Latest Directors’ Report

Bangladesh Lamps Limited

Directors’ Report for the year ended on 30 June 2020

 

Dear Shareholders,

Assalamu Alaikum. On behalf of the Board of Directors and myself, I am pleased to welcome you to the 59th 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 2020.

Business Performance

The Company started the fiscal year 2019-2020 with tremendous challenges. The Company had set a target this year to make its operation profitable by reducing aged receivables and credit in the first half (Jul 2019 – Dec 2019) and increasing revenue in the second half (Jan 2020 – Jun 2020) of the year. However, due to the outbreak of deadly COVID 19 pandemic across the country in March 2020, the company’s revenue in the second half plummeted drastically and it failed to earn the forecasted revenue, resulting in net loss for the year.

Despite the drop in sales revenue, there has been some significant improvements in the business, which is highlighted below:

Trade & other receivables decreased to Tk 130.06 million from Tk 311.99 million – 58% decrease over last year.

Operating cash flow increased from Tk 28.36 million to Tk 137.78 million from same period last fiscal year.

As the pandemic situation gradually improves and the country’s economy is showing signs of recovery, the revenue of the Company has also started to increase moderately from June 2020 and the Company anticipates to increase sales revenue that will lead to profitable growth in fiscal year 2021-22.

The Company is also planning to shift its present manufacturing facility from Mohakhali, Dhaka to Ghashirdia, Narshingdi in December 2020, as the current rental lease period for the facility ends on 31st December, 2020. The Company has made new arrangements in Narshingdi to take long term lease of approx. 90,000 SFT of industrial space with necessary amenities in this regard.

Dividend

Keeping in view of the performance of the Company, the Board of Directors is pleased to recommend cash dividend of Taka 1.00 per share of Taka 10.00 each (i.e. 10%) for the year ended on 30 June 2020.

The total appropriation is mentioned below:

(Taka)
Profit/(Loss) for the year ended 30 June 2020(92,542,983)
Add: Transfer from General Reserve101,913,591
—————–
Total divisible profit9,370,608
==========
Proposed appropriations
Dividend @ Tk. 1.00 per share on 9,370,608
ordinary shares of Tk. 10.00 each
9,370,608
—————–
Total appropriation9,370,608
==========

Shareholders & share value

­­Total number of shareholders of the Company at 30th June 2020 was 3,516 as against 3,542 in the previous year. The price index of shares on that date stood at Taka 112.70 per share at the Dhaka Stock Exchange and Taka 119.50 per share at the Chittagong Stock Exchange.

Board Matters

The tenure of Mr. Anis-uz-Zaman Khan who served the Company for two consecutive terms as the Independent Director was expired on 29th September, 2020. The Board placed on record the valuable contributions made by Mr. Anis-uz-Zaman Khan 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 Ms. Rokia Afzal Rahman 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 9 (nine) members including 2 (two) Independent Directors. Ms. Shahnaz Rahman is the Chairperson of the Board of Directors of the Company. Ms. Simeen 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 professionals of each key functional areas. The Board of Directors met 05 (five) times during the period under review.

The attendance record of the Directors is as follows:

Name of DirectorsMeetings heldAttended
Ms. Shahnaz Rahman54
Mr. Latifur Rahman
(Passed away on 01/07/2020)
53
Ms. Simeen Rahman55
Mr. Saifur Rahman                                               55
Mr. Atiqur Rahman 55
Mr. Shamsur Rahman   55
Mr. Arshad Waliur Rahman 55
Ms. Shahzreh Huq 55
Mr. Anis-uz-Zaman Khan (Independent Director)   (Tenure expired on 29th September, 2020)55
Mr. Akhtar Ahmed (Independent Director)             55
Ms. Rokia Afzal Rahman (Independent Director)   
(Appointed on 19th October, 2020)
00

Appointment of Managing Director & Chief Executive Officer (CEO)

Consequent upon the demise of Mr. Latifur Rahman, the Board of Directors of the Company felt the necessity to appoint Managing Director & Chief Executive Officer (CEO) of the Company. In this respect, the Board of Directors in its Board Meeting dated 15th September, 2020 appointed Ms. Simeen Rahman to act as Managing Director & Chief Executive Officer (CEO) 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.

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. Akhtar Ahmed who has been appointed by the Board, in light of the Corporate Governance Code issued by BSEC, as Chairperson of the said Committee in place of 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 2020. The LED (Light Emitting Diode) segment has grown significantly because of the energy saving benefit and longer life and we anticipate next lighting solution will come with LED. However, we have faced huge challenges during the year 2019-2020 particularly with non-warranty products made with low quality chip.

  • Segment-wise or product-wise performance :

The segment-wise net sales performance of the Company during the year 2019-2020 is shown below:

(Taka in Million)

YearEnergy Saving LampsElectric   BulbFTLOthersTotal
2019-2020761.05148.0726.824.28940.22
2018-20191,273.49228.6057.9413.461,573.49
  • Risks and concerns including internal & external risks factors:

Internal risk factors

The Company is fully aware of the 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 Notes 35 and 40 of the audited financial statements.

External risk factors

The Company’s results may be affected by factors outside its control such as pandemic situation, 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 change 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 2020, the net sales of the Company was Taka 940.22 million and the net profit/(loss) after tax was Taka (92.54) million. The financials are shown in the following table:

 Taka in Million
   For the year ended 30 June 2020  For the year ended 30 June 2019
Particulars  
Net revenue940.221573.49
Cost of sales(742.41)(1,200.42)
Gross profit197.81373.07
Other income  26.5834.61
Operating expenses(267.99)(322.39)
Profit/(loss) before net finance cost(43.60)85.29
Net finance cost(43.76)(43.12)
Profit/(loss) before contribution to WPPF(87.37)42.17
Contribution to WPPF2.01
Profit/(loss) before income tax(87.37)40.16
Income tax expenses(5.17)(10.89)
Profit/(loss) after tax(92.54)29.27
  • 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 pandemic situation since March 2020, the Company failed to earn forecasted revenue. As a result, the Company could not cover its operating cost and finance cost, resulting in net loss for the 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. 300,000 was paid to the Managing Director of the Company for the year ended on 30 June 2020. 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 International Financial Reporting Standards (IFRS), 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 flows 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. 23).

  • 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. 24).

  • 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. 28).

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. 29 & 30).

Directors

ln 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 Ms. Shahnaz Rahman and Ms. Simeen 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. Shamsur  Rahman and Ms. 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 and are not eligible for the re-appointment as per BSEC order no. SEC/CMR RCD/20099-13 /104/ admin /…. dated 27 July2011. Accordingly, new auditors are required to be appointed Messrs. Ahmed Zaker & Co., Chartered Accountants, have expressed their interest to act as the statutory auditors of the Company for the year 2020-2021. The Audit Committee of the Company reviewed the said Expression of Interest (EOl) as per the Corporate Governance Code issued by BSEC and forwarded to the Board for consideration Accordingly the Board places the same to the shareholders for approval.

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 provided 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/8498/2020 dated October 18, 2020 to act as a professional for issuing the certificate on compliance for the year 2020-2021.

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 19, 2020                                                                                 Chairperson