BOARD'S REPORT TO THE MEMBERS, Your Directors have pleasure in presenting the Fifty First Annual Report on the business and operations of the Company, together with the Audited Statement of Accounts for the year ended March 31, 2015. The Management Discussion and Analysis have also been incorporated into this report. OPERATIONS AND BUSINESS OVERVIEW Despite weak consumer demand and a sluggish economy, your Company ended with a total income of Rs.30.55 Crores for the year 2014-15 compared to Rs.59.69 Crores for the previous year. The reduction in income is also due to hiving off Health care Business to BPL Medical Technologies Private Limited during August 2013. The increased focus on cost reduction measures at its Printed Circuit Board (PCB) manufacturing unit and other offices, with a special emphasis on reducing input costs, overall expenses and reduction in interest cost helped the company to improve its financial performance in spite of decrease in total income of the company when compared to previous year. The gross profit earned for the year is Rs 7 27 Crores After providing Rs. 1.66 Crores and Rs. 0.05 Crores towards depreciation and finance charges respectively, your Company has earned a profit (before provisions & taxation) of Rs. 5.56 Crores for the year 2014-15. The operations of the Company continued to be affected due to working capital constraints and lack of bank funding. ? Dividend Your Directors regret their inability to recommend any dividend on equity shares of the Company since your Company has accumulated losses on the Balance Sheet and need to fund the new business initiatives. However, your Board has recommended payment of dividend on Preference Shares at Rs. 0.001 per share of face value of Rs. 100/-each, for the year under review, amounting to a total sum of Rs. 16,959/- as per the terms of the issue covered by the approved Scheme of Arrangement subject to the approval of the members at the ensuing Annual General Meeting. Since there was no unpaid/unclaimed Dividend declared and paid last year, the provisions of Section 125 of the Companies Act, 2013 do not apply. ? E-commerce Business in India India is at an inflection point of commerce moving online at a rapid pace as digital transformation commences. This should see the country emerge as the second largest digital market in the world by 2020, based on connected smart phones. India will leapfrog traditional tech themes and embrace new disruptive technologies with greater ease facilitated by a currently underdeveloped landscape. Over the next 15 years, it is estimated that India will have more than one billion digital users. This would be a unique global phenomenon, witnessing arguably the largest shift online in a country's population. The Indian e-commerce market is expected to grow 1.5 to 2.5% of GDP, or US$300bn, by 2030 driven by hyper growth in affordable smart phones, infrastructure, and ease of online transanctions.. Further, India's attractive demographics the youngest population in the world should lead to 300mn+ new online shoppers in the next 15 years, making e-tailing the largest online segment. India is fast in becoming one of the most important markets for global internet and telecom giants as they look beyond China for opportunities. US giants are targeting ad revenues (such as Google, Facebook) and the e-tailing pie (Amazon); Asian majors such as Samsung, Xiaomi are eyeing significant smart phone shipments, while Alibaba /Softbank look for strategic stakes in the India internet opportunity, helped by low entry barriers compared with some of the other markets. Some unique facts about India are enumerated below: • India has one of the youngest populations in the world with 68% below 35 years, and median age of 27 years vs. 37/38 for China/US • India has a very diverse population, speaking 22 different languages and the second-largest English speaking population in the world at around 125mn Only 30% of the population have bank accounts and only 3% file their income tax returns • Just 9% is covered by digital fiber and only 20mn people own a credit card. All this, along with suboptimal infrastructure are key triggers for the online economy to develop ? Exclusive partnership with Flipkart Flipkart started operations in October 2007 selling books via internet. It is now India's leading e-commerce marketplace with over 20 million products across 70+ categories including electronics, apparels, baby care products, home & kitchen appliances, books & media, fitness equipment, auto accessories etc. Flipkart has about 60million registered users and gets nearly 8 million visits daily. It has 13 warehouses and over 25,000 employees. Your company entered into an exclusive agreement with Flipkart India Pvt Ltd (Flipkart), a leading e-commerce company for sale of consumer durables and appliances under the "BPL" brand . This initiative of your company was launched on 15th July, 2015 initially with LED Colour Televisions, Washing Machines and Refrigerators with a new positioning for the brand "Experience it." Your company has also launched these products through print media and online advertisements. Members may visit the company's website www.bpl.in, for further information and updates on the same. Your company's objective is to supply products of great quality at a fair price, supported by excellent service. The product range would gradually cover other home appliances products like Air Conditioners, Microwave Ovens, and LED / Solar Lamps. Presently, the Flipkart business covers 140 towns across India including the four large metros -Delhi, Mumbai, Kolkata and Chennai. Your company has formed a dedicated team of senior executives to oversee the entire activities of the e-commerce initiative. In order to provide timely and efficient after sales service, your company has entered into an arrangement with Jeeves Customer Care Pvt Ltd who are specialist in undertaking customer care services of consumer electronic products. They have been in this business for the last decade or so. Your directors are pleased to report that the products launched under the BPL brand were well received with an overwhelming response in the market. Your company is pleased to introduce the brand to the new consumers and bring back the same to our loyal customers who have always enjoyed an unparalleled experience. BPL has been loved and endorsed for many years and now the company's aim is to give new experiences through products, design, technology and style once again, that resonate with the new generation. During the current financial year, your Company expects to achieve a turn over of approximately Rs.50 crores as a result of this new initiative. ? Risks and Concerns While the revival of BPL consumer electronics business through e-tailing seems promising, some risks are inherent: working capital constraint, exchange rate fluctuations, infrastructure limitations affecting the supply chain, uncertainty about broadband and 4G rollout, etc. ? Printed Circuits Board (PCB) Business The PCB industry in India, at present, consists of single sided, double sided & multi layer PCBs. BPL is engaged in manufacturing of single sided PCBs. The major market for this comes from the Lighting segment (both in CFL & LED), consumer electronics, basic telecom equipments, low-end power conversion and auto electronics industry. During the year 2014-15, the segment wise contributions to the total BPL PCB business is as under Your Company was able to cope with the competition & achieve a growth of 22% over the previous year with EBIDTAof around 20%. Further, PCB industry is witnessing sizeable growth in the unorganized sector, especially in consumer electronics segment like Color Televisions with Cathode Ray Tube (CRT), . The market in this segment is expected to grow around 20% this year. Your company intends to reap benefits from this growth and accordingly, the turnover of PCB business may increase by 18% during the current fiscal year. ? Risks and Concerns The Company's major competitors in this segment are depending on CRT TV business to the extent of 60% of their total business turn over and there is a threat from them in offering lower prices, better payment terms and other incentives to get business break through. Due to delay in upgrading our manufacturing facilities because of financial constraint, the Company's market share may be affected. The Company is trying to evolve strategies to maintain its market share and profitability through cost reduction and improvement of overall efficiency. ? Details of Subsidiary/Joint Ventures/Associate Companies The Company had two subsidiaries viz. Bharat Energy Ventures Limited and BPL Power Projects (AP) Private Limited ( an indirect subsidiary). Consequent to disinvestment in the equity capital of Bharat Energy Ventures Limited, during September, 2014, these companies ceased to be subsidiaries with effect from 1st October, 2014. BPL Medical Technologies Private Limited is an associate company since your company's investment is more than 20% in the equity capital of BPL Medical Technologies Private Limited. Since the company has no subsidiaries and as the company does not have any significant influence or control in the associate company, the disclosures and consolidation of accounts as required under AS-23 are not applicable to the company. ? Significant and material orders There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and company's operations in the future. ? Safety, Health and Environment Safety committees at the manufacturing unit are functioning properly to ensure safe and healthy work environment. Safety, Health and Environmental requirements as per rules have been adhered to at the unit. Shop in-charge personnel and all security staff have been given sufficient on job training in the use of safety equipments. Necessary consent(s) have been obtained from pollution control Board with respect to Water and Air. Fire Fighting equipments and water hydrant system are installed inside the factory for safety of all personnel and to meetany eventuality. The Company had 69 employees as on March 31, 2015. ? Conservation of energy, technology absorption and foreign exchange earnings and outgo a) Conservation of energy: Though not a large-scale user of energy, your Company continues to explore several measures to conserve scarce resources and protect the environment. These include Water Recycling, Waste Recycling, Solder Fumes Control and Power Factor Improvement. During the year under review, in view of working capital constraints, your company has not made any capital investment on energy conservation equipments. b) Technology absorption: Continuous efforts have been made for developing new technologies and to innovate products to keep your Company tuned to the market needs. During the year, no major R & D was carried out in view of the financial and other constraints faced by the Company. However, the Company will be focusing on these areas in the current financial year. c) Foreign exchange earnings and Outgo: During the period under review, your Company utilized foreign exchange worth Rs. 10.40 Crores and foreign exchange earning was Nil. ? Corporate Governance Your company reaffirms its commitment to corporate Governance and is fully compliant with the conditions of Corporate Governance stipulated in Clause 49 of the Listing Agreement with Stock Exchanges. A separate section on compliance with the conditions of Corporate Governance and certificate from the Statutory Auditors of the Company - M/s T Velupillai & Co, Chartered Accountants, in this regard forms part oftheAnnual Report. ? Policy on Directors appointment and Remuneration policy Policy on Directors appointment is to follow the criteria as laid down under the Companies Act, 2013 and the listing agreement with stock exchanges and good corporate practices. Emphasis is given to persons from diverse field or professions. Guiding policy on remuneration of Directors, Key Managerial Personnel and Employees of the company is that: • Remuneration to Key Managerial Personnel, Senior Executives, Managers, Staff and workmen is industry-driven and takes into account their performance and factors such as to attract and retain qualitytalent. • For Directors, it is based on the shareholders resolutions, provisions of Companies Act, 2013 and Rules framed there in, Circulars and Guidelines issued by the Central Government and other authorities from time to time. ? Annual Evaluation by the Board of its own performance, its committees and individual Directors The Board of Directors of the company has initiated and put in place evaluation of its own performance, its committees and individual Directors. The result of the evaluation is satisfactory and adequate for the requirements of the company. ? Declaration of independence by the Independent Directors Pursuant to Section 149(6) of the Companies Act, 2013, Mr. Suraj L Mehta and Capt. S Prabhala, the Independent Directors of the company have made a declaration confirming the compliance of the conditions stipulated in the aforesaid section. ? Directors' Responsibility Statement Pursuant to the requirements of Section 134 (1) (c ) of the Companies Act, 2013, and on the basis of explanations and compliance certificates given by the executives of the company and subject to disclosures in the annual accounts and also on the basis of discussions with the statutory auditors of the company, from time to time, we state as under : a) that in the preparation of the annual accounts, 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 at the end of the financial year and of the profit and loss of the company for that period; 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 directors had prepared the annual accounts 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. ? Directors Mr. K Jayabharath Reddy and Mr.K S Prasad, independent directors of the company, resigned as Directors of the company during August, 2014. Mrs. Anju Chandrasekhar, Director, retires by rotation, at the ensuing Annual General Meeting and is eligible for re-appointment. ? Number of meetings of Board of Directors The Board of Directors have met seven times and independent directors once during the Financial Year 2014-15. ? Details of Committee of Directors Composition of Audit Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee , number of meetings of each committee during the financial year 2014 -15 and meetings attended by each member of the committee as required under the Companies Act, 2013 are provided in the Corporate Governance Report and forming part of the Annual report. The recommendations of the Audit Committee as and when made to the board have been accepted byit. ? Key Managerial Personnel Mr.Ajit G Nambiar, Chairman & Managing Director and Mr.D Krishnan, Company Secretary and Compliance Officer are the Key Managerial personnel who were appointed prior to the notification of Section 203 of the Companies Act, 2013. Mr. S.V. Ganesh has been designated as the Chief Financial Officer of the company with effect from 29th September, 2014 and is also a Key Managerial personnel. ? Particulars of contracts or arrangements with related parties: The particulars of every contract or arrangements entered into by the Company with related parties referred to in Sub-section (1) of Section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto are disclosed in Form No.AOC-2. ? Particulars of Loans, Guarantees or Investments The 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 Statements. ? Deposits The Company has not accepted any deposits from the public and hence, the provisions of the Companies Act, 2013 and Rules framed there under are not applicable to the company. ? Auditors Report The explanations or comments of the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in their report has been furnished byway of an addendum. ? Share Capital The paid up Equity Share Capital of the Company as on 31st March, 2015 stood at Rs.48.88 Crores comprising 4,88,84,818 Equity Shares of Rs 10/- each, fully paid up. The paid up Preference Share Capital of the Company as on 31st March, 2015 was Rs.169.59 Crores consisting of 1,69,58,682 Redeemable Preference Shares of Rs.100/-each. The Company has not issued any Sweat Equity Shares or granted any Employee Stock Option during the Financial Year 2014-15. The Company has not made any provision of money for the purchase of or subscription for shares in the Company under any Scheme. The provisions of Rule 4 (4) of Companies (Share Capital and Debentures) Rules, 2014 are not applicable to the company since no equity shares have been issued by the Company with differential rights during the Financial Year 2014-15. ? Risk management The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. Significant audit observations and follow up actions thereon are reported to the Audit Committee. ? Whistle Blower Policy The Company has put in place a Whistle Blower Policy to provide an open and transparent working environment and to promote responsible and secure whistle blowing system for directors and employees of the company to raise any concern. The policy broadly cover instances of unethical behaviour, actual or suspected fraud or violation of the company's code of conduct, alteration of documents, fraudulent financial reporting, misappropriation/ misuse of company's assets, manipulation of company's data, pilferage of proprietary information, abuse of authority etc. The policy provides safeguard against victimization of Director(s)/employee(s) who raise the concern and have access to the Chairman of Audit Committee who is entrusted to oversee the whistle blower mechanism. The policy is available on the website of the company. ¦ MANAGEMENTDISCUSSION & ANALYSIS Your Directors have covered the Management Discussion & Analysis as required under the Corporate Governance requirements, as a part of the Board's Report in appropriate places to avoid duplication and overlapping of the contents of the said two reports. ? Internal Control and their adequacy Your Company has adequate internal financial control systems and checks, which ensure that all assets are safeguarded and that all transactions are recorded and reported properly. The Internal financial control systems are supplemented by extensive programme of internal audit conducted by external qualified Chartered Accountants. The Company has also put in place effective Budgetary Systems. ? Corporate Social Responsibility(CSR) The provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 are not applicable to the company as its net worth or turnover or net profit are below the prescribed limits. ? Analysis of Remuneration Pursuant to Rule 5 of the Companies (Appointment and Remuneration) Rules, 2014, a disclosure on remuneration related information of employees, Key Managerial Personnel and Directors is annexed herewith and forms part of the report (Annexure-I). ? Statutory Auditors M/s T Velu Pillai & Co., Chartered Accountants, Bangalore were appointed as Statutory Auditors for a period of three years at the Annual General Meeting held on 29th September, 2014. Their continuance of appointment and payment of remuneration are to be confirmed and approved in the ensuing Annual General Meeting. The Company has received a certificate from the Auditors to the effect that their re-appointment would be in accordance with the provisions of Section 141 of the Companies Act, 2013. ? Cost Auditors The company's business during the year under review was not covered under the Cost Audit Rules nor had the Government notified the company to appoint a cost auditor for the said period. ? Secretarial Audit Report Pursuant to the provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, your company has appointed Mr. Madhwesh Acharya, a Practicing Company Secretary as Secretarial Auditor of the Company for the Financial Year 2014-15 and the Secretarial Audit Report is annexed herewith and forms part of the report. ? Particulars of Employees Pursuant to provisions of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees are set out in separate statement is annexed here with and forms part of the report(Annexure-II). ? Extract of the Annual Return Pursuant to Section 134 (3) (a) of the companies Act, 2013 read with Rule 12(1) of the companies (Management and Administration) Rules, 2014, the extract of the Annual Return is annexed herewith and forms part of the report(Annexure-III). ? Sexual Harassment The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013, aiming at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of sexual harassment. A Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. During the year under review, there were no complaints pertaining to sexual harassment. ? Acknowledgements The Board wishes to record its appreciation of the continued support and hard work of the employees at all levels. The Board also acknowledges continued co-operation received from Dealers, Suppliers, Customers, Banks, Government Departments, Financial Institutions and Shareholders. For and on behalf of the Board of Directors Ajit G Nambiar Chairman & Managing Director Date : 14th August, 2015 Place : Bangalore |