BOARD'S REPORT Your Directors take pleasure in presenting the Thirty Eighth Annual Report and the audited accounts for the financial year ended March 31, 2015. Operations and Business Review Your Company closed the financial year 2014-15 on a good note. Gross Income has increased by about 19% over the last year from Rs. 63,617 Lakhs in previous year to Rs. 75,459 Lakhs in current year. The Profit before tax has also increased by 123% over the previous year from Rs. 458.73 Lakhs to Rs. 1025.15 Lakhs. Your Company aims to sell more of bigger size and high value tiles and to reduce the cost of production substantially. Your Company is also trying up additional manufacturing capacities in West Zone to augment supplies. With the integration of Brand 'Orient' and 'Bell' your Company now has only one Brand i.e. 'Orient Bell'. 'Orient Tile Boutiques' and 'Bell Tile Boutiques' have been renamed as 'Orient Bell Tile Boutiques' (OBTBs). Your Company has laid stress on acquiring premium customers and increasing the sale of high value products. To boost these higher margin sales, your Company is increasing spends on its branding and advertising and also plans to launch several OBTBs across India this year. Your Company has participated in the ACETECH Exhibitions held at Delhi, Bengaluru and Kolkata where for the first time in the tile industry, your Company has displayed the tile concepts using QR Code technology, which is a convenient and wonderful way to choose a tile for the end user. As a Sales and Marketing tool, your Company has launched a Facebook page <https://www.facebook.com/OrientBellLtd>. Your Company is constantly getting bigger and more prominent dealers in all towns and cities to display and sell tiles. While continuing to sell to large projects, during the year under review your Company acquired several prestigious customers such as Experion - Gurgaon, SARE group - Chennai, Gurgaon and Ghaziabad, DLF - Gurgaon, Delhi and Mahada - Mumbai and Pune. Operating Systems have been further strengthened and more manpower deployed to increase the share of retail in our total sales. This way, not only will we be able to sell more high value products but also improve the average selling price for all our products. Your Company is confident that with the support of its regular and prospective customers it will further strengthen its sales. Dividend For the year under review, your Directors have recommended a dividend of Re. 0.50 per equity share for the financial year ended March 31, 2015. The total outgo of dividend (inclusive of tax of Rs. 14.06 lakhs) would amount to Rs. 83.14 lakhs as against Rs. 79.40 lakhs in the previous year. The dividend payout is subject to approval of members at the ensuing Annual General Meeting. Particulars of Loans, Guarantees or Investments Loans, Guarantees and Investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report. Public Deposits Your Company has neither invited nor accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014. Transfer to Reserves We propose to transfer Rs. 70,20,900/- to Securities Premium and Rs. 68,66,168/- from Revaluation Reserve to General Reserve and Rs. 3,28,033/- from Employee Stock Option Reserve to General Reserve Particulars of Contracts or Arrangements made with Related Parties All Related Party Transactions entered during the year were in the ordinary course of business and on arm's length basis. No material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions to be provided under section 134(3)(h) of the Companies Act, 2013 in form AOC-2 is not applicable. Directors and Key Managerial Personnel During the year under review pursuant to withdrawal of nomination of Mr. Satish Chandra by IDBI Bank, Mr. Chandra resigned and Board approved the same effective 12th February, 2015. The Board of Directors in their meeting held on 03rd November, 2014 appointed Ms. Tanuja Joshi as an Additional Director in the category of Independent-Non-Executive Director of the Company with effect from 03rd November, 2014 to hold office up to the forthcoming Annual General Meeting. The above appointment was based on the recommendation of the Nomination and Remuneration Committee and subject to the approval of the Shareholders of the Company at the forthcoming Annual General Meeting. The Nomination and Remuneration Committee and the Board of Directors have in their respective meetings held on 13th August, 2015 subject to the approval of shareholders in the forthcoming Annual General Meeting, recommended the appointment of Ms. Tanuja Joshi as Independent- Non Executive Director for a period ending on 02nd November, 2019. To comply with the provisions of Section 149 and other applicable provisions of the Act, the Board has recommended the appointment of Ms. Tanuja Joshi to hold office as per her tenure of appointment mentioned in the notice of the forthcoming Annual General Meeting of the Company. Details of the proposal for the appointment of Ms. Tanuja Joshi as an Independent Director are also mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 38th Annual General Meeting of the Company. Her appointment is appropriate and in the best interest of the Company. Mr. Dhruv M. Sawhney's term of office as Independent Director of the Company shall end on 29th September, 2015 and he shall fulfill his term of appointment till the said date. Till now, the Company has not received any proposal intending to propose him as Independent Director either from him or from any other member in terms of section 160 of the Companies Act, 2013. In case, the said proposal is not received at least fourteen days before the ensuing Annual General Meeting, Mr. Dhruv M. Sawhney shall not be re-appointed as Director of the Company. The first term of appointment of Mr. N.R. Srinivasan shall also expire on 29th September, 2015. Mr. Srinivasan has given his consent to act as Independent director for a further term of one year from 30th September, 2015 to 29th September, 2016. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Mr. Mahendra K. Daga shall retire at the forthcoming Annual General Meeting and being eligible offers himself for re-appointment. The present term of Mr. Mahendra K. Daga as Chairman & Managing Director of the Company will expire on 30th November 2015. The Nomination and Remuneration Committee and the Board of Directors have, in their respective meetings held on 13th August, 2015 subject to the approval of the members vide special resolution at the ensuing Annual General Meeting and such other approvals as may be necessary in this regard, approved the reappointment and remuneration of Mr. Mahendra K. Daga as Chairman & Managing Director for a further period from 01st December, 2015 to 31st March, 2018. Number of meetings of the Board The Board met six times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013. Directors' Responsibility Statement Pursuant to Section 134(3) (c) of the Companies Act, 2013, your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, make the following statement: (a) that in the preparation of annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; (b) that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2015 and of the profit of your Company for the year ended on that date; (c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) that the accounts for the financial year ended March 31, 2015 have been prepared on a 'going concern' basis; (e) that internal financial controls were in place and that such internal financial controls were adequate and were operating effectively; (f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. Audit Committee The Audit Committee comprises of three Independent Directors namely Mr. R.N. Bansal (Chairman), Mr. N.R. Srinivasan (Member) and Mr. P.M. Mathai (Member) and two Non Independent-Executive Directors namely Mr. Mahendra K. Daga (Member) and Mr. K.M. Pai (Member). All the recommendations made by the Audit Committee were accepted by the Board. Remuneration Policy The Policy of the Company on Director's appointment and remuneration namely Nomination and Remuneration Policy, specifying criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub section (3) of section 178 of the Companies Act, 2013 was adopted by the Board on 03rd November, 2014. The said Policy was amended by the Board on 13th August, 2015 and the same is appended as Annexure 1 to the Board's Report. We affirm that the remuneration paid to the Directors is as per the terms laid and put in the Nomination & Remuneration Policy of the Company. The Nomination and Remuneration Policy and Nomination and Remuneration (Amended) Policy, 2015 may be accessed at the Company's website. Risk Management Policy Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has formed a Risk Management Policy. This policy seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The policy defines the risk management approach across the enterprise at various levels including documentation and reporting. The Risk Management Policy as approved by the Board is uploaded on the Company's website and may be accessed at the website of the Company at <http://www.orientbell.com>. Vigil Mechanism cum Whistle Blower Policy The Company has formulated a Vigil Mechanism cum Whistle Blower Policy to deal with the instances of unethical behavior, actual or suspected, fraud or violation of the Company's Code of Conduct. It provides for a mechanism for Directors and Employees of the Company to approach the Chairman of the Audit Committee of the Company or the Director nominated to play the role of Audit Committee as the case may be, to report such cases. The Vigil Mechanism cum Whistle Blower Policy of the Company is uploaded on the Company's website and may be accessed at the website of the Company at <http://www.orientbell.com>. Corporate Social Responsibility The Corporate Social Responsibility Committee comprises Mr. Madhur Daga (Chairman), Mr. K.M. Pai, Mr. N.R. Srinivasan, Mr. R.N. Bansal and Ms. Tanuja Joshi (Members). The Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy may be accessed on the Company's website at <http://www.orientbell.com> The CSR activities, as per the provisions of the Companies Act, 2013, may also be undertaken through a Registered Trust. The Company has identified and the CSR Committee has approved to undertake the CSR activities through M/s Godavari Foundation, a Trust registered under Section 12A of the Income Tax Act, 1961 (registration no. DIT(E) 268-69/8E/196/90-91). The Company undertakes initiatives in compliance with Schedule VII to the Act, as amended from time to time. During the year, the Company has spent Rs. 19,77,742/- (around 2% of the average net profits of last three financial years) on CSR activities. The Annual Report on CSR activities is appended as Annexure 2 to the Board's Report. Code for prevention of Insider Trading Practices The Company had instituted a comprehensive Code of Conduct for Prevention of Insider Trading for its Designated Employees, in compliance with Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, as amended from time to time (the "old Regulations"). The Code lays down Guidelines, which advise them on procedures to be followed and disclosures to be made, while dealing with shares of the Company and cautions them of the consequences of violations. The Securities and Exchange Board of India (SEBI) on 15th January, 2015 notified the SEBI (Prohibition of Insider Trading) Regulations, 2015 (the "new Regulations") which have come into force from 15th May, 2015, thereby revamping the two-decade old Regulations. In accordance with the provisions of the new Regulations, your Company has formulated and adopted 'Code of Conduct for prevention of Insider Trading' and 'Code of practices and procedures for fair disclosure of Unpublished Price Sensitive Information' (hereinafter collectively referred to as "OBL Code of Conduct") w.e.f. 15th May, 2015. OBL Code of Conduct has been formulated to regulate, monitor and ensure reporting of trading by the Employees and Connected Persons designated on the basis of their functional role in the Company towards achieving compliance with the new Regulations and is designed to maintain the highest ethical standards of trading in Securities of the Company by persons to whom it is applicable. Information pursuant to Section 134(3)(m) of the Companies Act, 2013 The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under section 134(3)(m) of the Companies Act, 2013 read with rule 8 of the Companies (Accounts) Rules, 2014 is appended as Annexure 3 to the Board's Report. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance and that of its Committees as well as performance of the Directors individually. Feedback was sought covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance and the evaluation was carried out based on responses received from the Directors. A separate exercise was carried out by the Nomination and Remuneration Committee of the Board to evaluate the performance of individual Directors. The performance evaluation of the Non-Independent Directors and the Board as a whole was carried out by the Independent Directors. The performance evaluation of the Chairman of the Company was also carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process. Employee Stock Option Scheme The information required to be disclosed in terms of the provisions of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is appended as Annexure 4 to the Board's Report. Management Discussion and Analysis Report 'Management Discussion and Analysis Report', as stipulated under Clause 49 of the Listing Agreement with Stock Exchanges forming part of this report, has been given under separate section in the Annual Report. Corporate Governance Report As per Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together a certificate for compliance of the provisions of Corporate Governance from the Statutory Auditors forms an integral part of this Report. Extract of Annual Return The details forming part of the extract of the Annual Return in Form MGT-9 is appended as Annexure 5 to the Board's Report. Subsidiary Company During the year under review, your Company has sold off its entire shareholding held by it in its wholly owned subsidiary, Elit International Trading (HK) Pvt. Ltd. The Company has presently no subsidiary. Particulars of Employees The information as per Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request. However, as per the provisions of Section 136 of the Act, the Report and Accounts are being sent to all the members excluding the information on particulars of employees which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. Any member interested in obtaining a copy thereof, may write to the Company Secretary in this regard. Auditors Statutory Auditors M/s S. R. Dinodia & Co. LLP, Chartered Accountants, New Delhi Statutory Auditors of your Company hold office till the conclusion of ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Company has received a letter from M/s S.R. Dinodia & Co. LLP, confirming that their appointment, if made, would be within the limits prescribed under section 139 and 141 of the Companies Act, 2013 and that they are not disqualified for re-appointment. The Board of Directors recommends the re-appointment of M/s S.R. Dinodia & Co. LLP as Statutory Auditors from the conclusion of ensuing Annual General Meeting till the conclusion of 39th Annual General Meeting in accordance with the provisions of Section 139 of the Companies Act, 2013 and rules there under at such remuneration as shall be fixed by the Board of Directors of the Company. Auditors' Report The Auditor's Report read with notes to the accounts referred to in the Auditor Report are self- explanatory and therefore do not call for any further comments. The Auditor's Report does not contain any qualification, reservation or adverse remark. Secretarial 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 Vivek Arora, Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is appended as Annexure 6 to the Board's Report. Material changes and commitments between the end of the financial year and date of report Your Company has entered into an Agreement with a Ceramic Tile Manufacturing Company at Morbi (Gujarat) and its Promoters to acquire its 19.5% equity stake. The plant shall have manufacturing capacity of about 46 (forty six) lakhs square meters of tiles (polished and glazed) per annum and likely to start commercial production by the end of December, 2015. General The Company has a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto covering all the aspects as contained under the "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013". Your Directors further states that during the year under review, no complaint was received and there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 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 gratefully acknowledges the assistance, support and co-operation received from banks, government authorities, dealers, project customers, vendors, business associates and members during the year under review. Your Directors would also like to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers. On behalf of the Board Mahendra K. Daga Chairman & Managing Director Date: 13th August, 2015 Place: New Delhi |