Dear Members,
Your Directors takes pleasure in presenting the 33rd Annual
Report on the business and operations performance of the Company, together with the
Audited Financial Statements, for the financial year ended 31st March, 2023.
1. Financial Results - Extract
The companys standalone and consolidated performance during the
financial year ended 31st March, 2023, as compared to the previous financial
year is summarised below:
Rs in Lakh
| Particulars |
Consolidated Standalone Year
ended Year ended |
|
31-03-2023 |
31-03-2022 |
31-03-2023 |
31-03-2022 |
| Revenue from Operations and Other Income |
43,248.27 |
48,878.84 |
27,809.19 |
34,278.61 |
| Earnings Before Interest Depreciation Tax Amortisation and
Exceptional Items (EBIDTAE) |
1,582.55 |
4,650.18 |
1,391.45 |
4,442.94 |
| Less: Exceptional Items |
0 |
0 |
0 |
0 |
| Earnings Before Interest Depreciation Tax and Amortisation
(EBIDTA) |
1,582.55 |
4,650.18 |
1,391.45 |
4,442.94 |
| Less: Finance Cost |
183.87 |
89.13 |
183.87 |
89.13 |
| Profit before Depreciation and Tax (PBDT) |
1,398.68 |
4,561.05 |
1,207.58 |
4,353.81 |
| Less: Depreciation |
303.51 |
261.93 |
303.51 |
261.93 |
| Profit before Tax |
1,095.17 |
4,299.12 |
904.07 |
4091.88 |
| Less: Provision for Tax |
303.30 |
1,109.42 |
246.38 |
1,041.98 |
| Profit after Tax |
791.87 |
3,189.70 |
657.69 |
3,049.90 |
| Total Comprehensive Income |
790.88 |
3,191.35 |
656.70 |
3051.55 |
2. Nature of Business
The company is primarily engaged in the business of chemical
manufacturing and chemical distribution. The company also owns windmills for the
production and sale of renewable energy.
The chemical manufacturing business focuses on the production and sale
of acrylamide liquid, polyacrylamide liquid, and n-methylol acrylamide (NMA). During the
year the company also commenced commercial production of acrylamide solid and will focus
on adding polyacrylamide solid to its production portfolio in the future. The chemical
distribution business mainly consists of the sales specialty and performance chemicals
produced by overseas manufacturers. The renewable energy business supplies electricity
from wind power to the State Electricity Boards of Rajasthan and Gujarat.
3. Performance Review
Fiscal year 2022-2023 was a year of demand disruption worldwide. The
sudden and sharp drop in chemical prices caused the companys profit and revenue to take a
hit. In 2022-23, consolidated and standalone EBITDA decreased by 66% and 69%,
respectively. The top 5 products of the distribution business accounted for nearly 79% of
the divisions revenue. Revenues at our subsidiary in Japan remained stable year-on-year.
On a positive note, international shipping costs dropped significantly from the staggering
highs in FY22 and supported export volumes. The company ended the financial year 2022 -
2023 with expectations of improvements in the coming fiscal.
A detailed analysis of the companys operations is provided later in
the Management Discussion and Analysis Report.
4. Dividend
For FY 2022-23, based on the Companys performance, the Directors are
pleased to recommend an equity dividend of 0.55 paise per equity shares of face value of
1 each for the year ended 31st March, 2023, subject to the approval of the
shareholders at the ensuing Annual General Meeting.
The Dividend Distribution Policy, in terms of Regulation 43A of the
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (SEBI Listing Regulations) is uploaded on the Companys website at
www.blackrosechemicals.com.
5. Transfer to Reserves
The Directors have not proposed to transfer any amount to the general
reserve and have decided to transfer 656.70 lakh to retained earnings for the FY
2022-23. The closing balance of retained earnings of the Company as at 31st
March, 2023, after all appropriation and adjustments, was 10,868.20 lakh.
6. Business Scenario
The financial year 2022-2023 ended with reduced revenue and profits
over the previous year due to the impact of the demand disruptions, global chemical price
meltdown, continued geo-political disturbance in Europe, and the much-anticipated recovery
of China post-COVID which never materialised. The Indian rupee which started the year at
76 per US Dollar remained volatile during the year, eventually closing at 82 - 83 at the
end of the fiscal, mirroring the weakening of global sentiment.
The first signs of the impending slowdown were evident in the first
quarter of the year. Both manufacturing and distribution sales declined as buyers began to
adopt a wait-and-see attitude in the face of falling international prices of commodity and
specialty chemicals. Profit margins declined in the second quarter due to high raw
material inventory costs and sales of distribution products at reduced prices. In the
third quarter, overall revenues improved due to a pickup in exports, but margins remained
under pressure as prices continued to fall in the domestic market and the company still
carried higher cost inventories. As prices began to stabilise and old inventories were
depleted, there were signs of improvement in the fourth quarter, with EBITDA margins
doubling from the previous quarter and manufacturing activity increasing.
The business scenario is discussed in more detail in the Management
Discussion and Analysis Report.
7. Acrylamide Plant at Jhagadia, Gujarat
The companys acrylamide plant witnessed 1) lower capacity utilization
due to decrease in domestic demand and 2) lower realisation on the back of continually
falling raw material prices. The acrylamide powder plant was commissioned during the year
but was unable to operate at meaningful levels due to the heavy dumping from Chinese
producers.
An in-depth explanation about the acrylamide plant operations is given
in the Management Discussion and Analysis Report.
8. Polyacrylamide Liquid Plant at Jhagadia, Gujarat
The ceramic tile industry in Morbi, Gujarat where the company sells its
polyacrylamide liquid ceramic binder - BRILBIND CE01 - has been badly affected by the
global demand slowdown, the increasing gas prices caused by the Ukraine war, and increased
Chinese competition in international markets, impacting the overall revenue and capacity
utilization during the year.
An in-depth explanation about the polyacrylamide liquid plant
operations is given in the Management Discussion and Analysis Report.
9. N-Methylol Acrylamide (NMA) Plant at Jhagadia, Gujarat
The company has been producing n-methylol acrylamide (NMA), a specialty
monomer used in the coatings and adhesive industry, since the end of FY22 with an
installed capacity of 2,000 MTPA. The company sells the product to both domestic and
multinational companies.
An in-depth explanation about NMA operations is given in the Management
Discussion and Analysis Report.
10. Subsidiary - B.R. Chemicals Co., Ltd., Japan
The Company has one subsidiary as on 31st March, 2023. There
are no associate or joint venture companies within the meaning of Section 2(6) of the
Companies Act, 2013 ("Act").
The nature of business of the subsidiary company remained unchanged
during the year.
During the year under review, the turnover of the companys wholly
owned subsidiary increased to 152 crores.
The performance and financial position of the companys subsidiary,
B.R. Chemicals Co., Ltd., for the year ended 31st March, 2023 is attached to
the financial statements hereto.
Pursuant to the provisions of Section 129(3) of the Act, a statement
containing the salient features of financial statements of the Companys subsidiary in
Form No. AOC-1 is attached to the financial statements of the Company.
11. Material Changes and Commitments
There have been no material changes and commitments affecting the
financial position of the Company which have occurred between the end of the financial
year of the company to which the financial statements relate and the date of the report.
12. Directors and Key Managerial Personnel
During the financial year 2022-23, the Board of Directors had appointed
Mrs. Harshita Shetty as the Company Secretary of the Company w.e.f. 29th June,
2022.
Apart from the above, no other Director or Key Managerial Personnel
were appointed or ceased during the financial year.
Following are the changes which took place after the end of the
financial year till the date of this report:
a) Mr. Sandeep Chokhani had resigned w.e.f. 11th May, 2023.
b) Mr. Ratan Kumar Agrawal was appointed as Additional Director w.e.f.
11th May, 2023 and resigned w.e.f. 26th July, 2023.
c) Mr. Ambarish Daga was appointed as Additional Director w.e.f. 26th
July, 2023.
d) Mr. Abhishek Murarka was appointed as Additional Director w.e.f. 26th
July, 2023.
e) Mr. Bhavesh Shah, General Manager Sales was appointed as Key
Managerial Personnel of the Company w.e.f. 26th July, 2023.
f) Mr. Sanket Desai, Associate Vice President - Manufacturing was
appointed as Key Managerial Personnel of the Company w.e.f. 26th July, 2023.
g) Mr. Garima Tibrawalla had resigned w.e.f. 2nd September,
2023.
h) Mr. Anup Jatia was re-classified as Non-Executive Director w.e.f 26th
July, 2023 and now retires by rotation at the ensuing Annual General Meeting and being
eligible, offers himself for re-appointment.
13. Declaration from Independent Directors
The Company has received following declarations from all the
Independent Directors confirming that:
a) They meet the criteria of independence as laid down under Section
149(6) of the Companies Act, 2013 and Rules issued thereunder, as well as of Regulation 16
of the Listing Regulations.
b) In terms of Rule 6(3) of the Companies (Appointment and
Qualification of Directors) Rules, 2014, they have registered themselves with the
Independent Directors database maintained by the Indian Institute of Corporate Affairs,
Manesar.
c) In terms of Regulation 25(8) of the Listing Regulations, they are
not aware of any circumstances or situation, which exist or may be reasonably anticipated,
that could impair or impact their ability to discharge their duties.
14. Board Meetings and Board Committees
a. Board Meetings
Five meetings of the Board of the Directors were held during the year
under review. The Corporate Governance Report, which is part of this report, contains the
details of the meetings of the Board.
b. Committees
Pursuant to Section 177 and 178 of the Companies Act, 2013 and the
rules made thereunder and in accordance with Listing Regulations, the Board of Directors
has constituted five Committees, namely Audit Committee, Nomination and Remuneration
Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee
and Risk Management Committee.
All details pertaining to the composition of the Board and its
committees are provided in the Corporate Governance Report, which is a part of this
report.
The company has been employing women employees in various grades within
its offices and factory premises. The company has constituted an Internal Compliant
Committee as required under the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 to redress any complaints received from employee(s)
of the Company. The Company is strongly opposed to sexual harassment and all the employees
are made aware about the consequences of such acts and the constitution of the Internal
Compliant Committee.
During the year there was no complaint received from any employee and
hence no compliant is outstanding as on 31st March, 2023.
c. Evaluations
The Board of Directors has carried out an annual evaluation of its own
performance, board committees, and individual directors pursuant to the provisions of the
Act and SEBI Listing Regulations.
The performance of the board was evaluated by the Board after seeking
inputs from all the directors on the basis of criteria such as the board composition and
structure, effectiveness of board processes, information and functioning, etc. The
performance of the committees was evaluated by the Board after seeking inputs from the
committee members on the basis of criteria such as the composition of committees,
effectiveness of committee meetings, etc.
In a separate meeting of independent directors, performance of
non-independent directors, the Board as a whole and Chairman of the Company was evaluated,
taking into account the views of executive directors and non-executive directors.
The Board and the Nomination and Remuneration Committee reviewed the
performance of individual directors on the basis of criteria such as the contribution of
the individual directors to the board and committee meetings like preparedness on the
issues to be discussed, meaningful and constructive contribution and inputs in meetings,
etc.
d. Policy on Directors Appointment and Remuneration and other details
The policy on Directorsremuneration is available on the website of the
Company at www.blackrosechemicals. com. The remuneration paid to the Directors is as per
the terms laid out in the said policy.
15. Auditors
a. Statutory Auditor
Members of the Company at the AGM held on 29th September,
2022 approved the appointment of M/s. M M Nissim & Co LLP, Chartered Accountants LLP
(Registration No. 107122W/ W100672), Chartered Accountants, as the statutory auditors of
the Company for a period of five years to hold the office for a period of 5 consecutive
years from the conclusion of 32nd Annual General Meeting till the conclusion of
the 37th Annual General Meeting to be held in the year 2027.
The report of the Statutory Auditor forms part of this Annual Report.
The said report does not contain any qualification, reservation, adverse remark or
disclaimer.
b. Cost Auditor
Pursuant to the provisions of the Section 148(1) of the Companies Act,
2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required
to have the audit of its cost records.
M/s. Poddar & Co., Cost Accountants, Mumbai, was appointed as Cost
Auditor of the Company for conducting the cost audit for the financial year 2022-23.
c. Secretarial Auditor
Secretarial Audit for the financial year 2022-23 was conducted by M/s.
Shiv Hari Jalan & Co., Company Secretaries in Whole - Time Practice in accordance with
the provisions of Section 204 of the Act. The Secretarial Auditors Report forms part of
this Annual Report.
16. Extract of Annual Return
Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the
Annual Return as on 31st March, 2023 is available on the Companys website at
www.blackrosechemicals.com.
17. Loans, Guarantees and Investments
The particulars of loans, guarantee or investments given/ made during
the financial year under review and governed by the provisions of Section 186 of the
Companies Act, 2013 have been furnished in Annexure I which forms part of this Annual
Report.
18. Deposits
The Company has not accepted any deposits from public in terms of
Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit)
Rules, 2014 and as such, no amount on account of principal or interest on deposits from
public was outstanding as on the date of the Balance Sheet.
19. Consolidated Financial Statements
In accordance with the provisions of Companies Act, 2013 (hereinafter
referred to as the Act), Regulation 33 of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred
to as Listing Regulations) and applicable Accounting Standards, the Audited Consolidated
Financial Statements of the Company for the financial year 2022-23, together with the
Auditors Report, form part of this Annual Report. A statement containing the salient
features of the Companys subsidiaries, associate and joint venture company in the
prescribed Form AOC- 1.
20. Directors Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of
Directors, to the best of its knowledge and ability, confirm that:
i) the annual financial statements for the year ended 31st
March, 2023 have been prepared in accordance with the applicable accounting standards
along with proper explanation relating to material departures, if any;
ii) 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 of the profit of the company for that period;
iii) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 2013
for safeguarding the assets of the company and for preventing and detecting fraud and
other irregularities;
iv) the annual accounts have been prepared on a going concern basis;
v) have laid down internal financial controls to be followed by the
Company and such internal financial controls are adequate and operating effectively;
vi) proper systems have been devised to ensure compliance with the
provisions of all applicable laws and that such systems are adequate and operating
effectively;
Based on the framework of internal financial controls and compliance
systems established and maintained by the Company, the work performed by the internal,
statutory and secretarial auditors and external consultants, including the 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 Companys internal financial controls were
adequate and effective during FY 2022-23.
21. Internal Financial Controls and Compliance Framework
Internal financial control over financial reporting have been designed
to provide reasonable assurance with regards to recording and providing reliable financial
information and complying with applicable accounting standards. These controls are
reviewed periodically, and the Company continuously tries to verify these controls to
increase its reliability.
The Company has documented its internal financial controls considering
the essential components of various critical processes, physical and operational. This
includes its design, implementation and maintenance, along with periodical internal review
of operational effectiveness and sustenance, which are commensurate with the nature of its
business and the size and complexity of its operations. This ensures orderly and efficient
conduct of its business, including adherence to the Companys policies, safeguarding of
its assets, prevention of errors, accuracy and completeness of the accounting records and
the timely preparation of reliable financial information.
The internal financial controls with reference to the financial
statements were adequate and operating effectively.
The Board has also put in place requisite legal compliance framework to
ensure compliance of all the applicable laws and that such systems were adequate and
operating effectively.
22. BRIL Employee Stock Option Scheme
The scheme was introduced for eligible employees of the company with an
objective to motivate employees giving them opportunity to participate and gain from the
companys performance thereby acting as a retention tool as well as align the efforts of
such talent towards long term value creation of the organization.
The applicable disclosure, as stipulated under Securities and Exchange
Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as on
31st March, 2023 is available on the Companys website on
www.blackrosechemicals.com.
23. Risk Management
In compliance with Regulation 21 of the Listing Regulations, a Risk
Management Committee has been constituted by the Board. The Risk Management Committee,
also known as Risk Management Oversight Committee, is entrusted with roles and powers as
specified in Part D of Schedule II of Listing Regulations. The Company has laid out a risk
management policy for identification and mitigation of risks. The Risk Management
Committee identifies the key risks for the Company, develops and implements the risk
mitigation plan, reviews and monitors the risks and corresponding mitigation plans on a
regular basis and prioritises the risks, if required, depending upon the effect on the
business/reputation.
The other details in this regard are provided in the Report on
Corporate Governance which forms a part of this Annual Report.
24. Vigil Mechanism and Reporting of Frauds
The Company has framed Vigil Mechanism/Whistle Blower Policy
("Policy") to enable Directors and employees to report genuine concerns or
grievances, unethical behavior and irregularities, fraud, if any, which could adversely
affect the Companys operations to the Audit Committee Chairman.
Based on a complaint received from a logistics service provider on July
19, 2022, a police compliant was filed on 10th August, 2022 and 16th
September, 2022 by the Company. Subsequent to the compliant, FIR No.0088/2023 dated 8th
April 2023 was registered by the Cuffe Parade Police Station, Mumbai, under Section 408,
420,
and 477A against Ganesan Muthiah Pillai, a former manager of the
company who was in charge of logistics operations from the end of 2019 till the middle of
2022. Further investigations are ongoing.
25. Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies
Act, 2013 read with rules made thereunder is provided in Annexure II which forms part of
this Annual Report.
26. Contracts and Arrangements with Related Parties
All the contracts, arrangements and transactions entered by the company
during the financial year with related parties were in the ordinary course of business and
were on arms length basis, hence Section 188(1) is not applicable and consequently no
particulars in Form AOC - 2 are required to be furnished. During the year, the company had
not entered into any contract, arrangements or transactions with related parties which
could be considered material. All the contracts, arrangements and transactions with
related parties are placed before the Audit Committee as also the Board, as may be
required, for approval.
27. Business Responsibility and Sustainability Report
("BRSR")
Regulation 34(2) of the SEBI Listing Regulations, inter alia, provides
that the Annual Report of the top 1000 listed entities based on market capitalization,
should mandatorily include a Business Responsibility & Sustainability Report
("BRSR"). The BRSR the financial year 2022-23, forms form of this report
describing the initiatives taken by the Company from an environmental, social and
governance perspective.
The BRSR for the financial year 2022-23 has also been hosted on the
Companys website, which can be accessed at website at www.blackrosechemicals.com
28. Orders passed by Regulators or Courts or Tribunals
No significant and material orders have been passed by any regulators
or courts or tribunals which can have an impact on the going concern status of the Company
and its future operations.
29. Listing
The companys shares are listed on the BSE and the applicable listing
fees have been paid.
30. Managerial Remuneration and Particulars of Employees
The Statement containing particulars of employees as required under
Section 197(12) of the Companies Act, 2013, read with Rule 5(2) and 5(3) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable as
none of the employees of the company are covered under the provisions of the said rules.
The ratio of the remuneration of each director to the median employees
remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read
with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, is provided in Annexure III which forms part of this Annual Report.
31. Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) forms an integral part of an
overall business policy aligned with its business goals. The Company, from time to time,
endeavors to utilize allocable CSR budget for the benefit of society.
Salient features of the CSR policy and the details of activities as
required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is provided
in Annexure IV forming part of this report. The CSR Policy is available on the website of
the company.
32. Service of Documents through Electronic Means
All documents, including the Notice and Annual Report shall be sent
through electronic transmission in respect of members whose e-mail IDs are registered in
their demat account or are otherwise provided by the members. A member shall be entitled
to request for physical copy of any such documents.
33. Disclosure Requirements
As per SEBI Listing Regulations, the Corporate Governance Report with
the Auditors Certificate thereon, and the Management Discussion and Analysis including
the Business Responsibility and Sustainability Report are attached, which form part of
this report.
The Company has devised proper systems to ensure compliance with the
provisions of all applicable secretarial standards issued by the Institute of Company
Secretaries of India and that such systems are adequate and operating effectively.
Your Directors state that no disclosure or reporting is required in
respect of the following items as there were no transactions on these items during the
year under review:
i. The Company has not issued any shares with differential rights and
hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4)
of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.
ii. During the year under review, there are no shares required to be
transferred to the demat suspense account or unclaimed suspense account of the Company.
iii. During the year, in terms of the provisions of Investor Education
and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016/Investor
Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, no
amount of unpaid/unclaimed dividends were transferred during the financial year to the
Investor Education and Protection Fund.
iv. During the year under review, there were no instance of one-time
settlement with banks or financial institutions and hence the differences in valuation as
enumerated under Rule 8(5)(xii) of Companies (Accounts) Rules, 2014, as amended, do not
arise
v. During the financial year, no application has been made and no
proceeding is pending under the Insolvency and Bankruptcy Code, 2016.
vi. During the financial year, there is no agreements entered under
clause 5A to para A of part A of Schedule III of SEBI (Listing Obligations And Disclosure
Requirements) Regulations, 2015.
34. Acknowledgements
The Board of Directors place on record sincere gratitude and
appreciation to all the employees at all levels for their hard work, solidarity,
cooperation, and dedication during the year.
The Board conveys its appreciation to its principals, customers,
shareholders, suppliers as well as vendors, bankers, business associates, regulatory, and
government authorities for their continued support.
Cautionary Statement
Certain statements in this Directors Report and in the Management
Discussion and Analysis Report describing the companys objectives, estimates, and
projections may be forward-looking statements and are based on certain expectations.
Actual results could however differ materially from those expressed or implied. Important
factors that could make a difference in the companys operations include the availability
of raw material/product, cost of raw material/product, changes in demand from customers,
fluctuations in exchange rates, changes in government policies and regulations, changes in
tax structure, economic developments within India and the countries in which business is
conducted, and various other incidental factors. We cannot guarantee that these
forward-looking statements will be realised, although we believe we have been prudent in
making any assumptions. We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events, or otherwise.
|
For and on behalf of the Board |
| Anup Jatia |
Ambarish Daga |
| Director |
Director |
| DIN: 00351425 |
DIN: 07125212 |
| Place: Mumbai |
|
| Dated:2nd September, 2023 |
|
+91-9892691696
