DIRECTORS' REPORT Dear members, The Directors take pleasure in presenting the 24th Annual Report along with the Audited Statement of Accounts for the year ended 31st March, 2015 as under: FINANCIAL PERFORMANCE: The turnover of the company in the year 2014-15 is Rs. 6,315.62 Lacs as against Rs. 6364.09 Lacs for the previous year 201314. During the current financial year our Company has gain a net profit of Rs. 68.63 Lacs as against the loss of Rs. 165.36 Lacs in P.Y. 2013-14 which shows the upward growth in the bottom line of more than 100%. St'll at present, there have been a number of external factors adversely affecting the performance and profitability of the Company: 1) Pressure on raw material input cost for Phenol, Methanol, Formaldehyde and Melamine due to rising crude oil prices. 2) Unfavorable exchange rates of US Dollar and EURO 3) Increase in both inward and outward freight costs due to high fuel prices. In addition to this, frequent shortage of raw materials also affected the overall production and in turn, the anticipated top and bottom line of the Company. Moreover, with the new project of an additional press in the laminate vertical and increasing the product range and the capacity, the company faced several unforeseen bottlenecks in the smooth working of this new expansion. Additional investment had to be made in large machineries including a boiler, phenolic treater, etc which consumed time and increased fixed costs thereby delaying the opportunity to leverage the output and the added capacity. Despite the downturn in the economy Bloom Dekor has managed to sustain the top line. Dividend: Your Directors have recommended a dividend of Rs. 0.60/- [i.e. 6% ] per equity share on 68,50,000 equity shares of Rs. 10/ - each fully paid-up for the financial year ended on 31st March, 2015, amounting to Rs.49,32,000 Lacs [inclusive of corporate dividend tax of Rs. 8,22,000 lacs]. The dividend, if declared by the shareholders at the ensuing Annual General Meeting, will be paid to those shareholders, whose names stand registered in the Register of Members on July 31,2015. In respect of shares held in dematerialized form, it will be paid to the members whose names are furnished by the National Securities Depository Limited and the Central Depository Services [India] Limited, as beneficial owners. MANAGEMENT DISCUSSION AND ANALYSIS [MDA1: MDA, for the year under review, as stipulated under clause 49 of the Listing Agreement, is presented in a separate section forming part of this Annual Report. Industry Overview and Developments: Globally, the decorative laminate industry is projected to have a marginal growth. However the picture appears to becoming better for the coming decade mainly on account of boom in the real estate markets which has put a high demand for decorative laminate sheets catering to the interior decoration of the innumerable res'dential and commercial buildings sector. At the same time, the Chinese invasion with low prices is adding pressure on the price realizations. The contribution of Indian laminate industry to the world demand is still under utilized and offers a lot of opportunity for the growth in volume. OUTLOOK & OPPORTUNITIES: LAMINATES: Bloom has always been a preference amongst the architects and the interior designers - the major influencers in the buying dea's'on of the customer. With all bottlenecks removed, Bloom is all geared to introduce its range of 7x3 laminates into the market and is looking at a 15-20% growth notwithstanding the market conditions. Due to booming in the real estate sector of India, Company has captured a good market share in the said area which is possble due to good product range and the network of the Company across the globe. Bloom has great plans to significantly achieve growth with improved margins. DOORS: Bloom Doors is on track with its business plan of increasing the network and penetration into the market by reaching out to the dealer network directly. Authorised channel partners are being formed pan India as a part of the business plan along with franchises given to showcase a gallery of doors that make the convincing process much easier. Bloom has started the various mode of advertising to capture the customer and create awareness about the value of door in decoration. The product has a guaranteed future but is finding resistance due to the price because of high and quality production cost. This however will be overcome by the increased awareness of good quality doors amongst the minds of the end customers. Bloom Doors have also found their place online in e-commerce portal of Snapdeal which has helped the company build its brand online. A few orders have been processed through Snapdeal and the feedback has been very encouraging. Except for minor challenges in sourcing man power, the road map for Bloom Doors is vivid with a guaranteed product with zero defects and zero maintenance problems. PROFESSIONAL MANAGEMENT The company is strategically taking calls to merge teams of both the verticals to increase the network without increasing the fixed costs significantly. An increased team of professionals to advice on the financial decisions of foreign exchange fluctuations and a smooth on time outsourced internal audit team to help us receive apt reports to take informed decisions about the segment wise performance and profitability. RISK PERCEPTION AND RISK MANAGEMENT POLICY Looking at the price movement of world crude oil prices, there would be noticeable variations in prices and supply of various chemicals and raw materials. The weakening of rupee will prove to be a major setback which will directly affect all raw material prices in both the Doors and the Laminates division. However, the company is determined and focused to gain momentum in growth and to improve their profit margins for the coming financial year by dividing the over heads into higher sales. For the doors division, competition will come in from cheaper doors being marketed by Chinese companies and other unorganized flush door manufacturers and not to forget the growth of new companies which would be wanting to tap the huge market that exists for the eco-friendly engineered panel doors and designer flush doors. This will induce heavy pressure on the cost control during the manufacturing process. The Company is aware of the risks associated with the business. It regularly analyses and takes corrective actions for managing/ mitigating the same. The Company has framed a formal Risk Management Framework for risk assessment and risk minimization which is periodically reviewed to ensure smooth operation and effective management control. The Audit Committee also reviews the adequacy of the risk management framework of the Company, the key risks associated with the business and measure and steps in place to minimize the same. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE There were no incidences of sexual harassment reported during the year under review, in terms of the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. PARTICULARS OF LOANS, GUARANTEES AND 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. MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of financial year of the Company i.e.31st March, 2015 and the date of Director's Report i.e. 14th July, 2015. Related Party Transactions All transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company's website. DIRECTORS: i. Cessation: During the year there was no cessation of any of the Director of the Company. ii. Retirement by rotation: In accordance with the prow'&'ons of section 152[6] of the Act and in terms of Articles of Association of the Company, Ms. Rupal Gupta [DIN - 00012611] will retire by rotation at the ensuing Annual General Meeting and being eligible, offer herself for reappointment. The Board recommends her reappointment. iii. Appointment of Director: No proposal / nomination have been received / made for the appointment as a Director of the Company. iv. Independent Directors: The Independent Directors have submitted their declarations of independence, as required pursuant to the provisions of section 149(7) of the Act, stating that they meet the criteria of independence as provided in section 149[6]. v. Profile of the Directors seeking appointment / reappointment: As required under clause 49 of the Listing Agreement, particulars of the Directors retiring by rotation and seeking appointment / reappointment at the ensuing Annual General Meeting is annexed to the notice convening 24th Annual General Meeting. vi. Chairman: Mr. Mayur Parikh - Chartered Accountant is the Chairman of the Board of Directors of the Company and also holds the chair as a chairman in the Board Meeting of the Company. vii. Key Managerial Personnel: The following persons were designated as Key Managerial Personnel: 1. Dr. Sunil Gupta - Managing Director 2. Mrs. Rupal Gupta - Whole Time Director 3. Mr. Kamlesh Sompura - Chief Financial officer 4. Mr. K. Rajendran - Compliance Officer Board Evaluation Pursuant to the provisions of the Act and Rules made there under and as provided under Schedule IV of the Act and clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of itself, the Directors indiw'dually as well as the evaluation of its committees. The manner in which the evaluation was carried out is provided in the Corporate Governance Report, which is part of this Annual Report. Committee of Board Your Company has several Committees which have been established as part of the best Corporate Governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes except Nomination and Remuneration Committee. The Company has following committees of the board • Audit Committee. • Nomination and Remuneration Committee. • Stakeholders' Grievances and Relationship Committee. • Independent Directors Committee. Remuneration Policy: The Board has on the recommendations of Nomination and Remuneration Committee, framed a Policy on selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report, which is part of this Annual Report. Directors' Responsibility Statement: In terms of section 134[3][c] of the Act, your Directors state that: i. in the preparation of the annual financial statements for the year ended on 31st March, 2015, applicable accounting standards read with requirements set out under schedule III of the Act, have been followed along with proper explanation relating to material departures, if any, ii. such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March, 2015 and of the profit of the company for the year ended on that date, iii. proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for prevention and detection of fraud and other irregularities, iv. the annual financial statements are prepared on a going concern basis, v. proper internal financial controls are in place and that the financial controls are adequate and are operating effectively and vi. the systems to ensure compliance with the provisions of all applicable laws are in place and are adequate and operating effectively. INTERNAL CONTROLS & THEIR ADEQUACY: The Company has established a well-defined process of risk management, wherein the identification, analysis and assessment of the various risks, measuring of the probable impact of such risks, formulation of risk mitigation strategy and implementation of the same takes place in a structured manner. Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks on the operations of the Company. Necessary internal control systems are also put in place by the Company on various activities across the board to ensure that business operations are directed towards attaining the stated organizational objectives with optimum utilization of the resources. Apart from these internal control procedures, a well-defined and established system of internal audit is in operation to independently review and strengthen these control measures, which is carried out by a reputed firm of Chartered Accountants. The Audit Committee of the Company regularly reviews the reports of the internal auditors and recommends actions for further improvement of the internal controls. INTERNAL AUDIT & INSPECTION: A comprehensive system of internal inspection and audit is in place in the company to monitor internal control systems. The scope and coverage of the Audit is reviewed from time to time to make it more focused and effective. The system of both out-sourcing and in-house audit continued during the year 2014-15. HUMAN RESOURCES: During the year under review the employee attrition was minimal. The management continues its efforts in imparting professional training to Executives and Staff members at various levels with the view to upgrade their competence and managerial abilities. The Industrial relations in the company continued to be cordial in the year 2014-15. New focus is being given to improve safety for the workers and improve awareness of work place management through training on 5S principles. CAUTIONARY STATEMENT: The statements and observations made in this analysis are reflective of the collective opinion of the company. Wherever possible, conservative estimates have been considered. Certain statements in this section relating to estimates, projections and expectations may be forward looking within the meaning of applicable laws and regulations. The actual results could differ marginally from what the directors envisage in terms of the future performance and outlook. The factors that may affect the performance of the company will be changes pertaining to government policies, tariff barriers, delays in registrations, changes in local and overseas markets and the related factors thereof. PUBLIC DEPOSIT: The company has not accepted any deposits from the public hence the directives issued by the Reserve Bank of India & the Provision of Section 73 to 76 of the Company Act - 2013 or any other relevant prow'&'ons of the Act and the Rules there under are not applicable. BOARD MEETINGS: A calendar of meetings to be held in a year is decided in advance by the Board and circulated to the Directors. During the year, Six Board and Five Audit Committee Meetings were convened and held, the details of which are provided in the Corporate Governance Report, forming part of the Directors' Report. The gap between two consecutive meetings was not more than one hundred and twenty days as provided in section 173 of the Act. CORPORATE GOVERNANCE: Your Company strives to incorporate the appropriate standards for corporate governance. Pursuant to Clause-49 of listing agreement to the Stock Exchange Corporate Governance Report and Practic'ng Company Secretaries' on its compliance is annexed and forms part of this report. AUDITORS: The Company's Auditors B.T. Vora & Co., Chartered Accountants, Ahmedabad [Firm Reg. No. 123652W] have res'gned from the position of the statutory auditor of the company due to their pre-occupation in other commitments. In place of him M/s. Dharmendra Shah & Co., Chartered Accountants [Firm Registration No. [102474W] is to be appointed as the statutory auditor of the company for the tenure of 5 years from the date of this Annual General Meeting subject to approval of the shareholders. AUDITORS' REPORT: M/s. Dharmendra Shah & Co., Chartered Accountants [Firm Registration No. [102474W] Statutory Auditor of the Company holds office until the conclusion of the ensuing 24th Annual General Meeting and offers themselves for reappointment. Pursuant to provisions of section 139 of the Companies Act, 2013 and the Rules made thereunder, the Board proposes to reappoint M/s. Dharmendra Shah & Co., Chartered Accountants as Statutory Auditor of the Company from the conclusion of the ensuing 24th Annual General Meeting till the conclusion of 29th Annual General Meeting. They have furnished a certificate confirming the eligibility under section 141 of the Companies Act, 2013 and Rules made thereunder. The Board based on the recommendation of Audit Committee, recommends the appointment of M/s. Dharmendra Shah & Co., Chartered Accountants [Firm Registration No. [102474W], Chartered Accountants, as the Statutory Auditor of the Company. Secretarial Auditor and Secretarial Audit Report: Pursuant to the prow'&'ons of section 204 of the Act and The Companies [Appointment and Remuneration of Managerial Personnel] Rules, 2014, the Company has appointed Mr. Anand S. Lavingia - Practicing Company Secretary to undertake Secretarial Audit for the financial year ended on 31st March, 2015. Secretarial Audit Report is attached to this report as Annexure-"A". The Board has duly reviewed the Secretarial Auditor's Report and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors as provided under section 134 of the Act. Corporate Social Responsibility [CSR]: The provisions related to CSR are not applicable to the company. Business Risk Management: A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate it. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non-business risks.. Managing the Risks of fraud, corruption and unethical business practices: i. Vigil Mechanism / Whistle Blower Policy: The Company has established vigil mechanism and framed whistle blower policy for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of Company's Code of Conduct or Ethics Policy. ii. Code of Conduct: The company is having its code of conduct to be followed by the Management. The same have been also published on the website of the company. Extract of Annual Return: Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014 the extract of the Annual Return as at 31st March, 2015 in Form MGT-9 forms part of this Annual Report as Annexure- "B". Constitution of Audit Committee: The Board has constituted the Audit Committee which comprises of Mr. Mayur Parikh as the Chairman and Mr. Ashok Gandhi and Mr. Karan Gupta as the members. More details on the Committee are given in the Corporate Governance Report. Particulars of Employees: There is no employee who fall in the category of the information required under section 197 of the Act read with Rule 5[1 ] of The Companies [Appointment and Remuneration of Managerial Personnel] Rules, 2014. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo: Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under section 134[3][m] of the Act read with the Companies [Accounts] Rules, 2014, are provided in the Annexure-"C" and forms part of this Report. General Disclosure: Your Directors state that the Company has made disclosures in this report for the items prescribed in section 134[3] of the Act and Rule 8 of The Companies [Accounts] Rules, 2014 to the extent the transactions took place on those items during the year. Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of Equity Shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and ESOS. 4. There is no revision in the Board Report or Financial Statement. 5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. ACKNOWLEDGEMENT: Your Directors wish to place on record their sincere appreciation for significant contributions made by the employees at all levels through their dedication, hard work and commitment, enabling the Company to achieve good performance during the year under review. Your Directors also take this opportunity to place on record the valuable co-operation and support extended by the banks, government, business associates and the shareholders for their continued confidence reposed in the Company and look forward to having the same support in all future endeavors. For and On behalf of the Board Sd/- Dr. Sunil Gupta Managing Director DIN: 00012572 Place : Ahmedabad Date: July 14,2015 |