presenting their Report on the business and operations of the Company alongwith the audited financial statements for the year ended 31st March, 2016. 2. COMPANY RESULTS AND DIVIDEND: The Company's turnover & other income for the year was Rs. 1,984 crore as against Rs. 2,567 crore in the previous year. The loss for the year was Rs. 85.24 crore compared to a profit of Rs. 24.56 crore in the previous year. Lower sales in Textiles compared to previous year; lower capacity utilization resulting in lower production, inventory loss and volatile crude oil prices largely affected the PSF business; and delay in getting the approvals for construction, increase in time related overheads which remained unabsorbed and lower sales of flats due to difficult market scenario affected the Realty business of the Company. It was further compounded by increase in interest costs. The construction of two towers at Island City Center ("ICC"), Dadar, by Bombay Realty, i.e. One ICC and Two ICC is in full swing and is expected to be completed as per schedule by 2018. Home & You, which is the Company's rebranded textile retail business, will cover larger markets and focus would be to grow the Company's consumer base. It would do so through product, design innovations, offerings to cater diverse consumer preferences and expand product availability on multi channel platforms. PSF industry saw a dismal growth of 2% in volume in the country, which was mainly met through increased cheap imports from China. This has in turn affected the Company's PSF business. The PSF Division is focusing on innovative product mix and cost reduction initiatives in order to reduce its cost. The Directors have recommended a dividend of 0.50 paise per equity share of Rs. 2/- which is subject to shareholders' approval. Despite loss in the year under review, your Directors have recommended dividend out of the balance of surplus in Statement of Profit & Loss. 3. CONSOLIDATED FINANCIAL RESULTS: The Company has prepared Consolidated Financial Statements in accordance with the applicable Accounting Standards as prescribed under the Companies (Accounts) Rules, 2014 of the Companies Act, 2013. The Consolidated Financial Results reflect the results of the Company and that of its subsidiary and associates. As required under Regulation 34 of the SEBI [Listing Obligations and Disclosure Requirements ("LODR")] Regulations, 2015, the Audited Consolidated Financial Statements together with the Independent Auditors' Report thereon are annexed and form part of this Report. The summarized Consolidated financial results are provided above. 4. BOMBAY REALTY: The business of Bombay Realty had to face serious challenges in the past two years on account of weak global clues, general economic slowdown, high interest rates and delay in the receipt of regulatory approvals. This resulted in a slowdown in construction activity, sales and build up of unsold inventory. The revenues from real estate activity for the year was Rs. 470 crore as compared to Rs. 444 crore in financial year 2014-15. With the receipt of some of the regulatory approvals and the consequent pick up in construction activity, the Company is now fully geared to complete the construction as per schedule and ensure timely delivery of the two towers. The Company has appointed Hill International Project Management Pvt. Ltd. as the Project Management Consultant (PMC), Sunjaay Athanki Projects Management Pvt. Ltd. (earlier known as Gardiner and Theobald Construction and Property Consultancy Pvt. Ltd.) as the Professional Quantity Surveyor and Larsen & Toubro Limited as General Contractor to undertake the construction work for both the towers of ICC. The construction on the Slum project at ICC has also commenced and handover is expected as per schedule by August, 2018. Construction of The Plaza', a Luxury High-Street for International Brands at Worli, which was earlier held up due to legal issues, is expected to re-start in the current financial year. 5. HOME&YOU: The domestic textile market experienced volume as well as value pressure led by weak demand. The influx of cheaper alternatives from unorganised sector and international markets only compounded the impact on the retail market. The Division's gross revenue for 2015-16 was Rs. 306 crore as against Rs. 407 crore in the previous year. Sale of Textile unit at Ranjangaon The Members of your Company through postal ballot in June 2015, had approved to sell/dispose of its textiles processing unit at B-28, MIDC Industrial Area, Ranjangaon, Maharashtra, ("Undertaking") to Oasis Procon Pvt. Ltd., New Delhi ("Oasis") together with ail specified tangible and intangible assets in relation to the Undertaking (excluding its brand name and the specific liabilities), on a slump sale basis as a going concern and on an "as is where is" basis for a consideration of Rs. 230 crore. The net proceeds from the sale of the Undertaking was to be utilized to repay loans and reduce the interest burden of the Company. As per the terms and conditions reflected in the agreed Term Sheet, the prospective buyers were obliged to complete the transaction not later than 31st July, 2015. However, they failed to make the requisite payments under the contract and the sale deed could not be completed. The Company is in the process of finding a new buyer for the said Unit. 6. POLYESTERDIVISION: The Division achieved a turnover of Rs. 1,168 crore during the year as compared to Rs. 1,498 crore in the previous year. In volume terms the reduction was about 6%. Sharp drop in crude oil and petrochemical prices during the year resulted in steep decrease in polyester prices and thereby reduction in turnover of the Division. The average capacity utilization at 91% was lower than 93% achieved in the previous year but was significantly better than the industry average capacity utilization of below 80% during the financial year. The market sentiment in the domestic polyester staple fibre industry was reflected in an overall growth of 2% compared to the previous year. However, PSF imports increased by approximately 25% in volume far exceeding the growth in domestic demand. Increased volatility in raw material prices and increased imports at significantly lower prices have posed challenges to the Company's Polyester business. 7. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES: Pursuant to Section 129(3) of the Companies Act, 2013 ("the Act") read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company's Subsidiary, Associates and Joint Venture (in Form AOC-1) is forming part of the Consolidated Financial Statements. Your Company does not have any Material Subsidiary [as defined under the SEBI (LODR) Regulations, 2015] as on 31st March, 2016. Pursuant to Section 136 of the Act, the Company is exempted from attaching to its Annual Report, the Annual Report of the Subsidiary Company viz. Archway Investment Company Limited. The financial statement of the Subsidiary Company is kept open for inspection by the shareholders at the Corporate Office of the Company. The Company shall provide the copy of the financial statements of its Subsidiary Company to the shareholders upon their request free of cost. The statements are also available on the website of the Company at www.bombaydyeing.com . 8. FIXED DEPOSITS: During the year, the Company repaid the deposits aggregating to Rs. 95.47 crore. The Company also accepted fixed deposits aggregating to Rs. 77.06 crore from 5,119 depositors. Total deposits outstanding as on 31st March, 2016 amounted to Rs. 78.54 crore out of which 247 deposits aggregating Rs. 1.36 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(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure A". 10. EMPLOYEE STOCK OPTION SCHEME (ESOS): The Information pursuant to the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, erstwhile SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and as per Section 62(1)(b) of the Companies Act, 2013 read with Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 has been provided in "Annexure B" to this Report. 11. RELATED PARTY TRANSACTIONS: The Company has formulated a policy on dealing with Related Party Transactions, The policy is disclosed on the website of the Company: (weblink <http://teknowits.com/bombaydyeing/> Corporategov.aspx). All transactions entered into with Related Parties as defined under the Companies Act, 2013, Clause 49 of the Listing Agreement and Regulation 2(1)(zc) and Regulation 23 of SEBI (LODR) Regulations, 2015, during the financial year were in the ordinary course of business and on an arm's length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. During the year, the Company had not entered into any contract/ arrangement/transactions with related parties which can be considered as material in nature. The related party transactions are disclosed under Note No. 50 of the Notes to Financial Statements for the financial year 2015-16. 12. 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 Note No. 51 of the Notes to the Financial Statements. 13. INSURANCE: All the properties including buildings, plant and machinery and stocks have been adequately insured. 14. ANNUALRETURN: The extract of Annual Return pursuant to the provisions of Section 92 of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in form MGT - 9 in "Annexure C" of this Report. 15. DIRECTORS AND KEY MANAGERIAL PERSONNEL: At the Annual General Meeting (AGM) held on 6th August, 2015, the members of the Company had appointed Dr. (Mrs.) Sheela Bhide as Independent Director for a term of five years with effect from 6th August, 2015 upto 5th August, 2020. In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Nusli N. Wadia (DIN: 00015731) retires by rotation and is eligible for re-appointment. Necessary information for the re-appointment of Mr. Nusli N. Wadia has been included in the notice convening the ensuing AGM and requisite details have been provided in the explanatory statement of the notice. Your directors recommend his re-appointment. Mr. Jehangir N. Wadia was appointed as the Managing Director of the Company for a period of five years from lst April, 2011 upto 31st March, 2016. The Board of Directors at its Meeting held on 31st March, 2016, have re-appointed him as the Managing Director of the Company for a further period of five years from lst April, 2016 upto 31st March, 2021, subject to the approval of the members of the Company. Excess remuneration payable to Mr. Jehangir N. Wadia, Managing Director for the financial year 2015-16, is subject to the approval of Central Government, in respect of which the Company has made an application and the approval is awaited. All the Independent Directors have given a declaration under subsection (7) of section 149 of the Companies Act, 2013 ("the Act") that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 26(3) of SEBI (LODR) Regulations, 2015. During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company. Eight 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. Key Managerial Personnel During the year under review, Mr. J. C. Bham retired as Company Secretary, with effect from the close of business hours on 31st May, 2015. Mr. K. Subharaman joined as the Company Secretary of the Company with effect from 1st June, 2015. He resigned as the Company Secretary of the Company with effect from close of the business hours on 30th April, 2016. The new Company Secretary is expected to join in July, 2016. Mr. Vinod Hiran, joined as the Chief Financial Officer ("CFO") of the Company with effect from 19th May, 2015 and ceased to be the CFO of the Company from 3rd November, 2015. Mr. Puspamitra Das was appointed as the CFO of the Company at the Board Meeting held on 31st March, 2016 and has joined the Company on 4th April, 2016. Board Evaluation Pursuant to the provisions of the Companies Act, 2013, and revised Clause 49 of the Listing Agreement and Regulation 17(10) of SEBI (LODR) 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 (weblink <http://> teknowits.com/bombaydyeing/Corporategov.aspx). 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 loss 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; 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 2015-16. 17. CORPORATE GOVERNANCE: Pursuant to Clause 49 of the Listing Agreement and Regulation 17(7) of SEBI (LODR) Regulations, 2015, a Management Discussion and Analysis Report is given in "Annexure D" to this Report. A separate report on Corporate Governance pursuant to Clause 49 of the Listing Agreement and Regulation 34(3) and 53(f) of SEBI (LODR) Regulations, 2015, 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 E". 18. PARTICULARS OF EMPLOYEES: The Information as per Section 197(12) 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 report and accounts are being sent to the Members and others entitled thereto, excluding the information on employees' remuneration particulars as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, which is available for inspection by the Members at the 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. 19. AUDITORS: Statutory Auditors The Company's Auditors, M/s. Kalyaniwalla & Mistry, Chartered Accountants, Mumbai who pursuant to Section 139 of the Companies Act, 2013, retire at the ensuing Annual General Meeting (AGM) of the Company and are eligible for re-appointment from the conclusion of current AGM up to the conclusion of the following AGM. They have confirmed their eligibility under Section 141 of the Act and the Rules framed there under for re-appointment as Auditors of the Company. As required under Clause 49 of the Listing Agreement and Regulation 33.1 (d) ii of SEBI (LODR) 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 maintained by the Company in respect of its Polyester and Real Estate Divisions are required to be audited. The Directors, on the recommendation of the Audit Committee, appointed M/s. N. I. Mehta & Co. to audit the cost accounts of the Company for the financial year ending 31st March, 2016 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 AGM. Secretariat Audit 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 M/s. 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 M/s. Aneja & Associates ceased to be internal auditors of the Company with effect from the closing of business hours on 31st December, 2015. At the Board Meeting held on 18th December, 2015, M/s. Ernst & Young, Chartered Accountants, were appointed as the Internal Auditors of the Company. 20. SIGNIFICANT AND 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. 21. MATERIAL CHANGES: The Board of Directors of your Company had approved to sell/ dispose of its textiles processing Unit at B-28, MIDC Industrial Area, Ranjangaon, Maharashtra, details of which have been provided on Page No. 16 of this report. 22. 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 Control Systems. The Internal 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. 23. CORPORATE SOCIAL RESPONSIBILITY: The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The CSR Committee was constituted by the Board of Directors of the Company comprising of three directors including Independent Directors. The CSR policy of the Company and the details about the development of CSR Policy and initiatives taken by the Company on Corporate Social Responsibility during the year are in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 in "Annexure H" to this report provides the requisite details. 24. AUDITORS QUALIFICATIONS: The remarks, if any, either by the Auditors or by the Practicing Company Secretary in their respective reports have been dealt with appropriately in this report. 25. RISK MANAGEMENT POLICY: The Company has formulated a Risk Assessment & Management Policy. Your attention is drawn to the Report on Corporate Governance for details. 26. AUDIT COMMITTEE: The Audit Committee of the Company comprises of 5 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 victimization 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://teknowits.com/bombaydyeing/Corporategov>. aspx). 27. CHANGE OF REGISTRAR AND SHARE TRANSFER AGENT: Securities and Exchange Board of India (SEBI) vide its Order -PR No. 66/2016 dated 22nd March, 2016 had passed an interim order against the Company's Registrar & Transfer Agent (R&TA),Sharepro Services (India) Pvt. Ltd. ("Sharepro") inter-alia restraining Sharepro and several entities linked with the management of Sharepro from buying, selling or dealing in the securities market or associating themselves with securities market, either directly or indirectly, in any manner, till further directions. Companies who are clients of Sharepro had also been advised by SEBI to change the R&TA. The Company's agreement with Sharepro came to an end on 31st March,2016 by efflux of time. In line with the SEBI directive, the Company at its Board Meeting held on 31st March, 2016, has appointed M/s. KARVY COMPUTER SHARE PRIVATE LIMITED, ("Karvy") having its Registered Office at "Karvy House" No 46, Avenue 4, Street No. 1, Banjara Hills, Hyderabad 500 034, as the Company's Registrar and Transfer Agent with effect from 1st April, 2016. Members are requested to note the change in the Company's R&TA from Sharepro to Karvy. 28. LISTING AGREEMENT: The Securities and Exchange Board of India (SEBI), on 2nd September, 2015, issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforceability. The said regulations were effective 1st December, 2015. Accordingly, all listed companies were required to enter into the Listing Agreement within six months from the effective date. The Company entered into Listing Agreement with BSE Limited and National Stock Exchange of India Limited in December 2015. 29. 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 NUSLI N.WADIA Chairman Place: Mumbai Date: 27th May, 2016. |