Binny Mills Ltd Directors Report.

To the Members

Your Directors have pleasure in presenting the Eleventh Annual Report and the Audited Financial Statements of your Company for the financial year ended 31st March, 2018.

FINANCIAL SUMMARY

Based on Ind AS compliant Financial Statements

Particulars 31s1 March 2018 31st March 2017
(In Rs. lakhs) (In Rs. lakhs)
Revenue from operations & other income 800.16 969.19
Profit / (loss) before Depreciation and Exceptional item (1,406.82) (1,429.82)
Depreciation 2.96 3.15
Profit / (loss) before Tax and Exceptional item (1,409.78) (1,432.97)
Exceptional item* - (39.53)
Profit / (loss) after Exceptional item before Tax (1,409.78) (1,472.50)
Provision for Tax (including Deferred tax) (30.70) (30.68)
Profit / (loss) after Tax (1,440.48) (1,503.18)
Other comprehensive income (loss) 0.80 (1.18)
Total comprehensive income / (loss) for the year (1,439.68) (1,504.36)

* Exceptional item of expense pertains to prior period electricity charges paid during the first quarter of the previous financial year.

OPERATIONS

As the members may be aware, pursuant to the Demerger Scheme of Binny Ltd, the Agencies and Services Undertaking of Binny Ltd was transferred to and vested in the Company, with effect from 1st Jan 2010, the Appointed Date as per the Demerger Scheme.

The company operates in 4 divisions viz., Warehousing, Showrooms, Agencies and Bintex. The Warehousing division has rented its warehouses and is deriving rental income from it. The Showrooms are engaged in retail selling of textile materials. The Agencies division is engaged in the business of selling Tarpaulin, rain coats and bags. The Bintex division is engaged in selling textile materials, particularly uniform materials, bed spreads, and other textile varieties.

For the year 2017-18, the Rental income from Warehousing division was Rs.204.86 lakhs as against Rs. 199.58 lakhs in the previous year, a marginal increase by about 2.6%. The sales made by the Showrooms division was Rs.169.25 lakhs as against Rs. 165.94 lakhs in the previous year, a marginal increase by about 2%, the Agencies division did not make any sale during the year as also in the previous year and the Bintex division Rs.342.32 lakhs as against Rs. 543.58 lakhs in the previous year.

The aggregate amount of revenue from Rent, Sales and operating income were Rs.745.05 lakhs as against Rs. 919.39 lakhs in the previous year.

The Companies (Indian Accounting Standards), Rules, 2015 (Ind AS) becomes applicable to the Company from the financial year 2017-18 onwards. Accordingly, the financial statements for the year ended 31st March 2018 have been prepared and presented after complying with the applicable Ind AS requirements. As per the Ind AS compliant financial statements prepared and presented for the year ended 31st March 2018, the Company has incurred a Net Loss (before tax) of Rs. 1,409.78 lakhs as against a Net loss (before tax) of Rs. 1,472.50 lakhs in the previous year and a Net Loss (after tax) of Rs. 1,440.48 lakhs as against a Net Loss (aftertax) of Rs. 1,503.18 lakhs in the previous year. The other comprehensive income for the year is Rs.0.80 lakhs as against a loss of Rs. 1.18 lakhs in the previous year. The Total comprehensive loss for the year is Rs. 1,439.68 lakhs as against a Total comprehensive loss of Rs. 1,504.36 lakhs in the previous year.

PREFERENCE SHARES

The 28,14,18,142 (9%) Cumulative Redeemable Preference Shares (CRPS) of Rs.5/- each aggregating to Rs.140,70,90,710/- are redeemable on or before 12th May 2020.

Preference share dividend is payable on the CRPS from the date of original allotment of shares by Binny Ltd. The holders of the CRPS have preferential right to dividend over the equity share holders, as and when dividend is declared by the company.

In accordance with the Ind AS requirements, the Paid-up Preference Share Capital on the 9% Cumulative Redeemable Preference Shares of Rs.140,70,90,710/- which was earlier classified as Share Capital has now been reclassified as Borrowings as Financial Liabilities under Non-current liabilities.

Pursuant to this classification, the preference dividend amount of Rs.12,66,38,164/- and the Dividend Distribution Tax on it for an amount of Rs.2,57,83,530/-aggregating to Rs. 15,24,21,694/-has been charged to Profit and Loss statement as Finance Cost for the year ended 31st March 2018 as against the same amount of Rs.. 15,24,21,694/- in the previous year ended 31st March 2017.

At the first time adoption of Ind AS compliant Financial Statements, the Company is required to prepare an opening Balance Sheet as on 1-4-2016.

In that opening Balance Sheet, the following adjustments have been made for the arrears of preference dividend up to 1st April 2016 and the Dividend Distribution Tax on it and the Revaluation Reserve as at 1st April 2016:

Rs.
Retained Earnings as per published accounts 2,99,88,403
Add : Revaluation Reserve as on 1-4-16 23,50,21,085
Less : Arrears of preference dividend up to 1-4-16 115,10,97,874
Less : Dividend Distribution Tax on the arrears of
Preference Dividend at 20.36% 23,43,63,527
Net Amount 112,04,51,913

Due to this the shareholders funds as at 1-4-16 is showing a negative amount of (-) Rs.108,85,67,173/-

Since the Company is in the process of consolidating its operations, the company could not find enough resources to pay dividend this year. Hence, the company is not recommending preference dividend this year.

DIVIDEND ON EQUITY SHARES

As stated for Preference Dividend, since the Company is in the process of consolidating its operations, the company could not find enough resources to pay dividend this year. Hence, the company is not recommending dividend on the equity shares this year.

COMPANYS PERFORMANCE

Considering the difficult macro-economic conditions and challenging business environment, the Companys performance during the year under review was satisfactory.

FUTURE PLANS

The Company has plans to improve its sales performance in the Textile Division by focusing on whole sale customers while retaining the existing retail customers. The Company has plans to procure bulk orders for its Textile division in order to improve the sales and profit. The Company has plans to attract new customers for its retail textile sale.

ECONOMIC AND BUSINESS ENVIRONMENT

Overthe last two months, reports published bythe World Bankandthe IMF reaffirm what economy watchers have been predicting for a while. India will sustain its mantle as the worlds fastest growing major economy in 2018. This growth trajectory is expected to continue for a while powered by growing consumption demand and an expected upswing in private capital investment.

Business cannot endure in societies that fail. The world over, income inequity, poverty, growing social unrest, extreme weather events borne out of climate change and jobless growth severely impede progress despite the path-breaking advancements in science and technology.

Indias developmental challenges are even more daunting. India is home to a large share of the worlds poor. Its resources, relative to the population, are meagre. With 17% of the worlds population, India has only 2.4% of the land area, 4% of fresh water and 1% of forest resources. In less than a decade from now, Indias population is slated to outstrip that of China, further stretching the ecological and economic resources needed forthe development. Providing food, water, energy, education, health care and above all, livelihood security to the estimated 1.5 billion people will multiply the challenges manifold. Gainful livelihood opportunities need to be found for the millions of young people who enter the job market every year.

It is quite evident that challenges of this magnitude cannot be addressed by any single organ of society or the Governments alone. The need for collective action has never been more pressing than it is now. It is believed that managerial and innovative capacity of business can significantly contribute towards making a transformational change in the society for mutual benefit. It is with this strength of conviction that business entities should pursue innovation in business models to synergise the creation of economic wealth with the formation of ecological and social capital as a unified strategy.

OUTLOOK AND OPPORTUNITIES

The thrust on rural and infrastructure sectors in the Union Budget could rejuvenate rural demand and encourage private investment. Indian Meteorological Departments forecast of normal monsoon in the year 2018 and its positive impact on food output, should create growth in rural and urban demand for textiles and textile products.

There is a positive outlook on the opportunities before the Company. The Company expects its business to grow in the financial year 2018-19 due to improvement in the vital parameters of economy. With the effects of demonetization and teething troubles with implementation of GST diminishing gradually, the economic activity is expected to gather pace in 2018-19.

Policy efforts such as improving ease of doing business, speedy resolution of corporate distress and speeding up of the stalled projects, among others, should produce accelerating impulses for growth trajectory and revival of capex cycle. The credit off-take has improved in the recent period and is becoming increasingly broad based, which augurs well for the trading sector and new investment activity.

BOARD OF DIRECTORS

Directors retirement by rotation:

Shri S. Natarajan, Director, (DIN 00155988), retires by rotation at this Annual General Meeting and being eligible offers himself for reappointment.

Director appointment made during the year:

There was no change in the composition of the Board of Directors during the period under purview. Present term of office of Managing Director:

The present term of appointment of Shri V. Rajasekaran as Managing Director of the Company is up to 12th May 2020.

DISCLOSURES AS PER SECTION 134 OF THE COMPANIES ACT, 2013 READ WITH RULE 8(5) OF THE COMPANIES (ACCOUNTS) RULES, 2014

Extract of Annual Return:

The extract of Annual Return in the Form MGT 9 annexed to this report pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure 1.

Number of meetings of the Board:

There were four Board meetings held during the year. The details of the Board meetings and the Committee meetings are given in the Report on Corporate Governance which forms part of the Annual Report.

Directors Responsibility Statement:

To the best of their knowledge and belief and according to the confirmation and explanations obtained by them, your Directors make the following statement in terms of Section 134(5) of the Companies Act, 2013:

i) That in the preparation of the Annual Accounts, for the year ended 31st March 2018, the applicable Accounting Standards had been followed along with proper explanation for material departures, if any;

ii) That the selected accounting policies were applied consistently and judgements and estimates that are reasonable and prudent were made so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year ended 31st March 2018 and of the loss of the Company for that period;

iii) 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 safe guarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv) That the annual accounts for the year ended 31st March 2018 had been prepared on a going concern basis.

v) Internal financial controls had been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and;

vi) Proper systems to ensure compliance with the provisions of all applicable laws had been devised and that such systems were adequate and operating effectively.

Declaration by Independent Directors:

The Board has received the declaration from all the Independent Directors as per the requirement of section 149(7) of the Companies Act, 2013 and the Board is satisfied that all the Independent Directors meet the criterion of independence as mentioned in section 149(6) of the Companies Act, 2013.

Companys policy on Directors appointment and remuneration:

In accordance with section 178(4) ofthe Companies Act, 2013 and pursuant to Part D of Schedule II ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (henceforth referred to as ‘the Listing regulations), the Nomination and Remuneration Committee has put in place the policy on diversity of Board of directors for appointment of directors taking into consideration the qualification and wide experience ofthe directors in the fields of textiles trading, banking, finance, administration and legal apart from compliance of legal requirements of the Company. The policy on diversity of Board of directors is annexed to the Directors Report as Annexure II.

The Nomination and Remuneration Committee has laid down remuneration criteria for the directors, key managerial personnel and other employees in the Nomination and Remuneration Policy. It has also laid down, in the Nomination and Remuneration Policy, the evaluation criteria for performance evaluation of the directors including independent directors. The Nomination and Remuneration Policy is annexed to the Directors Report as Annexure III pursuant to section 178(4) ofthe Companies Act, 2013.

Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made in the Auditors Report and in the Secretarial Audit Report:

The Auditors Report to the Shareholders for the year under review does not contain any qualification, reservation, or adverse remark or disclaimer. The Secretarial Audit Report, given by a Company Secretary in practice, states that the Company is advised to appoint one more independent Director. The Company is taking all effective steps to appoint an Independent Director.

Particulars of loans, guarantees or investments under section 186 of the Companies Act, 2013:

There are no loans made, guarantees given or security provided or securities of any other body corporate acquired, during the year, under section 186 of the Companies Act, 2013.

Particulars of contracts or arrangements with related parties:

The Related Party Transactions (RPTs) entered into by the Company are given in Note No.42 of the Notes on Accounts attached to the Financial Statements forming part of this Annual Report. These transactions were entered into in the ordinary course of business and on an arms length basis and were in compliance with the provisions ofthe Companies Act, 2013 and Regulation 23 ofthe Listing Regulations. There are no contracts or arrangements with Related Parties referred to in section 188 (1) of the Companies Act, 2013. There are no materially significant related party transactions made by the Company with the Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest ofthe Company at large. None ofthe directors have any pecuniary relationships ortransactions with the Company except for the payment of sitting fees. There are no particulars of RPTs to be disclosed in FormAOC-2.

The statement of RPTs is placed before the Audit Committee and the Board on a quarterly basis. Omnibus approval was obtained for the transactions of repetitive nature.

The Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board is uploaded on the Companys website www.bmlindia.com

The state ofthe Companys affairs:

The state ofthe Companys affairs is explained in the paragraph ‘operations in the Directors Report.

The amount, if any, carried to reserves:

The Company has not transferred any amount to reserves.

The amount, if any, which it recommends, should be paid byway of dividend:

The Board is not recommending payment of any dividend on the Preference shares and the equity shares issued by the Company.

Material changes and commitments, if any, affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of report:

There are no material changes and commitments affecting the financial position ofthe Company, that have occurred between the end ofthe financial year ofthe Company to which the financial statements relate and the date of report viz., for the period from 31st March 2018 to 31st July 2018.

Conservation of energy, technology absorption, foreign exchange earnings and outgo:

The information pursuantto section 134(3) (m) ofthe Companies Act, 2013 read with Rule 8 ofthe Companies (Accounts) Rules, 2014 is as follows:

(A) Conservation of energy : Not Applicable
(B) Technology absorption : Not Applicable
(C) Foreign exchange earnings and Outgo : NIL

Risk Management Policy:

The Company has framed a Risk Management Policy to identify, communicate and manage material risks across the organisation. The policy also ensures that responsibilities have been appropriately delegated for risk management. Key Risk and mitigation measures are provided in the Management Discussion and Analysis Report annexed to the Directors Report.

The details about the policy developed and implemented by the Company on Corporate Social Responsibility initiatives taken during the year:

The provisions of section 135 of the Companies Act, 2013 are not applicable to the Company. Hence, the Company has no Corporate Social Responsibility Policy. However, pursuant to good corporate governance practice, your company demands adherence of social responsibility coupled with creation of value in the larger interest of the society. Your company and its dedicated employees continue to contribute towards several worthwhile causes. Your company aims to enhance the quality of life of the community in general and has a strong sense of social responsibility. Your Company and its employees have participated in welfare activities of the community.

Statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors:

Pursuant to the provisions of the Companies Act, 2013 and regulation 17(10) of the Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually, as well as the evaluation of the working of its various Committees. The manner in which the evaluation has been carried out has been explained in the Report on Corporate Governance.

The financial summary or highlights:

The financial summary is given in the Paragraph ‘Financial Results in the Directors Report.

The change in the nature of business, if any:

There is no change in the nature of business during the year under review.

The details of directors or key managerial personnel who were appointed or have resigned during the year:

Shri A. Sampath was appointed as the Company Secretary and Chief Financial Officer from 30th March 2018. There were no directors or other key managerial personnel who were appointed or have resigned during the year.

The names of Companies which have become or ceased to be Subsidiaries, joint ventures or associate companies during the year:

There are no Companies which have become or ceased to be Subsidiaries, joint ventures or associate companies during the year.

The details relating to deposits, covered under Chapter V of the Companies Act, 2013 and details of deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013:

The company has not accepted any deposits covered under Chapter V of the Companies Act, 2013.

The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future:

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

The details in respect of adequacy of internal financial controls with reference to the Financial Statements:

The Companys well defined organizational structure, documented policy guidelines, defined authority matrix and internal financial controls ensure efficiency of operations, protection of resources and compliance with the applicable laws and regulations. Moreover, the Company continuously upgrades its systems and undertakes review of policies. The internal financial control is supplemented by regular reviews by management and standard policies and guidelines to ensure reliability of financial and all other records to prepare the financial statements and other data. The Audit Committee reviews the internal financial controls and also monitors the implemented suggestions.

Disclosure under section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, there were no cases filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

DISCLOSURES BY A LISTED COMPANY UNDER RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The ratio ofthe remuneration of each directortothe median remuneration ofthe employees ofthe company for the financial year:

Since no director of the Company is in receipt of remuneration from the Company there are no particulars to be furnished.

The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

There is no increase in the remuneration to the aforesaid personnel in the financial year 2017-18.

The percentage increase in the median remuneration of employees in the financial year:

There is no increase in the median remuneration of employees in the financial year 2017-18.

The number of permanent employees on the rolls ofthe Company:

There are 12 permanent employees on the rolls ofthe Company as at 31st March 2018.

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year viz., 2017-18 and its comparison with the percentile increase in the managerial remuneration:

There is no managerial remuneration paid during the financial year 2017-18. There was no increase in the salaries of employees during the financial year 2017-18.

The key parameters for any variable component of remuneration availed by the directors:

The directors were not paid any remuneration during the financial year 2017-18.

STATEMENT OF EMPLOYEES PARTICULARS

The particulars required to be furnished under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is as follows:

During the year, there are no employees drawing remuneration of Rs.60 lakhs or more per annum or Rs.5 lakhs or more per month, or was in receipt of remuneration which, neither in the aggregate nor at a rate, which in the aggregate, is in excess of that drawn by the Managing Director or holding, either by himself or along with his spouse and dependent children, not less than 2% of the equity shares of the Company.

AUDITORS

M/s. NSR & Co., Chartered Accountants, Chennai (Firm Registration No. 010522S) the Statutory Auditors of the Company, were appointed as auditors at the Tenth Annual General Meeting of the Company held on 22nd September, 2017 for a period of five years and they shall hold office till the conclusion of the 15th Annual General Meeting to be held in the year 2022.

The Companies (Amendment) Act, 2017, has amended section 139 ofthe Companies Act, 2013 by omitting the first proviso to section 139 (1) which provided for ratification of appointment of auditor by the members at every Annual General Meeting. The amendment has been notified to have come into effect from 7th May 2018. Due to this, there is no need for ratification by the members the appointment of auditors at every Annual General Meeting till the completion ofthe five year term.

SECRETARIAL AUDIT

The Board had appointed Shri K. Elangovan, M/s Elangovan Associates, Company Secretaries in Practice, Chennai, (Certificate of Practice No.3552) Membership No. (FCS 1808) to carry out Secretarial Audit under the provisions of section 204 ofthe Companies Act, 2013 for the financial year 2017-18. The Secretarial Audit Report is annexed to this report as Annexure IV.

WHISTLE BLOWER POLICY/VIGIL MECHANISM

Pursuantto section 177 (9) and (10) ofthe Companies Act, 2013 and regulation 22 ofthe Listing regulations, the Company has formulated and established a Whistle Blower Policy / Vigil Mechanism providing a mechanism under which an employee and director of the Company may report violation of personnel policies of the Company, unethical behavior, suspected or actual fraud, violation of Companys code of conduct or ethics policy.

The Vigil Mechanism provides for adequate safeguards against victimization of directors / employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. It also ensures standards of professionalism, honesty, integrity and ethical behavior. The Whistle Blower Policy / Vigil Mechanism is uploaded on the Companys website www.bmlindia.com

ANNEXURES TO THE DIRECTORS REPORT

1. The Extract of Annual Return in Form MGT-9 - Annexure I

2. The Policy of Board Diversity - Annexure II

3. The Nomination and Remuneration Policy - Annexure III

4. Secretarial Audit Report - Annexure IV; and

5. Auditors Certificate on Corporate Governance Compliance - Annexure V ATTACHMENTS TO THE DIRECTORS REPORT

The Management Discussion and Analysis Report

The Management Discussion and Analysis Report, pursuant to regulation 34 (2) (e) and Schedule V of the listing regulations, is given as a separate Report and this report is part of the Directors Report.

The Report on Corporate Governance

The Report on Corporate Governance, pursuantto regulation 34 (3) and Schedule V ofthe listing regulations, together with Auditors Certificate on Corporate Governance, the certificate duly signed by the Managing Director on the Financial Statements of the Company for the year ended 31st March 2018 as submitted to the Board of Directors at their meeting held on 29th May 2018 and the declaration by the Managing Director regarding compliance by the Board members and senior management personnel with the Companys Code of Conduct is included as a separate section in the Annual Report.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation for the continued co-operation and support extended by all concerned persons and authorities for the smooth and efficient functioning ofthe Company.

For and on behalf of the Board

V.R. Venkataachalam

Chairman

[DIN: 00037524]

Registered Office:

No.4, (Old No.10) Karpagambal Nagar,

Mylapore,

Chennai 600 004.

CIN: L17120TN2007PLC065807

E-mail: binnymills@bmlindia.com

Date : 31st July 2018

Place : Chennai