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Directors Report of Butterfly Gandhimathi Appliances Ltd.

Mar 31, 2015

Dear members,

The Directors have pleasure in presenting this twenty eighth Annual Report together with the Audited Statement of Accounts for the financial year ended on 31st March 2015.

FINANCIAL RESULTS:

The Company's financial performance for the year ended 31st March 2015 is summarised below:

Financial Year Financial Year ended on ended on 31.03.2015 31.03.2014

Revenue from Operations (Gross) 57,719.28 83,886.82

LESS: Excise Duty 4,821.30 7,468.69

Revenue from Operations (Net) 52,897.98 76,418.13

Other Income 435.43 654.68

Operating Expenditure 53,751.77 78,388.68

Operating Profit 3,967.51 5,498.14

Profit before Depreciation and Finance cost 4,402.94 6,152.83

Finance Cost 2,956.84 2,209.60

Depreciation 1,023.62 509.26

Profit before Tax 422.48 3,433.97

IT/Deferred Tax for the current year 139.19 1,192.55

Profit after Tax 283.29 2,241.42

Against Rs.303.2 crores (net) Tamil Nadu Government sale in financial year 2013-14, the sale for financial year 2014-15 was only Rs.84.3 crores (net) due to late release of purchase order by the Government. Added to this, due to sluggish market condition, the branded product sales came down during the financial year 2014-15, as compared to the previous year. The combined effect of these factors resulted in lower revenue from operations and also lower profits for financial year 2014-15.

DIVIDEND:

Considering the marginal profit after tax earned by the Company, the Board of Directors does not recommend any dividend for the financial year under review.

CURRENT YEAR'S OPERATIONS:

In January 2015, the Company had bagged orders worth Rs.510 crore (gross) from the Tamil Nadu Government for supply of Table Top Wet Grinders during FY 2014-15/2015-16. Against this, purchase orders for supply of materials worth Rs.255 crores have been released in the first phase. After supply of Rs.92.12 crores made during financial year 2014-15, supply of balance materials worth Rs.162.88 crores is expected to be completed by June 2015. The Company is expecting release of the second phase Purchase Order of the Tamil Nadu Government shortly. Company has initiated special steps for improving sale of branded products from the second quarter of the current financial year. This together with the economy measures adopted by the Company for cost reduction should bring better performance results for the current financial year.

MANAGEMENT DISCUSSION AND ANALYSIS:

The Directors' comments on Management Discussion and Analysis, which forms a part of this report, are restricted to the areas which are relevant to the current scenario of the Company and outlook.

CREDIT RATING:

The Company's financial discipline and prudent is reflected in the following CRISIL's credit ratings on the Company's bank facilities.

Long Term Rating CRISIL A-/Stable (Reaffirmed)

Short Term Rating CRISIL A2 (Reaffirmed)

DIRECTORS RESPONSIBILITY STATEMENT:

In pursuance of Section 134(5) of the Act, the Directors hereby confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The directors had selected such accounting policies and applied them consistently and made judgements 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) The directors had 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) The directors had prepared the annual accounts on a going concern basis; and

(e) 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.

(f) 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.

CORPORATE GOVERNANCE:

The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. Your Com- pany conforms to the prescribed norms of Corporate Governance.

In accordance with the Listing Agreement with the Stock Exchanges, a Compliance Report on Corporate Governance along with a Certificate of Compliance from the Auditors forms part of this report.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTY TRANSACTIONS:

All contracts/arrangements/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 Company had not entered into any contract/arrangement/transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Company enjoys distinct advantages in the form of competitive prices, product quality, economy in transportation cost and lower inventories by virtue of the existing related party transactions.

Particulars of contract or arrangements with related parties referred to in Section 188 (1) in Form AOC-2 has been annexed as Annexure - I

RISK MANAGEMENT:

The Board has formulated the Company's Risk Management Policy, identifying the elements of risk that the Company may face, such as strategic, financial, credit, market, liquidity, security, property, legal, regulatory and other risks, pursuant to the provisions of Section 134 (3) (n), which has been exhibited in the Company's website www.butterflyindia.com.

INTERNAL FINANCIAL CONTROLS:

The Company has in place adequate internal financial controls commensurate with its size and operations.

DIRECTORS:

Mrs.Maheshwari Mohan (DIN 07156606) who was appointed as Additional Director at the meeting of the Board held on 31.3.2015 will hold office up to the conclusion of the ensuing Annual General Meeting of the Company.

Keeping in view her vast experience as a Lawyer and knowledge in legal matters, it will be in the interest of the Company that Mrs. Maheshwari Mohan, who meets the criteria of independence as per the relevant provisions and is independent of the management, your Directors recommend her appointment as a Woman Independent Director of the Company.

The present tenure of Mr.V.M.Kumaresan, Executive Director - Technical (DIN 00835948) ends on 31.05.2016. The Nomination and Remuneration Committee and the Board of Directors at their meetings held on 10.6.2015 have recommended his reappoint- ment without any change in his existing remuneration for a further period of five years w.e.f. 01.06.2016 to 31.5.2021.

Messrs.V.M.Seshadri (DIN:00106506) and V.M.Gangadharam (DIN: 00106466), Directors retire by rotation from the Board pursuant to the provisions of Section 152 (6) (c) of the Companies Act 2013 and, being eligible, offer themselves for reappointment.

DECLARATION FROM INDEPENDENT DIRECTORS:

The Company has received necessary declaration from each Independent Director under section 149 (7) of the Act that they meet with the criteria of their independence laid down in Section 149 (6) of the Act.

APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION:

Pursuant to the provisions of Section 178(3), read with Companies (Meetings of Board and its Powers) Rules 2014 and Clause 49(II)(B)(5) and Clause 49 (IV) of the Listing Agreement, the Nomination and Remuneration Committee has formulated the crite- ria for determining qualifications, positive attributes and independence of a Director and for evaluating performance of the Directors and Key Management Personnel, which can be viewed at the Company's website www.butterflyindia.com.

PROGRAMME FOR FAMILIARISATION OF INDEPENDENT DIRECTORS:

The details of programme for familiarization of independent directors of the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at its link www.butterflyindia.com.

NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee of the Company has formulated and devised policies regarding qualifications, pos- itive attributes and independence of a Director as also a policy relating to the remuneration for the Directors and Key Management Personnel. The Company's policy in this regard is exhibited in its website www.butterflyindia.com.

PERFORMANCE EVALUATION OF DIRECTORS:

The Nomination and Remuneration Committee of the Company has evaluated performance of every Director of the Company for the financial year under review.

The independent Directors of the Company held a separate meeting without the attendance of non-independent Directors and members of management. At the said meeting, they reviewed the performance of non-independent Directors and the Board as a whole including the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Direc- tors. Similarly, at a meeting of the Board of Directors, the Board evaluated the performance of each Independent Directors and the Committees represented by such Independent Directors in accordance with the parameters for such evaluation formulated by the Nomination and Remuneration Committee of the Company.

AUDITORS AND AUDITORS REPORT:

Provisions of Rule 6 (3), illustration 1, of the Companies (Audit and Auditors) Rules 2014, explaining rotation in case of individual auditor, restrict the maximum number of consecutive years for which the Auditors, who were Statutory Auditors of the Company for more than five years prior to commencement of provisions of Section 139(2) of the Companies Act 2013 (the New Act) to three years. Considering that M/s.Rudhrakumar Associates, Chartered Accountants (FRN.007033 S), Chennai, were Auditors of the Company for more than five years prior to commencement of the New Act, in partial modification of the resolution, being resolution No.4, passed at the Annual General Meeting of the Company held on 31st July 2014, appointing the above Auditors for a consecutive period of five years, it is proposed to appoint them as Statutory Auditors from the conclusion of this twenty eighth Annual General Meeting, till the conclusion of the thirtieth Annual General Meeting of the Company, they having been Auditors for the financial year 2014-15. The Company has received a letter from M/s.Rudhrakumar Associates, Chartered Accountants to the effect that their reappointment, if made, would be in accordance with the conditions prescribed under Section 139(2) of the New Act read with the applicable rules and a certificate confirming that they are not disqualified for such reappointment within the meaning of Section 141 of the New Act.

The Board of Directors commend passing of the resolution being Item No.4 of the Notice convening this meeting.

The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.

COST AUDITORS:

The Board has reappointed M/s.S.Mahadevan & Co., Cost Auditors (FRN.000007), No.1, Lakshmi Nivas, K.V.Colony, Third Street, West Mambalam, Chennai - 600 033 for conducting the audit of cost records of the Company for the financial year 2015-16. Their report for financial year 2013-14 was filed on the MCA Portal on 15.11.2014.

SECRETARIAL AUDIT:

The Board appointed Mr.TMurugan, Company Secretary in Practice, [COP No.4393], M22E, Sri Subah Colony, Munusamy Road, K.K.Nagar, Chennai - 600 078 to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended 31.3.2015 is annexed to this report as Annexure II. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

DISCLOSURES:

Audit Committee:

The Audit Committee comprises Independent Directors, viz., Messrs.K.Ganesan (Chairman), V.R.Lakshminarayanan, M. Padmanabhan and A.Balasubramanian (Members), and also V.M.Lakshminarayanan, Chairman & Managing Director of the Company as a Member. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism:

The Company has established vigil mechanism for directors and employees to report genuine concerns pursuant to section 177 (9) and (10) of the Act and Clause 49 (F) of the Listing Agreement.

The Vigil Mechanism of the Company also incorporates a Whistle Blower Policy in terms of the Listing Agreement. Protected disclosures can be made by a Whistle Blower through an email or dedicated telephone line or a letter addressed to the Chairman of the Audit Committee/Executive Director of the Company. The Company's Whistle Blower Policy may be accessed on its website at the link www.butterflyindia.com.

Meetings of the Board:

Eight meetings of the Board of Directors were held during the financial year. For further details please refer to Report on Corporate Governance in this Annual Report.

Conservation of energy, technology, absorption and foreign exchange out go:

Information relating to energy conservation, technology absorption, foreign exchange earned and spent and research and develop- ment activities undertaken by the Company in accordance with Section 134 (3) (m) of the Act read with Rule 8(3) (A) of Companies (Accounts) Rules, 2014, are given in Annexure - III of the Directors' Report.

Extract of Annual Return:

As required pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules 2014, an extract of Annual Return in Form MGT-9 is given in Annexure - IV of the Directors' Report.

Statement pursuant to Rule 5(2) & (3) of Companies (Appointment and remuneration) Rules 2014:

Statement showing the details of employees pursuant to the provisions of Rule 5(2) & (3) of Companies (Appointment and Remu- neration) Rules 2014 is annexed as Annexure - V

Details/disclosure of ratio of remuneration to each Director to the median employee's remuneration, pursuant to provisions of Section 197 (12) read with Rule 5(1) of Companies (Appointment and Remuneration) Rules 2014 are annexed as Annexure - VI

Payment of remuneration made to managerial personnel is in conformity with Schedule V Part II Section II (A) to the Companies Act 2013.

Corporate Social Responsibility Committee:

Pursuant to the provisions of Section 135(1) of the Act, the Company has constituted a Corporate Social Responsibility Committee, consisting two Independent Directors and the Chairman & Managing Director of the Company. The said Committee has formulat- ed 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. However, since the Company did not reach any one of the minimum threshold limits stipulated in Section 135(1) of the Act, the Company is not liable for CSR expenses for the year under review.

Listing with Stock Exchanges:

The Company confirms that it has paid the Annual Listing Fee for the year 2015-16 to both National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd., with whom the equity shares of the Company have been listed.

GENERAL:

Your Directors state that no disclosure or reporting is required in respect of the following items, as they are not applicable for the financial year under review:

1. Details relating to deposits covered under chapter V of the Act.

2. Details regarding investment/loan/guarantee, attracting the provisions of Section 186 of the Act.

3. Issue of equity shares with differential rights as to dividend, voting or otherwise.

4. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

5. Material orders, if any, passed by the Regulators or Courts or Tribunals, which may impact the going concern status and Com- pany's operations in future.

6. Case, if any, filed under the Sexual Harassment of Women at the Work Place (Prevention, Prohibition and Redressal) Act 2013.

There are no material changes and commitments, affecting the financial position of the Company which have occurred between financial year ended on 31.3.2015 and the date of this report.

PERSONNEL

The spirit of trust, transparency and team work has enabled the Company to build a tradition of partnership and harmonious industrial relations. Your Directors record their sincere appreciation of the dedication and commitment of the employees to achieve excellence in all areas of the business.

ACKNOWLEDGEMENTS:

Your Directors take this opportunity to thank, in particular State Bank of Travancore, Industrial Development Bank of India Ltd., Axis Bank, Kotak Mahindra Bank Ltd, State Bank of India, Ratnakar Bank Ltd., Aditya Birla Finance Ltd., Fullerton India Credit Company Ltd, Tamil Nadu Civil Supplies Corporation, Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd for the co-operation extended by them. Our thanks are also due to employees at all levels, suppliers, distributors, dealers and customers for their continued support.

Your Directors also thank the shareholders for their continued confidence and trust placed by them with the Company.

For and on behalf of the Board Navalur - 600 130 V.M.LAKSHMINARAYANAN Date : 10.06.2015 Chairman & Managing Director


Mar 31, 2013

The Directors have pleasure in presenting this Twenty Sixth Annual Report together with the Audited Statement of Accounts, of the Company for the financial year ended on 31st March, 2013.

FINANCIAL RESULTS (Rs. in Lakhs) Financial year Financial year ended on ended on 31.03.2013 31.03.2012

Sales 80699.66 64241.10

Operating Expenditure 73721.30 58483.59

Operating Profit 6978.36 5757.51

Other Income 513.76 563.75

Profit/(Loss) before Depreciation and Finance cost 7492.12 6321.26

Finance Cost 2233.15 1754.89

Depreciation 400.59 167.01

Profit/floss) before Tax 4858.38 4399.36

Exceptional & Extraordinary items (87.17) 24.65

IT for the current period (1450.71) (1,327.55)

Excess Provision (Net Deferred Tax) 21.80 (55.55) Profit/(Loss) after Tax 3342.30 3040.92

DIVIDEND

Taking into account that the Company has earned adequate net profits in the financial year under review, your Directors are pleased to recommend a dividend of Rs..2.50/- per equity share on 1,78,79,551 fully paid up equity shares of Rs..10/- each, after transferring Rs..335.16 Lakhs to General Reserve. The total cash outflow on account of this dividend, including tax on dividend, is Rs..522.95 lakhs.

REVIEW OF OPERATIONS

During the period under review, sales turnover recorded impressive growth of 25.62% and profit before interest and depreciation also improved by 18.52% as compared to the previous financial year. After providing for interest, depreciation and exceptional and extraordinary items before tax, the Company earned a profit of Rs..47.71 Crores. The Company is now focused on a growth curve, both in volume of sales and areas of operation and the result achieved is to be viewed in this perspective.

Supply of Table Top Wet Grinders and Mixer Grinders against the tender of Tamil Nadu Civil Supplies Corporation largely contributed to the improvement in its sales turnover.

AWARDS AND RECOGNITION

At the Non-Fuel Channel Partners'' Meet of IOCL held at Dharampur (Kasuali), Himachal Pradesh on 04th May, 2013, the Company was awarded a Certificate of Excellence for achieving on All India basis the highest sales of LPG Stoves co-branded with Indane during the financial year 2012-13.

CURRENT YEAR''S OPERATIONS

Taking into account the effective steps taken by the Company for accomplishing PAN INDIA market for its products, both for branded and institutional sales, and in anticipation of repeat orders from the Government of Tamil Nadu for supply of Table Top Wet Grinders / Mixer Grinders, your Company expects to sustain its growth rate.

The Company has recently introduced hard anodized Aluminium Pressure Cookers, new Mixer Grinder and Glass-Top LPG Stove models. In addition, new products like Hand Blenders and Chimneys have also been introduced. A host of new products and new models of existing products are in the pipeline.

The persistent inflationary trend in the country might affect the disposable income of the individuals which, in turn, can affect the Company''s turnover/margins. Also, in view of the continuing free distribution programme of Table Top Wet Grinders and Mixer Grinders to eligible category of people in Tamil Nadu, turnover of these products through the regular distribution channel may be affected

OPENING OF BRANCH IN UNITED KINGDOM

With a view to establish regular exports of its products, the Company incorporated its branch office in the United Kingdom on 30th October 2012. This overseas Branch Office will take care of the export business of the Company in the UK and the neighbouring European Countries.

DIRECTORS

At the meeting of the Board of Directors of the Company held on 30th May 2013, the Board appointed Mr.T.R.Srinivasan as an Independent Additional Director with effect from 01.06.2013, who will hold office up to the date of this Annual General Meeting. The Company has received a Notice under Section 257 of the Companies Act 1956 proposing his candidature as a Director of the Company. Mr.Srinivasan is also willing to act as Director, if appointed.

At the same Board meeting, Mr.D.Krishnamurthy, Company Secretary was appointed as additional Director and Executive Director-cum-Company Secretary of the Company with effect from 01.06.2013, who will hold office up to the date of this Annual General Meeting. The Company has received a Notice under Section 257 of the Companies Act 1956 proposing his candidature as a Director of the Company. Mr.Krishnamurthy is also willing to act as Director, if appointed.

The present tenure of Messrs.V.M.Seshadri, Managing Director and V.M.Gangadharam, Executive Director expires respectively on 31.5.2014 and 30.9.2013. The Remuneration Committee at its meeting held on 27.5.2013 and the Board of Directors at its meeting held on 30.5.2013 have recommended their reappointment without any change in their existing remuneration package for a further term of three years respectively w.e.f. 1.6.2014 and 1.10.2013.

Messrs.A.Balasubramanian, K.J.Kumar and GS.Samuel, Directors retire by rotation from the Board under Company''s Articles of Association and being eligible offer themselves for reappointment.

MANAGEMENT DISCUSSION AND ANALYSIS

The Directors'' comments on Management Discussion and Analysis are restricted to the areas which are relevant to the current scenario of the Company and outlook.

CORPORATE GOVERNANCE l

Your Company conforms to the norms of Corporate Governance. In accordance with the Listing Agreement with the Stock Exchanges, a Compliance Report on Corporate Governance along with a Certificate of compliance from the Auditors forms part of this report.

AUDITORS

Messrs.Rudhrakumar Associates, Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and being eligible have expressed their willingness to continue in office, if reappointed.

FIXED DEPOSITS

The Company has not accepted any deposits from the public and, as such, there are no outstanding in terms of the Companies (Acceptance of Deposits) Rules 1975.

REPORT ON ENERGY CONSERVATION AND R&D ACTIVITIES

Information relating to energy conservation, foreign exchange earned and spent and research and development activities undertaken by the Company in accordance with the provisions of Section 217(1 )(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules 1988 are given in Annexure "A" of the Directors'' Report.

PARTICULARS OF EMPLOYEES [SECTION 217 (2A)]

The particulars as required under Section 217(2A) of the Companies Act 1956 are given in Annexure "B" of the Directors'' Report

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956 your Directors confirm:

In the preparation of the Annual Accounts:

i. the applicable accounting standards have been followed.

ii. the Directors 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 the results of the Company for the year.

iii. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

iv. "Going concern" basis has been followed.

The financial statements have been audited by Messrs.Rudhrakumar Associates, Chartered Accountants, the Statutory Auditors and their report is attached to the Accounts.

PERSONNEL

The spirit of trust, transparency and team work has enabled the Company to build a tradition of partnership and harmonious industrial relations. Your Directors record their sincere appreciation of the dedication and commitment of the employees to achieve excellence in all areas of the business.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to thank, in particular, Industrial Development Bank of India Ltd., State Bank of Travancore, Bank of Baroda, The South Indian Bank Ltd, Axis Bank, ING Vysya Bank Ltd, PEC Ltd, Religare Finvest Ltd, Fullerton India Credit Company Ltd, Tamil Nadu Civil Supplies Corporation, Indian Oil Corporation Ltd., Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited for the co-operation extended by them. Our thanks are also due to the suppliers, distributors, dealers and customers for their continued support.

Your Directors also thank the shareholders for their continued confidence and trust placed by them with the Company.

For and on behalf of the Board

V.M.LAKSHMINARAYANAN

Chairman & Managing Director

Navalur-603 103

Date: 30.5.2013


Mar 31, 2012

The Directors have pleasure in presenting this Twenty fifth Annual Report together with the Audited Statement of Accounts, of the Company for the financial year ended on 31 st March, 2012.

FINANCIAL RESULTS: Rs. In lakhs

Financial year Financial year

ended on of 9 months

31.03.2012 ended on 31.03.2011

Sales 64,241.10 22,070.48

Operating Expenditure 58,483.59 20,051.97

Operating Profit 5,757.51 2,018.51

Other income 563.75 272.28

Profit/(Loss) before Depreciation and Finance Cost 6,321.26 2,290.79

Finance Cost 1,754.89 674.25

Depreciation 167.01 95.46

Profit/(loss) before Tax 4,399.36 1,521.08

Exceptional & Extraordinary items 24.65 117.79

IT for the current period (1,327.55) (549.29)

Excess Provision (Net of Deferred Tax) (55.55) 429.55

Profit/(Loss) after Tax 3,040.91 1,519.13

DIVIDEND:

Taking into account that the Company has earned adequate net profits in the financial year under review, your Directors are pleased to recommend a dividend of Rs.2/- per equity share on 1,78,79,551 fully paid up equity shares of Rs. 10/- each. The total cash outflow on account of this dividend, including tax on dividend, is Rs.415.59 lakhs.

REVIEW OF OPERATIONS:

During the period under review, sales turnover on an annualized basis recorded phenomenal growth of 141 % and profit before interest and depreciation on an annualized basis also improved as compared to the previous financial year. After providing for interest and depreciation, the Company earned a profit of Rs.30.41 crores.

Supply of Table Top Wet Grinders and Mixer Grinders against the tender of Tamilnadu Civil Supplies Corporation largely contributed to the improvement in sales turnover.

AWARDS AND RECOGNITION:

Your Company won National Award-2010, First Prize, awarded by Government of India, Ministry of Micro, Small and Medium Enterprises for its LPG Operated Stoves/Appliances. Also, appreciating your Company's performance and growth during the financial year 2011 -12, M/s. Indian Oil Corporation Limited(IOCL) has presented a memento for having stood first on All India basis in turnover, with respect to LPG Stoves supplied through the LPG gas distributors of IOCL.

CURRENT YEAR'S OPERATIONS:

Taking into account the steps taken by the Company for establishing PAN INDIA market for its products and in anticipation of repeat orders from the Government of Tamilnadu for supply of Mixer Grinders and Table Top Wet Grinders, your Company expects to sustain its growth rate. However, the persistent inflationary trend in the country could have some effect in the disposable income of the individuals which, in turn, can affect the Company's turnover/margins. Also, in view of the free distribution programme of Table Top Wet Grinders and Mixer Grinders to eligible category of people in Tamilnadu, turnover of these products through the regular distribution channel may be affected.

MERGER OF GANGADHARAM APPLIANCES LIMITED:

The Hon'ble Board for Industrial and Financial Reconstruction at its Review Hearing of Case No. 279/98 of M/s.Gangadharam Appliances Limited (GAL) held on 17-08-2011 sanctioned the Modified Rehabilitation cum Merger Scheme (MS-11) submitted by GAL. The merger scheme envisaged GAL's merger with the Company, as per scheme already approved by the members at the Extraordinary General Meeting of the Company held on 09th September, 2010. After completing statutory requirements, we merger became effective on 27th September 2011, with retrospective effect from 01 st January, 2009. This merger will facilitate the Company's stride along the road for its accelerated growth.

AUTHORISED SHARE CAPITAL

Taking into account the Company's future growth plans, members approved enhancement of its Authorized Share Capital from Rs. 10 crores to Rs.25 crores at the Annual General Meeting held on y ,-08-2011. Added to this, in terms of the Rehabilitation-cum-Merger Scheme as mentioned above, the Authorized Share Capital of the Company after the said merger stood enhanced by a further amount of Rs. 15 crores (being unabsorbed authorized share capital of GAL), i.e., from Rs.25 crores to Rs.40 crores.

ISSUED AND PAID UP CAPITAL

In terms of the Rehabilitation - cum - Merger Scheme stated above, 57,93,950 Equity Shares of Rs. 10/- each of the Company were allotted to the members of the erstwhile Gangadharam Appliances Limited on 14th November, 2011. With this issue, the Company ' s issued and paid up capital increased from 96,34,601 Equity Shares of Rs. 10/- each to 1,54,28,551 Equity Shares of Rs. 10/- each as on 31st March, 2012.

The newly issued shares will rank paripassu with the existing equity shares of the Company in all respects, including for payment of dividend for financial year ended on 31 -3-2012.

PREFERENTIAL ISSUE

At the Extraordinary General Meeting of the Company held on 16th April, 2012, members approved through a Special Resolution, Preferential Issue of24,51,000 (Twenty four lakhs fifty one thousand) Equity Shares of Rs. 10/- each at apremium of Rs.398/- per equity share aggregating Rs. 100,00,08,000/*- (Rupees One hundred crores eight thousand) in favour of M/s.Reliance Alternative Investments Fund- Private Equity Scheme-I (acting through Reliance Alternative Investments Services Private Limited). The subscription money was received from the said Private Equity Investor on 11 th May, 2012 and the aforesaid Equity Shares were issued in their favour. These shares will also rank paripassu with ihe existing equity shares of the Company in all respects.

The Company proposes to utilize the above amount towards settlement of its high cost term loans (Rs.30 crores), Capital expenditure for creating additional capacity/backward integration (Rs.40 crores) and future Working Capital margin requirements (Rs.30 crores).

DIRECTORS: w

At the Extraordinary General Meeting of the Company held on 24th December, 2011, members through a Special Resolution approved the appointment of Mr. V.M.Lakshminarayanan, who hitherto w|s Non-Executive Chairman of the Company, as Managing Director of the Company for a period of three years with effect from 01 st December, 2011. Accordingly, Mr. V.M.Lakshminarayanan has become life Managing Director of the Company, besides being Chairman.

Mr. V.R.Sivaraman, who was Director of the Company, resigned on 02nd January, 2012 due to his old age. Your Directors place on record their sincere appreciation of the valuable contribution of Mr. V.RSivaraman during his long tenure as the Director of the Company. n

At the meeting of the Board of Directors of the Company held on 14th November, 2011, the Boar$ appointed Mr. ABalasubramanian as an Additional Director with effect from 14th November, 2011, when will hold office up to the date of this Annual General Meeting.

The Company has received a Notice u/s.257 of the Companies Act, 1956 proposing his candidature as a Director of the Company. Mr.Balasubramanian is also willing to act as Director, if appointed. t;

With a view to comply with the provisions of Clause 49 (1 A) of the Listing Agreement, at the meeting of the Board of Directors held on 11 th May, 2012, Mr.K. J.Kumar was appointed as an Independent Director in the casual vacancy created by the resignation of Mr. V.R.SiVaraman. At the same meeting, Mr.G.S.Samuel was also appointed as an Additional Director (Independent). Both Messrs.K. J.Kumgt and G.S.Samuel will hold office upto the date of this Annual General Meeting. The Company has received Notices under Section 257 of the Companies Act, 1956 proposing their candidature as Directors of the Company .They are also willing to act as Directors, if appointed.

In terms of Article 112 of the Articles of Association of the Company amended through Special Resolution at the Extraordinary General Meeting held on 16-04-2012, the Private Equity Investor has appointed Mr.R.S.Prakash as their Nominee Director, who will be a Non-Executive Director not liable to retire on a rotational basis and not required to hold any qualification shares. In terms of the said Artiste Mr.Prakash has to be elected as a Director at the ensuing Annual General Meeting of the Company, who shall hold such office until the investor changes or withdraws his nomination.

Pending approval of the Central Government for the increase in the number of Directors beyond 12, it became necessary for one of the non-independent Directors, viz. Mr.D.Krishnamurthy, to step down from the Board. The Board, appreciating his service as Executive Director of the Company, agreed that he could be made Executive Director of the Company, as soon as the Central Government approval for increasing the strength of the Board is received and one more independent Director is appointed.

Messrs.M.Padmanabhan, K.Ganesan and V.R.Lakshminarayanan, Directors retire by rotation from the Board under Company's Articles of Association and being eligible, offer themselves for reappointment.

MANAGEMENT DISCUSSION AND ANALYSIS:

The Directors comments on Management Discussion and Analysis are restricted to the areas which are relevant to the current scenario of the Company and outlook.

CORPORATE GOVERNANCE:

Your Company conforms to the norms of Corporate Governance. In accordance with the Listing Agreement with the Stock Exchanges, a Compliance Report on Corporate Governance along with a Certificate of compliance from the Auditors forms part of this report.

CHANGE OF ARTICLES OF ASSOCIATION:

# - At the Extraordinary General Meeting of the Company held on 16th April, 2012, members have approved a new set of Articles of Association in substitution of the previous Articles of Association of the Company, which has come into force and effect from the said date of the meeting.

AUDITORS:

Messrs.Rudhrakumar Associates, Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and being eligible have expressed their willingness to continue in office, if reappointed

COST AUDITOR :

Central Government has issued directives for the maintenance of Cost Records for the Company's own manufactured products and the Cost Audit thereof, which has been complied with by the Company.

FIXED DEPOSITS:

The Company has not accepted any deposits from the public and, as such, there are no outstanding in terms of the Companies (Acceptance of Deposits) Rules 1975.

PARTICULARS OF EMPLOYEES (SECTION 217 (2A)):

There was no employee covered by the provisions of Section 217(2A) of the Companies Act, 1956.

REPORT ON ENERGY CONSERVATION AND R&D ACTIVITIES:

Information relating to energy conservation, foreign exchange earned and spent and research and development activities undertaken by the Company in accordance with the provisions of217(l)(e)of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules 1988 are given in Annexure "A" of the Directors' Report.

DIRECTORS' RESPONSIBILITY STATEMENT:

Statement under sub-section (2 AA) of Section 217 of the Companies Act, 1956 ("The Act").

In the preparation of the Annual Accounts: i the applicable accounting standards have been followed.

ii. the Directors 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 the results of the Company for the year.

iii proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

iv. "Going concern" basis has been followed.

The financial statements have been audited by Messrs.Rudhrakumar Associates, Chartered Accountants, the Statutory Auditors and their report is attached to the Accounts.

GRATUITY/SUPERANNUATION FUND

Subject to approval of Commissioner of Income Tax, the Company has formed separate Trusts for Gratuity and Superannuation Fund effective from 01st March, 2012. Messrs.V.M.Lakshminarayanan, Chairman & Managing Director, V.M.Balasubramaniam, Director and D.Krishnamurthy, Company Secretary have been appointed as Trustees for both these Trust Funds.

PERSONNEL

The spirit of trust, transparency and team work has enabled the Company to build a tradition of partnership and harmonious industrial relations. Your Directors record their sincere appreciation of the dedication and commitment of the employees to achieve excellence in all areas of the business.

ACKNOWLEDGEMENTS:

Your Directors take this opportunity to thank, in particular, Industrial Development Bank of India Ltd., State Bank of Travancore, Bank of Baroda, The South Indian Bank Ltd, PEC Ltd,ReligareFinvest Ltd, Tamilnadu Civil Supplies Corporation, Indian Oil Corporation Ltd., Bharat Petroleum Corporation Limited and Hindusan Petroleum Corporation Limited for the co-operation extended by them. Our thanks are also due to the suppliers, distributors, dealers and customers for their continued support.

Your Directors also thank the shareholders for their continued confidence and trust placed by them with the Company.

For and on behalf of the Board

V.M.LAKSHMINARAYANAN

Chairman & Managing Director

Chennai-600 018

Date: 20th July, 2012


Mar 31, 2011

REPORT TO SHAREHOLDERS

The Directors have pleasure in presenting this Twenty fourth Annual Report together with the Audited Statement of Accounts, of the Company for the financial year of nine months ended on 3181 March, 2011.

FINANCIAL RESULTS: (Rs. in lakhs)

Financial year Financial year of 9 months of 18 months ended on ended on 31.06.2011 30.06.2010

Sales 22070.48 27162.38

Operating Expenditure 20199.98 24320.83

Operating Profit 1870.50 2841.55

Other Income 272.28 182.50

Profit/(Loss) before Depreciation and interest 2142.78 3024.05

Interest 526.24 665.11

Depreciation 95.46 130.15

Profit/(loss) before Tax 1521.08 2228.79

Fringe Benefit Tax -- (0.83)

Income Tax for the current period (549.29) (1019.87)

Interest Reclaimed by Bank -- (132.00)

Deferred Tax Assets/ (Liability) (7.76) 482.14

^Profit/fLoss) after Tax 1519.13 1558.23

DIVIDEND:

Taking into account that the Company has earned net profits consecutively in the last financial year and the current financial year, wiping off the entire carry forward loss, your Directors are pleased to recommend a dividend of Re.1/- per equity share on 96,34,601 equity shares of Rs.10/- each. The total cash outflow on account of this dividend, including tax on dividend, is Rs. 112.35 lakhs.

REVIEW OF OPERATIONS:

During the period under review, sales turnover on an annualised basis improved by 47% and profit before interest and «B»preciation on an annualised basis also improved as compared to the previous financial year. After providing for interest and depreciation, the Company earned a profit of Rs. 15.21 crores.

In the early morning hours of 14th December 2010, an unfortunate fire accident took place at our factory premises in the Pressure Cooker Division. Inventories worth approximate Rs.1.18 crores got damaged in the fire. The necessary claim with the Insurance Company has been made, as indicated vide Note No.7 of Schedule 17, Notes on Accounts.

CURRENT YEAR'S OPERATIONS:

Taking into account the increasing trend of consumers and also in anticipation of handsome orders from the Govern- ment of Tamil Nadu for supply of Mixer Grinders and Table Top Wet Grinders as a part of its election manifesto, your Company expects to sustain its growth rate. However, the persisting inflationary trend in the country could have some effect in the disposable income of the individuals, which to some extent can affect the Company's turnover.

DIRECTORS:

A* the meeting of the Board of Directors.of the Company held on 12th May, 2011, the Board appointed Mr.V.M.Seshadri as an Additional Director with effect-from 1st June, 2011. He holds office upto the date of this Annual General Meeting.

29

The Company has received a Notice u/s.257 of the Companies Act, 1956 proposing his candidature as a Director of the Company.

Messrs.V.M.Lakshminarayanan, K.Ganesan and V.R.Lakshminarayanan, Directors retire by rotation from the Board under Company's Articles of Association and being eligible offer themselves for reappointment.

MANAGING DIRECTOR:

Mr.V.M.Balasubramaniam, vide his letter dated 2.5.2011, expressed his desire to resign as Managing Director of the Company and to continue as a Non-Executive Director on the Board with effect from 1st June, 2011. Your Directors place on record their sincere appreciation of the valuable contribution of Mr. V.M. Balasubramaniam in turning around the Company without seeking any Rehabilitation Scheme from the Hon'ble BIFR.

The Remuneration Committee, at its meeting held on 7.5.2011 endorsed to the Board the appointment of Mr.V.M.Seshadri, who is a technocrat having 'hands on' experience of about four decades in the home appliances industry, as Managing Director of the Company with effect from 1st June, 2011 for a period of three years. The Committee also approved payment of the same remuneration as Mr.V.M.Balasubramaniam to Mr.Seshadri. The Board approved the appointment and remuneration payable to him, subject to approval of the Shareholders.

MANAGEMENT DISCUSSION AND ANALYSIS:

The Directors' comments on Management Discussion and Analysis are restricted to the areas which are relevant to the current scenario of the Company and outlook.

CORPORATE GOVERNANCE:

Your Company conforms to the norms of Corporate Governance. In accordance with the Listing Agreement with the Stock Exchanges, a Compliance Report on Corporate Governance along with a Certificate of compliance from the Auditors forms part of this report.

MERGER OF GANGADHARAM APPLIANCES LIMITED:

The proposal submitted by Gangadharam Appliances Ltd - (Transferor Company) for its merger with the Company to the Hon'ble Board for Industrial and Financial Reconstruction (BIFR) effective from 1st January, 2009 has been circulated by Hon'ble BIFR to all Government Departments from whom any reliefs/concessions have been sought. The date for hearing the objections/suggestions, if any received, is fixed on 17th August, 2011.

CHANGE OF OBJECTS CLAUSE OF MEMORANDUM OF ASSOCIATION :

In view of the merger of the sick Company Gangadharam Appliances Ltd. (GAL) with the company in the near future, it has become necessary to alter the main objects clause of Memorandum of Association of the company incorporating the products manufactured by GAL and the product range covered in the objects clause of its Memorandum of Association. Accordingly, a Special Resolution for giving effect to the proposed alteration has been sent to the Share- holders for being passed by the Postal Ballot Process, as required by Section 192A of the Companies Act, 1956 read with Companies (passing of Resolution by Postal Ballot) Rules, 2011.

AUDITORS' REPORT:

The observations made by Auditors vide para 9 of the Annexure 'A' to the Auditors' Report about slight delay in a few cases in respect of deposit of undisputed statutory liabilities and with regard to non-payment of Income Tax are self explanatory.

AUDITORS:

Messrs.Rudhrakumar Associates, Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and being eligible, have expressed their willingness to continue in office {,reappointed.

FIXED DEPOSITS:

The Company has not accepted any deposits from the public and, as such, there are no outstanding in terms of the Companies (Acceptance of Deposits) Rules 1975.

PARTICULARS OF EMPLOYEES (SECTION 217 (2A)):

There was no employee covered by the provisions of Section 217(2A) of the Companies Act, 1956.

REPORT ON ENERGY CONSERVATION AND R&D ACTIVITIES:

Information relating to energy conservation, foreign exchange earned and spent and research and development activities undertaken by the Company in accordance with the provisions of 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules 1988 are given in Annexure "A" of the Directors' Report.

DIRECTORS' RESPONSIBILITY STATEMENT:

Statement under sub-section (2AA) of Section 217 of the Companies Act, 1956 ("The Act").

In the preparation of the Annual Accounts:

' i. the applicable accounting standards have been followed.

ii. the Directors have selected such accounting policies and applied them consistently and made judgements 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 the results of the Company for the year.

iii. proper and sufficient care has been taken for the maintenance of adequate accounting records in accor- dance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

iv. "Going concern" basis has been followed.

The financial statements have been audited by Messrs.Rudhrakumar Associates, Chartered Accountants, the Statu- tory Auditors and their report is attached to the Accounts.

PERSONNEL

The spirit of trust, transparency and team work has enabled the Company to build a tradition of partnership and harmonious industrial relations. Your Directors record their sincere appreciation of the dedication and commitment of the employees to achieve excellence in all areas of the business.

ACKNOWLEDGEMENTS:

Your Directors take this opportunity to thank, in particular, Industrial Development Bank of India Ltd., State Bank of Travancore, Bank of Baroda, The South Indian Bank Ltd., The South Indian Bank Ltd., PEC Ltd., and Religare Finvest Ltd. for the co-operation extended by them. Our thanks are also due to the suppliers, distributors, dealers and customers for their continued support.

Your Directors also thank the shareholders for their continued confidence and trust placed by them with the Company.

For and on behalf of the Board

V.M.LAKSHMINARAYANAN

Chairman

Chennai - 600 018.

Date:07.07.2011


Jun 30, 2010

The Directors have pleasure in presenting this Twenty Third Annual Report together with the Audited Statement of Accounts of the Company for the financial year of eighteen months ended on 30th June, 2010.

FINANCIAL RESULTS: (R inlakhs)

Financial year of Financial year of 18 months ended 18 months ended on 30.06.2010 on 31.12.2008

Sales 27162.38 16055.57

Operating Expenditure 24371.76 14646.30

Operating Profit 2790.62 1409.27

Other Income 182.50 435.81

Profit/(Loss) before Depreciation and interest 2973.12 1845.08

Interest 614.18 313.74

Depreciation 130.15 170.89

Profit/(loss) before Tax 2228.79 1360.45,

Prior period expenses - (5.49)

Fringe Benefit Tax (0.83) (6.40)

Income Tax for the current period (1019.87) (462.42)

Interest Reclaimed by Bank (132.00) -

Deferred Tax Assets/(Liability) 482.14 64.00

Profit/(Loss) after Tax 1558.23 950.14

DIVIDEND:

Taking into account the necessity to conserve working capital requirements, your Directors regret their inability to recommend any dividend forthe year.

REVIEW OF OPERATIONS:

During the period under review, despite constraints in bank finance for working capital for major part of the period, sales turnover improved by 69.18 % and profit before interest and depreciation also improved as compared to the previous financial year. After providing for interest and depreciation the Company earned a profit before tax of Rs.22.29 crores.

DEREGISTRATION FROM BIFR:

With the net worth of the Company having become positive as on 31.12.2008 at the request of the Company, the Honble BIFR at its hearing held on 31.08.2009 deregistered the Companys name from the list of sick companies.

CURRENT YEARS OPERATIONS:

Barring unforeseen circumstances your Directors are hopeful of achieving improved performance in the current financial year.

DIRECTORS:

Messrs.V.R.Sivaraman, M.Padmanabhan and D.Krishnamurthy, Directors retire by rotation from the Board under Companys Articles of Association and bejng eligible offer themselves for reappointment.

MANAGEMENT DISCUSSION AND ANALYSIS:

The Directors comments on Management Discussion and Analysis are restricted to the areas which are relevant to the current scenario of the Company and outlook.

CORPORATE GOVERNANCE:

Your Company conforms to the norms of Corporate Governance. In accordance with the Listing Agreement with the Stock Exchanges, a compliance report on Corporate Governance along with a certificate from the Auditors forms part of this report.

MERGER OF GANGADHARAM APPLIANCES LIMITED:

Aproposal has been submitted by Gangadharam Appliances Ltd (GAL-Transferor Company) for its merger with the Company to the Honble Board for Industrial and Financial Reconstruction (BIFR) effective from 1st January, 2009. At the Extraordinary General Meeting of the Company held on 9th September, 2010, the shareholders unanimously approved the Scheme for the purpose of proposed merger, subject to approval of the Honble BIFR.

AUDITORS:

Messrs.Rudhrakumar Associates, Chartered Accountants, retire at the conclusion of the forthcoming Annual General Meeting and being eligible have expressed their willingness to continue in office, if reappointed.

FIXED DEPOSITS:

The Company has not accepted any deposits from the public and, as such, there are no outstanding in terms of the Companies (Acceptance of Deposits) Rules 1975.

PARTICULARS OF EMPLOYEES (SECTION 217 (2A)):

There was no employee covered by the provisions of Section 217(2A) of the Companies Act, 1956.

REPORT ON ENERGY CONSERVATION AND R&D ACTIVITIES:

Information relating to energy conservation, foreign exchange earned and spent and research and development activities undertaken by the Company in accordance with the provisions of 217(1 )(e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Board of Directors) Rules 1988 are given in Annexure "A" of the DirectorsReport.

DIRECTORS RESPONSIBILITY STATEMENT:

Statement under sub-section (2AA) of Section 217 of the Companies Act, 1956 ("The Act").

In the preparation of the Annual Accounts:

i. The applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgements 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 the results of the Company for the year.

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

iv. "Going concern" basis has been followed.

The financial statements have been audited by Messrs.Rudhrakumar Associates, Chartered Accountants, the Statutory Auditors and their report is appended to the Accounts.

PERSONNEL

The spirit of trust, transparency and team work has enabled the Company to build a tradition of partnership and harmonious industrial relations. Your Directors record their sincere appreciation of the dedication and commitment of the employees to achieve excellence in all areas of the business.

ACKNOWLEDGEMENTS:

Your Directors take this opportunity to thank, in particular Industrial Development Bank of India Ltd., State Bank of Travancore, Bank of Baroda, The South Indian Bank Ltd, PEC Ltd. and SBI Global Factors Ltd, for the co-operation extended by them. Our thanks are also due to the suppliers, distributors, dealers and customers for their continued support.

Your Directors also thank the shareholders for their continued confidence and trust placed by them with the Company.

For and on behalf of the Board V.M.LAKSHMINARAYANAN Chairman Chennai-600018. Date: 30.09.2010

 
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