Latest Directors’ Report

Bangladesh Lamps Limited

Directors’ Report for the year ended on 30 June 2019

 

Dear Shareholders,

Assalamu Alaikum. On behalf of the Board of Directors and myself, I am pleased to welcome you to the 58th Annual General Meeting of Bangladesh Lamps Limited and present before you the Annual Report and Audited Financial Statements of the Company for the year ended on 30 June 2019.

Business Performance

Our business performance during the year 2018-2019 witnessed a moderate growth in sales. The sales for the year 2018-2019 was Taka 1,573.49 million as compared to Taka 1,475.77 million in 2017-2018.

Due to increase in finance cost during the year 2018-2019, profit growth could not be sustained. However, the overall state of business of the Company has improved during the year 2018-2019, due to a number of corrective measures taken by the management, such as, cost recovery and broadening of sales network etc. Some of the performance highlights for the year 2018-2019 are as follows:

Net Sales (Million)        1573.49
Profit after tax (Million)            29.27
EPS (Taka)             3.12
Net Operating Cash Flow Per Share (Taka)             3.03
NAV Per Share (Taka)           92.34

 Dividend

Keeping in view of the performance of the Company, the Board of Directors is pleased to recommend cash dividend of Taka 2.00 per share of Taka 10.00 each (i.e. 20%) for the year ended on 30 June 2019.

The appropriation of profit is shown below:

Taka

Profit for the year ended on 30 June 2019                                                           29,273,932

Total Divisible profit                                                                                         29,273,932

                                                                                                                       ===========

Proposed appropriations

Proposed dividend @ Taka 2.00 per share on

9,370,608 ordinary shares of Taka.10.00 each                                                   18,741,216

Transfer to General Reserve                                                                               10,532,716

Total appropriation                                                                                        29,273,932

                                                                                                                     ===========

Shareholders & share value

­­Total number of shareholders of the Company at 30th June 2019 was 3,542 as against 3,243 in the previous year. The price index of shares on that date stood at Taka 208.20 per share at the Dhaka Stock Exchange and Taka 213.50 per share at the Chittagong Stock Exchange.

Board Matters

The tenure of Mr. Ahmed Shafi Choudhury who served the Company for two consecutive terms as the Independent Director was expired on 24th December 2018. On the same date, the tenure of Mrs. Rokia Afzal Rahman as the Independent Director was also expired. The Board placed on record the valuable contributions made by Mr. Ahmed Shafi Choudhury and Mrs. Rokia Afzal Rahman towards the progress of the Company.

Complying upon the provision of the Corporate Governance Code issued by the Bangladesh Securities and Exchange Commission on 3rd June 2018, the Board of Directors appointed Mr. Akhtar Ahmed as Independent Director of the Company, subject to approval of the Shareholders at the upcoming Annual General Meeting. It is to be mentioned that the said appointment was recommended by the Nomination & Remuneration Committee (NRC) of the Company.

Now, the Board of Directors of Bangladesh Lamps Limited comprises of 10 (ten) members including 02 (two) Independent Directors. Mrs. Shahnaz Rahman is the Chairperson and Mr. Latifur Rahman is the Managing Director & Chief Executive Officer (CEO) of the Company. To enable the Board to function effectively and allow Directors to discharge their responsibilities efficiently, full and timely information is made available to them by the professional managers of each of the business segments. The Board of Directors met 05 (five) times during the period under review. The attendance record of the Directors is as follows:

Name of Directors                                          Meetings Held                            Attended

Mrs. Shahnaz Rahman                                                   5                                                   5

Mr. Latifur Rahman                                                        5                                                   5

Mr. Saifur Rahman                                                         5                                                   3

Mr. Atiqur Rahman                                                         5                                                   5

Mr. Shamsur Rahman                                                    5                                                   5

Mr. Arshad Waliur Rahman                                            5                                                   5

Mrs. Simeen Hossain                                                     5                                                  5

Mrs. Shahzreh Huq                                                         5                                                   5

Mr. Anis-uz-Zaman Khan (Independent Director)          5                                                   5

Mr. Akhtar Ahmed (Independent Director)                     5                                                   2

(Appointed on 24th December 2018)

Mr. Ahmed Shafi Choudhury (Independent Director)   5                                                   2

(Tenure expired on 24th December 2018)

Mrs. Rokia Afzal Rahman (Independent Director)         5                                                   2

(Tenure expired on 24th December 2018)

Re-appointment of Managing Director

As per section 110 of the Companies Act 1994, the tenure of office of Mr. Latifur Rahman as Managing Director expired on 15th September 2019. The Board has re-appointed him as Managing Director of the Company for a further period of five years and places before you for confirmation.

Audit Committee

The Audit Committee comprises of 03 (three) Directors. The Committee is headed by the Independent Director, Mr. Akhtar Ahmed. The objective of the Audit Committee is to ensure an adequate and effective internal control to facilitate the smooth functioning of the Company’s operations and assist the Board in discharging its responsibilities. The Audit committee also reviews the interim and annual financial statements before submission to the Board.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee (NRC) comprises of 03 (three) Directors. The Committee is headed by the Independent Director, Mr. Anis-uz-Zaman Khan.  The NRC assists the Board to formulate policy for formal and continued process of considering remuneration / honorarium of Directors and top-level executives. The NRC has a guiding role to the management to identify the Company’s needs for employees at different levels and determine their selection, transfer or replacement and promotion criteria.

Corporate Reporting

The Board of Directors is pleased to inform the following as required by the Bangladesh Securities and Exchange Commission:

  • Industry outlook and possible future development :

The business trend and growth in the lighting industry was moderate during the year ended on 30 June 2019. The LED (Light Emitting Diode) segment has grown significantly because of the energy saving benefit and longer life. Though we have faced huge challenges during the year 2018-2019 particularly with non-warranty products made with low quality chip, the Company has achieved 6.62% growth in sales revenue in compare to the last year.

  • Segment-wise or product-wise performance :

The segment-wise net sales performance of the Company during the year 2018-2019 is shown below:

(Taka in Million)

YearEnergy Saving LampsElectric BulbFTLOthersTotal
2018-20191,273.49228.6057.9413.461,573.49
2017-20181,113.50265.8684.5711.841,475.77
  • Risks and concerns including internal & external risks factors:

Internal risk factors

The Company is fully aware of the different risks associated with doing business and is prepared to manage those risks through a professional approach. The financial and other risks have been disclosed in the Note 35 and Note 40 of the audited financial statements.

 External risk factors

The Company’s results may be affected by factors outside its control such as political unrest, strike, civil commotion and act of terrorism.

Threat to sustainability and negative impact on environment

In line with global practice, the government initiates changes in environmental, health and safety laws and regulations and energy saving activities from time to time. The Company keeps track of these changes and pay special attention and proactive business strategy are being formulated to ensure conformity with the changes.

 While many of the risk areas are beyond control of any single company, Bangladesh Lamps Limited closely monitors the trends and developments in each of the risk areas and takes the best possible measures to mitigate them through product and market diversification, efficient sourcing of materials, use of latest technology and investment in research and development to gain sustained competitive advantage.

  • Cost of Goods Sold, Gross Profit Margin & Net Profit Margin :

During the year ended 30 June 2019, the net sales of the Company was Taka 1,573.49 million and the net profit after tax was Taka 29.27 million. The financials are shown in the following table:

(Taka in Million)

Particulars
For the

year ended 30 June 2019

For the

year ended 30 June 2018

Net revenue1,573.491,475.77
Cost of sales(1,200.42)(1,145.21)
Gross profit373.07330.57
Other income34.6135.91
Operating expenses(322.39)(287.89)
Profit before net finance cost85.2978.58
Net finance cost(43.12)(19.16)
Profit/(loss) before contribution to WPPF42.1759.42
Contribution to WPPF2.01(2.83)
Profit/(loss) before income tax40.1656.59
Income tax expenses(10.89)(16.11)
Profit/(loss) after tax29.2740.48
  • Extra-ordinary activities :

No extra-ordinary activities and their implications (gain or loss) have been recognized in the financial statements during the year under review.

  • Related party transactions :

All transactions with related parties have been made on commercial basis and were conducted on the basis of “Arm’s Length Principle”. Details of related party transactions have been disclosed under Note 36 of the Audited Financial Statements.

  • Explanation on significant variance :

Due to increase in finance cost, profit after tax and Earnings Per Share (EPS) have decreased, as compared to the last year.

  • Remuneration paid to Directors including Independent Directors :

The Board of Directors including Independent Directors received fees for attending Board Meetings only in accordance with the Articles of Association of the Company. The remuneration of Tk. 3,00,000 was paid to the Managing Director of the Company for the year ended on 30 June 2019. The remunerations to the directors including independent directors have been disclosed in Note 34 of the Audited Financial Statements.

  • Financial statements prepared following all applicable laws & regulations :

The Financial Statements together with the notes thereon have been drawn up in accordance with Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994, Securities and Exchange Rules 1987 and other applicable laws and regulations. These statements present fairly the Company’s state of affairs and the results of its operations, cash flow and changes in equity.

  • Proper books of accounts maintained:

Proper books of accounts of the Company have been maintained.

  • Appropriate accounting policies applied in preparation of Financial Statements:

Appropriate Accounting Policies have been consistently applied in the preparation of Financial Statements and the accounting estimates are based on reasonable and prudent judgment.

  • IAS & IFRS have been followed in preparation of Financial Statements:

International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as adopted in Bangladesh, have been followed in preparation of the financial statements and any departure there-from has been adequately disclosed.

  • Internal control :

The Company maintains a sound internal control system which gives reasonable assurance that the Company’s resources are safeguarded and the financial position of the Company is well managed.

  • Protection of minority shareholders from abusive actions :

The minority shareholders of the Company have been protected from abusive actions by, or in the interest of, controlling shareholders acting either directly or indirectly and have effective means of redress.

  • Going concern :

The Directors are of the opinion that the Company is a going concern and there are no indications of significant doubts upon the Company’s ability to continue as a going concern. Accordingly, Financial Statements are prepared on a going concern basis.

  • Significant variations have been highlighted :

All significant variations in operating results from the previous year have been highlighted and reasons thereof have been explained.

  • The key operating and financial data:

The key operating and financial data for the last ten years is enclosed (Page no. 5).

  • Interim dividend declaration :

No dividend has been declared as interim dividend.

  • The pattern of shareholding :

The pattern of shareholding (name wise) is also enclosed (Page No. 22).

  • Management’s discussion and analysis signed by Managing Director & CEO :

A Management’s Discussion and Analysis signed by Managing Director and Chief Executive Officer (CEO) presenting detailed analysis of the company’s position and operations along with a brief discussion of changes in the Financial Statements is enclosed (Page No. 23).

  • The declaration or certification by the Managing Director & CEO and the CFO to the Board :

The Declaration by the Managing Director and Chief Executive Officer (CEO) and the CFO to the Board as required under condition No. 3(3) of Corporate Governance Code is disclosed as per Annexure-A (Page No. 27).

Corporate Governance Compliance Certificate & Report

In accordance with the requirement of Bangladesh Securities Exchanges Commission, Corporate Governance Compliance Certificate as well as Report regarding compliance of conditions of Corporate Governance Code as required under condition No. 1(5)(xxvii) is enclosed as per Annexure-B and Annexure-C respectively (Page No. 28 & 29).

Directors

In terms of article 113 of the Articles of Association of the Company, Transcom Limited is entitled to appoint one-third of the total number of Directors who shall not retire by rotation. Accordingly, Mr. Latifur Rahman and Mrs. Shahnaz Rahman who were appointed by Transcom Limited as Directors of the Company will not retire by rotation.

Out of the other Directors, Mr. Saifur Rahman, Mr. Atiqur Rahman, Mr. Arshad Waliur Rahman and Mrs. Shahzreh Huq will retire by rotation in accordance with article 124 of the Articles of Association of the Company and, being eligible, offer themselves for re-election.

Auditors

The existing auditors of the Company Messrs. A. Qasem & Co., Chartered Accountants, will retire at this meeting. They are, however, eligible for re-appointment and have indicated their willingness to be re-appointed as the statutory auditors for the year 2019-2020.

Appointment of professional to certify compliance with the CGC

In order to comply with the Corporate Governance Code (CGC) issued by the Bangladesh Securities and Exchange Commission dated 03 June 2018, the Company has taken initiatives to appoint a professional firm who will provide the certificate as stated in the aforesaid Code. M/S Basu Banerjee Nath & Co., Chartered Accountants, have expressed their willingness vide their letter No. BBNC/8137/2019 dated October 06, 2019 to act as a professional for issuing the certificate on compliance for the year 2019-2020.

Acknowledgement

On behalf of the Board of Directors and myself, I would like to thank our shareholders, employees of the Company, our business partners including distributors, customers, banks, financial institutions, government agencies, and our suppliers for their continuous support and co-operation extended to the Company. We expect that this commitment will persist in future as well, so that the Company can attain greater success.

On behalf of the Board

Dated, Dhaka                                                                                                         Shahnaz Rahman

October 10, 2019                                                                                                    Chairperson