BOARD'S REPORT Dear Members, Your Directors have pleasure in presenting their 37th Annual Report on the business and operations of the Company and Audited Financial Statements for the Financial Year ended on 31st March, 2015. RESULT OF OPERATIONS AND STATE OF COMPANY'S AFFAIRS The highlights of the Company's Performance are as under: • Revenue from operations including other income decreased by 0.55% to Rs.25123.96 Lacs • Exports decreased by 1.22% to Rs. 13578.69 Lacs. • PBDIT increased by 5.80 % to Rs. 2733.61 Lacs. • Cash Profit decreased by 1.99°% to Rs. 1477.00 Lacs. • Net Profit increased by 15.02% to Rs. 650.99 Lacs. Net Revenue from operations, including other income for the year ended 31st March, 2015 was Rs 25123.96 Lacs as against Rs 25262.23 Lacs in the previous year. Though yarn production during the year was higher at 13349 Tons compared to 12525 Tons in the previous year. Net revenue including the other income was almost flat mainly as a result of decrease in the prices of polyester yarn due to decrease in prices of polyester fiber. Average price of polyester fiber during the year decreased to Rs. 91.76 per kg compared to Rs.101.76 per kg in the previous year. • Repaid Rs.959.63 Lacs of term loans to the Banks and Financial Institutions. • Availed Corporate Loan of Rs 1000.00 Lacs from State Bank of India Furthermore, during the year under review, RIICO & Exim Bank Ltd has disbursed term loan of Rs. 1200 Lacs &Rs. 1041.00 Lacs respectively for the expansion / modernization project. The Company's Bankers have provided a need-based working capital facility during the year. EXPORTS Exports have always been the main focus of your Company. The Company's exports have increased 14.06 % from 6344 metric tonnes to 7236 metric tonnes. However, in value terms exports decreased to Rs 13578.69 Lacs compared to Rs 13746.56 Lacs due to appreciation in value of INR against Euro. RATINGS ICRA has upgraded the rating on the bank facilities of the Company to "ICRA BBB from CRISIL BBB-/Stable/Crisill A3". This upgrade in rating reflects an improvement in the Company's overall financial risk profile, particularly its liquidity, backed by stable accruals, continued fund support from promoters, and prudent financing. The Company's successful commissioning of its enhanced capacities along with a stable demand from its customers will ensure that it achieves an annual topline growth of about 10% over the medium term and improve its operating margin from 10% to 12-13 % over the years. DIRECTORS AND KEY MANAGERIAL PERSONNEL Shri N.G Khaitan, Non-Executive & Non Independent Director & Shri Rahul Shroff, Executive Director of the Company who retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment. Smt. Dipika Shroff, who was appointed as an additional director in the board meeting held on 10th February, 2015 and holds office up to the date of ensuing Annual General Meeting, is proposed to be appointed as Director of Company at the ensuing Annual General Meeting. The Company has received necessary notice under Section 161(1) of Companies the Act, 2013 from a member proposing her appointment and the resolution for her appointment shall be placed at the Annual General Meeting for the approval of members Information as required pursuant to clause 49 of listing agreement with the stock exchanges on the directors, including those retiring by rotation is provided in the report of corporate governance. Your Directors recommend the said appointments /re- appointments as stated above. During the year Shri V.B.L Mathur & Shri B.K Agarwal resigned from Directorship of the Company w.e.f 06th February,2015 and 31st March,2015 respectively. The Board places on record its gratitude for the services rendered for very long time by Shri V. B.L Mathur & Shri B.K Agarwal during their association with the Company. Shri Mahesh Kumar Gupta, CFO & CS, also resigned from the Company w.e.f 09th August, 2014. During the year under review, the Company has appointed/ reappointed following people as Key Managerial Personnel in the Meeting held on 09thAugust, 2014. 1. Shri Sanjiv Shroff as Managing Director 2. Shri Ravindra Kala as Chief Financial Officer 3. Shri Vimal Tank as Company Secretary APPOINTMENT OF INDEPENDENT DIRECTORS / EXECUTIVE DIRECTORS AT LAST AGM In compliance with the provision of Section 149 & 152 and schedule IV and other applicable provision, if any, of the Companies Act, 2013 read with (Appointment and Qualification of Directors) rules 2014, Shri Narayan Shroff, Shri V.B.L Mathur, Shri K.L Sonthalia, Shri Shanker Menon, Shri Ramadoss Srinivasn and Shri B.K Agarwal were appointed as Independent Directors at the 36th Annual General Meeting for a term of 5 year from 29.09.2014 to 28.09.2019. At the aforesaid AGM, Shri Sanjiv Shroff, Managing Director of your Company was re-appointed for three years commencing from 01.09.2014 to 31.08.2017 & Shri R.N Sharma, Whole time Director was re-appointed for a term of three years from 29.09.2014 to 28.09.2017. DECLARATION OF INDEPENDEN CE BY I N DEPENDEN T DIRECTORS The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under subsection (6) of Section 149 of the Companies Act, 2013. BOARD EVALUATION Pursuant to Provision of the Companies Act, 2013 read with Rules issued there under and Clause 49 of Listing Agreement, the Board has carried out an annual evaluation of its own performance, the directors individually, as well as the evaluation of the working of its Committees. The performance of Individual Directors, the Board and its various Committees were discussed in details. A structured questionnaire each for evaluation of the Board, its various Committees and individual director were prepared and recommended to the Board of Director by Nomination & Remuneration Committee for doing the required evaluation, after taking into consideration the input received from directors covering, various aspect of the Boards function such as adequacy of the composition of the Board and its committees, execution and performance of specific duties, obligations and governance etc. A separate exercise was carried out to evaluate the performance of individual directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company. A Performance evaluation of Independent Directors was carried out by the entire board. A Performance evaluation of the Chairman and non-independent directors was also carried out by the Meeting of Independent Directors separately. NUMBER OF MEETING OF BOARD The Board of Directors met six times during the year on 30.05.2014, 09.08.2014, 31.10.2014, 17.01.2015, 10.02.2015 and 30.03.2015. The frequency of and the quorum at these meetings were in conformity with the provisions of the Companies Act, 2013 and the Listing Agreement entered into by the Company with the Stock Exchanges. Attendance and other details are given in Corporate Governance Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013. STATUTORY AUDITORS M/s G.P. Kejriwal & Co. Chartered Accountants, Jaipur (Firm Registration Number: 001036C), were appointed as Statutory Auditor of the Company at the previous Annual General Meeting held on 29th September, 2014 till the conclusion of 39th Annual General Meeting, subject to ratification of their appointment in every Annual General Meeting. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has obtained a written certificate from the above mentioned Auditors to the effect that they conform with the limits specified in the said Section and that they are not disqualified for appointment within the meaning of Section 141 of the said Act. Ratification of appointment of Statutory Auditors is being sought from the shareholders of the Company at the ensuing AGM. As required under clause 41 of Listing Agreement, the Auditors have also confirmed that they hold a valid certificate issued by the peer review Board of ICAI. AUDITORS REPORT The Auditor's Report for the F.Y. 2014-15 does not contain any qualification, reservation or adverse remarks. COST AUDITORS Cost Audit Report for the year 2013-14 was filed with the MCA on 26.09.2014 before due date. Due to applicability of New Companies Act, 2013 and Cost Audit Rules clarify that the Cost Audit for the year 2014-15 was not applicable on your Company but the Management has decided to conduct the Audit by M/s HMVN & Associates Cost Accountants, 31, Community Centre, Golden Palace, 2nd Floor, Ashok Vihar, Delhi-110052 for the year 2014-15 for their Internal Control. M/s. HMVN & Associates,Cost Accountants, New Delhi has been appointed by the Board to conduct the Audit for the Financial Year 2015-16. As required under the Companies Act,2013 the remuneration payable to the Cost Auditors is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking member's ratification for remuneration payable to M/s. HMVN & Associates, Cost Accountant, New Delhi is included in the Notice of Annual General Meeting. SECRETARIAL AUDITORS & SECRETARIAL AUDIT REPORT Pursuant to Provision of Section 204 of the Companies Act, 2013 and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, made there under, the Company has appointed M/s. V.M & Associates, Practicing Company Secretary, Jaipur to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as Annexure-2 and forms integral part of the Report. The Secretarial Audit Report does not contain any qualification/ reservation & adverse remark. The Board of Directors has re-appointed M/s. V.M & Associates, Practicing Company Secretary, Jaipur to conduct the Secretarial Audit for the Financial Year 2015-16. INTERNAL AUDITORS Pursuant to Provision of Section 138 of the Companies Act,2013 and Companies (Accounts) Rules, 2014 made thereunder, the Board of Directors in its meeting held on 08th August,2015 has re- appointed M/s. Rajeev Amitabh & Co, Chartered Accountant, New Delhi to conduct the Internal Audit of the Company for the Financial Year 2015-16. FIXED DEPOSITS: During the Financial Year 2014-15, your Company has not invited, accepted or renewed any deposits from the public within the meaning of Section73 and 74 of the Companies Act., 2013 read together with The Companies (Acceptance of Deposit) Rules, 2014. SHARE CAPITAL During the year under review, the Company has allotted 3,00,000 No.s of 10% Cumulative Redeemable Preference Shares of Rs. 100/- on 17.01.2015 on private placement basis to augment long term funds and increase shareholders fund. After issue of above additional Preference Shares, issued preference capital increased to Rs. 2307.50 Lacs. During the Year the Company has extended the period of Redemption of 325000 10% Cumulative Redeemable Preference Shares of Rs. 100/-each up to 20 years. Present Capital Structure are as under. Equity Share Capital : 399.48 Lacs Preference Share Capital : 2307.50 Lacs EXTRACT OF ANNUAL RETURN The Extract of the Annual Return in Form MGT-9 containing details as on the financial year ended 31st March, 2015, as required under Section 92 (3) of the Companies Act, 2013, read with the Companies (Management and Administration) Rules 2014, is included in the Report as an Annexure-7. MATERIAL CHANGES AND COMMITMENTS There were no material changes and commitment affecting the financial position of the Company between the end of the financial year as on 31st March,2015 of the Company to which the financial statements related and date of this report (August 08, 2015). SIGNIFICANT MATERIAL ORDER PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE There were no significant and material orders passed by the regulators, courts or tribunals which would impact the going concern status of the Company. SUBSIDIARY COMPANY The Company has no Subsidiaries as on 31st March, 2015. LOANS, GUARANTEES & INVESTMENTS BY THE COMPANY Details of Loans, Guarantees, and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are provided in the Note No. 12 of the Financial Statement. INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY The Company has put in place an adequate system of internal control commensurate with its size and nature of business to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor of the Company checks and verifies the internal control and monitors them in accordance with the policy adopted by the Company. Your Company is implementing ERP system to have better internal control. REPORT ON CORPORATE GOVERNANCE A separate section on Corporate Governance and a certificate from Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with Stock Exchange form a part of the Annual Report are given in Annexure-8 . VIGIL MECHANISM /WHISTLE BLOWER POLICY Your Company is committed to highest standard of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177(9) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Policy provides a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them. The policy is to promote ethical behavior in all its business activities and to report concerns and unethical behavior, actual or suspected fraud or violation of our code of conduct and ethics. Under the said Mechanism, the employees are free to report violations of applicable laws and regulations and the Code of Conduct. It also provides for adequate safeguards against the victimization of persons who use such mechanism. The Vigil Mechanism/Whistle Blower Policy has been posted on the Company's website www.reliancechemotex.com . The functioning of the vigil mechanism is reviewed by the Audit Committee from time to time. Your Company here affirm that no director/employee has been denied accessed to the Chairman of the Audit Committee and that no compliant were received during the year. Brief details about the policy are given in the Corporate Governance Report. NOMINATION & REMUNERATION POLICY The Board of Directors has framed the policy on Nomination & Remuneration which lays down the framework in relation to remuneration of directors, Key Managerial Person and Senior Management of the Company. This policy also lays down the criteria for selection and appointment of Board Members. The Nomination & Remuneration policy has been posted on the Company's website www.reliancechemotex.com and also annexed with the report in Annexure-6. Remuneration Committees was renamed as "Nomination & Remuneration Committee in the Meeting of Board of Directors held on 30th May, 2014. Further the Board of Directors also approved the Policy on Nomination & Remuneration in the Meeting held on 09th August, 2014. Further the said Committee was reconstituted in the Board Meeting held on 10th February, 2015 with the following person namely Shri K.L Sonthalia, Shri Shanker Menon and Shri Ramadoss Srinivasan.The Remuneration policy of the Company comprising the appointment and remuneration of the Directors, KMP & Senior Executive of the Company including criteria for determining qualification, positive attributes and independence of directors and other related matter has been provided in the Corporate Governance Report. RELATED PARTY TRANSACTION The Company has framed the policy on related party transactions and the Audit Committee shall review the related party transactions in every meeting. As reviewed by the Audit Committee there are no material related party transactions during the year. Audit Committee in the Meeting held on 30th May, 2014 has sanctioned the omnibus approval of various transaction with related party for one year. Although during the year the Company has approved the Lease/ Leave Agreement with Indo Textile & Fibers Ltd, A.S Chemotex Private Limited, A.R Commercial Private Limited & Spell Fashions Private Limited from 01.04.2014 and obtained the shareholders' approval in the Annual General Meeting held on 29.09.2014. The disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 is given in AOC -2 as given in Annexure-3. The policy on related party transactions are posted on companies website www.reliancechemotex.com . DISCLOSURE UNDER THE SEXUAL HARRASAMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has always believed in providing a safe and harassment free workplace for every individual through various interventions and practices. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the year 2014-15. The Company Framed a Policy on Sexual Harassment of Women at the Workplace and also the committee has been constituted namely to redress the compliant received regarding sexual harassment. There is no complaint received during the year. COMPOSITION OF AUDIT COMMITTEE As per the requirement of Clause 49 of the Listing Agreements with Stock Exchange and in compliance of Section 177 of Companies Act, 2013, the Company had re- constituted the Audit Committee in the board meeting held on 10th February, 2015 comprising the following Directors 1. Shri K.L.Sonthalia - Chairman 2. Shri N.G.Khaitan - Member 3. Shri Shankar Menon - Member 4. Shri Ramadoss Srinivasn - Member Shri K.L Sonthalia is the Chairman of the Audit Committee. The composition, role, functions and powers of the 'Audit Committee' are in accordance with Clause 49 of the Listing Agreement with Stock Exchange and Section 177(1) of the Companies Act, 2013. CORPORATE SOCIAL RESPONSIBILITY In terms of requirements of Section 135 of the Companies Act, 2013 and rules issued there under, the Board of Directors of your Company has constituted a CSR Committee comprising of Shri K.L Sonthalia, Shri R.N Sharma, Shri Rahul Shroff as members of the committee. This Committee is responsible for formulating, implementing and monitoring the CSR Policy of the Company. During the year, on the recommendation of CSR Committee, the Board of Directors has given the aid of Rs. 13,38,000/- towards Prime Minister National Relief Fund. The Report on CSR Activities required under the Companies Act, 2013 are set out in the Annexure- 4. RISK MANAGEMENT Your Company has framed the Risk Management Policy and has constituted a Committee on Risk Management. The Committee closely monitors all risks that could have a negative effect on the Company. The Risk Management Committee comprised of Shri Rahul Shroff, Shri Sanjiv Shroff, Shri Ameya Shroff & Shri R.N Sharma, and was also attended by the CFO and the Company Secretary. Risk which has reviewed by the Risk Management Committee are Financial Risk, Compliance Risk, Hazardous Risk, and Employee Related Risk. Although the Company has long been following the principle of risk minimization as is the norm in every industry, it has now become compulsion. Therefore, in accordance with clause 49 of the listing agreement the Board members were informed of risk assessment and minimization procedures after which the Board formally adopted steps for framing, implementing and monitoring the risk management plan for the Company. The main objective of this policy is to ensure sustainable business growth with stability and to promote a proactive approach to reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues. PARTICULARS OF EMPLOYEES & THEIR DISCLOSURES: The information required pursuant to Section 197 (12) read with rule 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is appended as Annexure- 5. A detailed discussion on human resources & industrial relations is made in the "Management Discussion & Analysis Report" which forms a part of this report. The Board places on record their appreciation for the effort and contribution made by each employee and for each employee's continued high level of performance. There are no employees of the Company in receipt of remuneration of Rs. 5.00 Lacs Per Month or more as required to be furnished under Section 197 (12) of the Companies Act, 2013 and rules made there under, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014. MANAGERIAL REMUNERATION The detail of Managerial Remuneration are given elsewhere in Corporate Governance Report as forming part of Board's Report. PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO. The statement pursuant to Section 134 (3)(m) of The Companies Act, 2013 read with the Rule 8(3) of The Companies (Accounts) Rules,2014 regarding particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act is given in Annexure- 1. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement of Section 134(3)(c) of the Companies Act, 2013, with respect to Directors' Responsibility Statement Board of Directors hereby state and confirm that: (i) In the preparation of the annual accounts for the year ended March 31st, 2015 the applicable accounting standards and schedule III of the Companies Act, 2013 had been followed and there are no material departures from the same; (ii) Appropriate accounting policies have been selected and these have been applied consistently and that the judgements and estimates that have been made are reasonable and prudent so as to provide a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss 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 to safeguard the assets of the Company and to prevent or detect fraud and other irregularities; (iv) The annual accounts for the year ended 31st March, 2015 have been prepared on a going concern basis; (v) Robust and detailed Internal Financial Controls to be followed by the Company have been laid down. These controls are adequate and were operating effectively; (vi) Appropriate system have been devised to ensure that your Company is compliant with all applicable provisions and statutory requirements. These systems were adequate and operating effectively. ACKNOWLEDGMENT The Directors express their grateful appreciation for the cooperation and continued assistance received from Financial Institutions, Banks, Government Authorities, Shareholders, Suppliers and Esteemed Customers. The Directors also wish to place on record the appreciation for the services rendered by the Employees of the Company. FOR AND ON BEHALF OF BOARD OF DIRECTORS FOR RELIANCE CHEMOTEX INDUSTRIES LIMITED (Sanjiv Shroff) (Ra h ul Sh roff) DIN: 00296008 D I N : 02301693 Place: Mumbai Date: 08th August, 2015 |