Dear Shareholders,
The Directors have pleasure in presenting the 29th Annual Report of the Company, along with the Audited Financial Statements of the Company for the financial year ended 31st March 2018.
FINANCIAL HIGHLIGHTS
The Company’s performance during the year as compared with previous year is summarized below:
(Rs. In Crores)
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Particulars
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FY 2017-18
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FY 2016-17
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Revenue From operations
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203.54
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192.05
|
|
Gross Profit / (Loss) before interest and depreciation
|
12.80
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8.97
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|
Interest
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6.79
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6.59
|
|
Profit / (Loss) before depreciation and tax
|
6.01
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2.38
|
|
Depreciation
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6.89
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7.03
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Profit / (Loss) before Exceptional items
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(0.88)
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(4.65)
|
|
Exceptional Item - Expense/ (Income)
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0.00
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8.22
|
|
Profit/(Loss) after Exceptional items
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(0.88)
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(12.87)
|
|
Profit/ (Loss) before tax
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(0.88)
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(12.87)
|
|
Provision for Taxation
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0.00
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0.00
|
|
Profit / (Loss) after tax
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(0.88)
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(12.87)
|
|
Other Comprehensive Income
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(0.42)
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(0.56)
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Balance carried to Balance Sheet
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(1.30)
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(13.43)
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PERFORMANCE REVIEW
The clothing Export scenario continued to be fiercely competitive. Textile and clothing exports slid 0.4% in the last financial year (2017-18) to $ 35 billion as apparel exports fell. While exports of cotton yarn, fabrics and made ups grew 4%, outbound apparel shipments registered a 4% decline, reducing from $ 17.3 billion to $ 16.7 billion. Garment exports from Vietnam and Bangladesh were increasing whereas Garment production in India has declined in the last 10 months. As pricing are too competitive, great effort is necessary to bag orders. Furthermore Duty Drawback element also reduced by about 70% during the period.
IMF said India’s growth is expected to rise from 6.7% in 2017-18 to 7.3% in 201819 and 7.5% in 2019-20, as the effects of demonetization and the introduction of the goods and services tax fade.
The performance of the Company has to be viewed from the context of the back drop of the business conditions that it was compelled to operate during the year.
Pursuant to the notification, issued by the Ministry of Corporate Affairs dated February 16, 2015 relating to the Companies (Indian Accounting Standards) Rules, 2015, the Company has adopted “IND AS” with effect from 1st April 2017 with transition date of 1st April 2016. Accordingly, the financial statements for the year 2017-18 have been prepared in compliance with the Companies (Indian Accounting Standards) Rules, 2015.
The Company has turned in a satisfactory performance in the year 2017-18 with a net Revenue from operations at Rs.203.54 crs reflecting ~ 6 percent rise vis-a-vis Rs.192.05 crs recorded in the previous year. The Operating EBITDA stood at Rs.12.80 crs against Rs.8.97 crs the previous year.
A detailed analysis of the financial results is given in the Management Discussion and Analysis Report which forms part of this report.
CHANGES TO SHARE CAPITAL
Preferential Allotment
Allotment of Equity Shares on Preferential basis upon conversion of Warrants: “During the financial year 2016-17, the Company has issued and allotted 56,96,756 Warrants at a price of Rs.11.41 (including premium of Rs.1.41 per Warrant) per Warrant to promoters and Managing Director convertible into equivalent number of Equity Shares on preferential basis in accordance with and in terms of the provisions of Sections 39, 42 and 62(1)(c) of the Companies Act, 2013 read with rules framed thereunder, Chapter VII of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to time and other applicable laws. Out of the 56,96,756 warrants allotted, 35,05,696 Warrants were converted into equivalent number of Equity Shares during the year under review.
Consequent upon allotment of 35,05,696 equity shares on preferential basis, the paid up equity share capital of the Company has been increased from Rs.42,07,12,490/-to Rs. 45,57,69,450.
The entire issue proceeds were utilized for Augmenting Long Term Capital and for general corporate purpose. This equity infusion reiterates the promoter’s commitment towards the business of the company and confidence in its growth prospects and will strengthen the balance sheet of the company.
DIVIDEND
In view of the loss for the year under review, no amount is proposed to be transferred to the reserve(s) and your Directors have not recommended payment of any dividend for the year under review.
TRANSFER TO RESERVES
During the year under review, the Company has not transferred any amount to the reserves.
FINANCE AND ACCOUNTS
The financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of Companies Act, 2013, (the ‘Act’) and other relevant provisions of the Act. The financial statements up to and for the year ended March 31, 2017, were prepared in accordance with the Companies (Accounting Standards) Rules, 2006, notified under Section 133 of the Act (‘Previous GAAP’). The financial statements for the year ended March 31, 2018 is the first financial statements of the Company under Ind AS.
Due to the losses incurred by the Company in the earlier years, there is no provision for Income Tax. The Company has recognized Deferred Tax Asset in unabsorbed depreciation and accumulated losses to the extent of corresponding deferred tax liability on the difference between the book balances and written down value of fixed assets under Income Tax.
DEPOSITS
During the year under review, the Company has not accepted or renewed any fixed deposits from the public falling under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014. Thus, as on March 31, 2018, there were no deposits which were unpaid or unclaimed and due for repayment.
CASH FLOW STATEMENT
In conformity with the provisions of Section 134 of Companies Act, 2013 and Regulation 34 2(c) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Cash flow statement for the year ended 31st March, 2018 forms part of this Annual Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All the transactions with the related parties entered during the year were in the ordinary course of business and on Arm’s length basis. Details of such transactions are given in the accompanying financial statements. The Company has framed a policy on Related Party Transactions and the same has been displayed in the Company’s website www. celebritygroup.com
Further, the prescribed details of related party transactions of the Company in Form No. AOC-2, in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure II to this Report.
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES
The Company does not have any subsidiary or associate or joint venture company.
CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION & ANALYSIS
The Corporate Governance Report and Management Discussion & Analysis which forms part of this Report are set out as separate Annexures, together with the Certificate from the Secretarial Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated in Schedule V of Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
COMPLIANCE WITH CODE OF CONDUCT
The Company has framed a Code of Conduct for all the members of the Board and Senior Management personnel of the Company. The Code of Conduct is available on the Company’s website: www.celebritygroup.com. All members of the Board and senior management personnel have affirmed compliance to the Code as on March 31, 2018.
As stipulated under Regulation 34 (3) and Schedule V (D) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 a declaration Signed by Mr. Charath Ram Narsimhan, Managing Director to this effect is annexed to the report on Corporate governance, which forms part of this annual report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In compliance with the requirements of Section 135 and Schedule VII of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the Board of Directors have constituted a CSR Committee. The details of the Committee are provided in the Corporate Governance Report, which forms part of this Annual Report.
As there have been carry forward losses, provisions of Section 135 of Companies Act, 2013 pertaining to Corporate Social Responsibility are not applicable to the Company.
The contents of the CSR Policy of the Company as approved by the Board on the recommendation of the CSR Committee is available on the website of the Company and can be accessed through the website www.celebritygroup.com.
ESTABLISHMENT OF VIGIL MECHANISM
Pursuant to Section 177 (9) of Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company has a vigil mechanism established, to enable all employees and the directors to report in good faith about any violation of the Policy. The Audit Committee of the Board oversees the functioning of Whistle Blower Policy. The Whistle Blower Policy covering all employees and directors is hosted in the Company’s Website www.celebritygroup.com.
DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors:
During the year, the board, at its meeting held on 05th April, 2017, based on the recommendation of the Nomination & Remuneration Committee, appointed Mr. Vidyuth Rajagopal, who was actively involved in all spheres of the management of the Company as Joint Managing Director from the position of the whole-time director.
The board, on the recommendation of Nomination and Remuneration Committee, at its meeting held on 11th December, 2017 reviewed the remuneration payable to Joint Managing Director effective 01st October, 2017 within the overall limits prescribed in Schedule V of the Companies Act, 2013.
During the year, the board, at its meeting held on 11th December, 2017 re-appointed Mr. Charath Ram Narsimhan as Managing Director of the Company, effective 13th February, 2018 to hold the office for a period of five years on such terms and conditions, subject to the approval of the shareholders at the AGM.
Key Managerial Personnel:
Pursuant to Section 203 of the Companies Act, 2013, Mr. S. Venkataraghavan was appointed as Chief Financial Officer (Key Managerial Personnel) of the Company with effect from 27th May, 2017 in place of Mrs. L. Visalakshi who resigned from the services of the Company with effect from 26th May, 2017.
DECLARATION BY INDEPENDENT DIRECTOR
The Company has received necessary declarations from all the Independent Directors of the Company confirming that they continue to meet the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16 & 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, as amended, extract of the Annual Return of the Company in the prescribed Form MGT-9 is annexed as Annexure- III to this Annual Report.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met Six (6) times during the financial year 2017-18 i.e., 05th April 2017, 26th May 2017, 18th August 2017, 08th September 2017, 11th December 2017, and 13th February 2018. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of all Board/ Committee meetings held are given in the Corporate Governance Report.
AUDIT COMMITTEE
Pursuant to Section 177 (8) of Companies Act 2013, the particulars relating to the Composition, terms of reference and other details about the Audit Committee has been detailed in the Corporate Governance Report which forms part of this Annual Report.
During the year, all the recommendations of the Audit Committee were accepted by the Board.
The Audit Committee reviews the adequacy and effectiveness of the Company’s internal financial controls, so that the ultimate objective of Zero Surprise, Risk controlled Organization is achieved.
REMUNERATION POLICY
The Remuneration policy of the company has been structured to match the market trends of the industry, qualifications and experience of the employee and responsibilities handled by them.
The Policy inter alia provides for the following:
a) attract, recruit, and retain good and exceptional talent;
b) list down the criteria for determining the qualifications, positive attributes, and independence of the directors of the Company;
c) ensure that the remuneration of the directors, key managerial personnel and other employees is performance driven, motivates them, recognises their merits and achievements and promotes excellence in their performance;
d) motivate such personnel to align their individual interests with the interests of the Company, and further the interests of its stakeholders;
e) ensure a transparent nomination process for directors with the diversity of thought, experience, knowledge, perspective and gender in the Board; and
f) fulfill the Company’s objectives and goals, including in relation to good corporate governance, transparency, and sustained long term value creation for its stakeholders.
Particulars pertaining to constitution of the Nomination and remuneration Committee and its terms of reference has been detailed in the Corporate Governance Report which forms part of this Annual Report.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not given any loans or guarantees covered under the provision of Section 186 of the Companies Act, 2013.
MATERIAL CHANGES & COMMITMENTS
There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this Report
BOARD EVALUATION
An annual performance evaluation of all Directors, the Committees of Directors and the Board as a whole for the year under review was carried out. For the purpose of carrying out performance evaluation, assessment questionnaires were circulated to all Directors and their feedback was obtained and recorded.
REPORT AS PER SECTION 134 READ WITH RULE 8 AND SUB RULE 5 OF COMPANIES (ACCOUNTS) RULES 2014
Change in nature of business, if any: NIL
The name of Companies which have become or ceased to be its subsidiaries, Joint Ventures or associate companies during the year: NIL
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY
The Company was not in receipt of any orders from the regulator / courts / tribunals impacting the going concern status of future operations of the Company.
The Company was in receipt of the notice / order from statutory authorities during the year for claim not acknowledged as debts by the company. The details of the same have been provided in Note 38 of the financial statements.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors report.
DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY
Pursuant to section 134 (3) (n) of the Companies Act, 2013 the company has framed Risk Management Policy which lays down the framework to define, assess, monitor and mitigate the business, operational, financial and other risks associated with the business of the Company. The Company has been addressing various risks impacting the Company in Management Discussion and Analysis Report which forms part of this Annual Report.
During the year under review, the company has not identified any element of risk which may threaten the existence of the company.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTOR
In compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility of the Directors, the working of the Company, nature of the Industry in which the Company operates, business model, etc.
The details of such familiarization programmes for the Independent Directors are disclosed on the website of the Company www.celebritygroup.com.
AUDITORS
Statutory Auditors
M/s SRSV & Associates, Chartered Accountants, Chennai have been appointed as the Statutory Auditors of the Company from the conclusion of the 28th Annual General Meeting till the conclusion of 33rd Annual General Meeting of the Company in place of M/s Anil Nair & Associates, Chartered Accountants, Chennai and M/s. CNGSN & Associates LLP, Chartered Accountants, Chennai, the Joint Auditors of the Company.
The Annual Accounts of the Company including its Balance Sheet, Statement of Profit and Loss and Cash Flow Statement including the Notes and Schedules to the Accounts have been audited by M/s. SRSV & Associates, Chartered Accountants, Chennai.
The Statutory Auditors’ Report does not contain any qualification, reservation or adverse remark on financial Statements of the Company. The Auditors’ Report is enclosed with the financial statements in this Annual Report.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. BP & Associates, Practicing Company Secretaries, as the Secretarial Auditors of the Company to undertake the Secretarial Audit for the financial year 2017-18. The Secretarial Audit Report for the financial year 2017-18 does not contain any qualification, reservation or adverse remark or declaimer which requires any explanation/comments by the Board. Secretarial Audit Report given by Secretarial Auditors is annexed with the report as Annexure IV.
Internal Auditors
Pursuant to Section 138 of the Companies Act 2013 read with rule 13 of The Companies (Accounts) Rules, 2014 and all other applicable provisions (including any amendment thereto) if any of the Companies Act, 2013 and as recommended by the audit committee M/s. RVKS & Associates, Chartered Accountants, Chennai were appointed as the Internal Auditors of the company for the Financial Year 2017-18.
The audit conducted by the Internal Auditors is based on an internal audit plan, which is reviewed each quarter in consultation with the Audit Committee. These audits are based on risk based methodology and inter alia involve the review of internal controls and governance processes, adherence to management policies and review of statutory compliances. The Internal Auditors share their findings on an ongoing basis during the financial year for corrective action. The Audit Committee oversees the work of Internal Auditors.
LISTING FEE
The equity shares of the Company are listed on the Stock Exchanges viz., BSE Limited and The National Stock Exchange of India Limited. The Company has paid the applicable listing fee to the Stock Exchanges within the stipulated time.
DISCLOSURE UNDER SECTION 67 (3) (C) OF THE COMPANIES ACT, 2013
No disclosure is required under Section 67 (3) (c) of the Companies Act, 2013 read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014, in respect of voting rights not exercised directly by the employees of the Company as the provisions of the said section are not applicable.
PARTICULARS OF EMPLOYEES
Disclosure with respect to the remuneration of directors and employees pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(1), 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as ANNEXURE-I.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
During the financial year 2017-18, no unpaid or unclaimed dividend was required to be transferred to IEPF.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.
The Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment and Non-discrimination at Work Place in line with the requirements of Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
An Internal Complaints Committee (ICC) was set up to redress the complaints received from women regarding sexual harassment and discrimination at workplace.
During the year ended 31st March, 2018, the ICC did not receive any complaint pertaining to sexual harassment/discrimination at the work locations.
DIRECTORS’ RESPONSIBILITY STATEMENT
As required by Section 134(3)(c) and 134(5) of the Companies Act, 2013, the Directors, to the best of their knowledge and ability, confirm that:-
a) in the preparation of the annual accounts for the financial year ended 31 st March 2018, 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 judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
c) the Directors had taken proper and sufficient care 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) the Directors had prepared the annual accounts on a going concern basis;
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; and
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.
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors and external consultants, including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant board committees, including the audit committee, the board is of the opinion that the Company’s internal financial controls were adequate and effective during financial year 2017-18.
CONSERVATION OF ENERGY / TECHNOLOGY ABSORPTION / FOREIGN EXCHANGE
A. Conservation of Energy:
The operations of the Company are not energy-intensive. However, wherever possible, the Company strives to curtail the consumption of energy on a continuing basis.
B. Technology absorption: Not applicable.
C. Foreign Exchange Earning and Outgo :
a. Total Foreign exchange earned (FOB Value) : Rs.173.53 Crs
b. Total Foreign exchange outgo : Rs.43.42 Crs
SECRETARIAL STANDARDS
The Company is in compliance with the Secretarial Standards on Meetings of the Board of Directors (SS - 1) and General Meetings (SS - 2) issued by The Institute of Company Secretaries of India.
ACKNOWLEDGEMENT
The Directors wish to convey their gratitude and appreciation to all the employees for their valuable contribution during the year. They would also like to place on record their appreciation for the continued co-operation and support received by the Company during the year from bankers, financial institutions, business partners and other stakeholders.
For and on behalf of the Board
Sd/-
Venkatesh Rajagopal
Place: Chennai Chairman
Date: 28th May, 2018 (DIN: 00003625)
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