DIRECTORS' REPORT DEAR MEMBERS, Your Directors have pleasure in presenting this Thirty-Third Annual Report on the business and operations of your Company with the Audited Financial Statements for the year ended March 31, 2015. 2. OPERATIONS & STATE OF COMPANY'S AFFAIRS Your Company earned revenue of Rs. 15,350.99 Million for the year ended 31st March, 2015, as compared to Rs. 18,572.05 Million in the previous financial year. The Company recorded a Net Profit after Tax of Rs. 331.90 Million compared to Rs. 507.88 Million in the previous financial year. There was no change in nature of business of the Company, during the year under review. 3. DIVIDEND Your Directors recommend a Dividend of 10% i.e. Re. 0.10 per Equity Share of face value of Rs. 1/- each fully paid up aggregating to Rs. 26.69 Million for the year ended 31st March 2015. 4. TRANSFER TO RESERVES The Board of Directors has not recommended transfer of any amount to reserves. 5. SHARE CAPITAL The paid up Equity Share Capital as at March 31, 2015 stood at 266.91 Million. During the year under review, the Company has not issued shares with differential voting rights nor granted any stock optionsor sweat equity shares. As on March 31, 2015 none of the Directors of the Company hold instruments convertible into equity shares of the Company. During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014. 6. SUBSIDIARIES, ASSOCIATES & JOINT VENTURES The Company has one material non listed Indian Subsidiary Company i.e. Axiom Cordages Limited. The policy for determining material subsidiaries of the Company is available on the website of the Company i.e. www.responsiveindustries.com Responsive International Limited, a wholly owned subsidiary of the Company has not yet commenced its operations. The Company does not have any associate Company & Joint venture. Performance of Axiom Cordages Limited is as follows: The total revenue of Axiom Cordages Limited stood at Rs.6,045.65 Million (Previous year 6,855.45 Million). Profit after tax for the year stood at Rs.290.09 Million (Previous year 316.68 Million). The requirement of appointing Independent Director of the Company on the Board of Directors of the subsidiary Company has been duly complied with. The requirements of the Clause 49 of the Listing Agreement with regard to subsidiary company have been complied with. Statement containing salient features of the financial statement of Subsidiary Company in Form AOC-1 forms part of this Annual Report. 7. CONSOLIDATED FINACIAL STATEMENT The Consolidated Financial Statements of the Company and of its Subsidiary, Axiom Cordages Limited are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standard (AS-21) and other Accounting Standards issued by the Institute of Chartered Accountants of India as well as Listing Agreement as prescribed by the Securities and Exchange Board of India (SEBI). 8. CORPORATE GOVERNANCE The Company has complied with all the mandatory requirements of Corporate Governance, as stipulated in Clause 49 of the Listing Agreement with the stock exchanges. A separate report on Corporate Governance and a certificate from M/s. P. P. Shah & Co., Practicing Company Secretaries regarding compliance with the conditions of Corporate Governance is given in a separate section and forms part of the Annual Report. Further, a declaration signed by the Chairman cum Whole Time Director, affirming compliance with the code of conduct by all the Board members and senior management personnel along with certificate required under clause 49(IX) of the Listing Agreement is also given in this Annual Report. 9. DIRECTORS In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Rajesh Pandey (DIN 00092767) retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for reappointment. Accordingly, his re-appointment forms part of the notice of the ensuing Annual General Meeting. Mr. Jagannadham Thunuguntla (DIN 02254282) and Ms. Jyoti Rai (DIN 07091343) was appointed as an Additional Independent Director on the Board of the Company w.e.f. 12th December, 2014 and 13th February, 2015 respectively. The resolution seeking approval of the Members for the appointment of Mr. Jagannadham Thunuguntla and Ms. Jyoti Rai have been incorporated in the notice of the forthcoming Annual General Meeting of the Company along with brief details about them. The Company has received a notice under Section 160 of the Act along with requisite deposit proposing their appointment. During the year under review, Mr. Atit Agarwal was reappointed as Whole Time Director of the Company for a period of three years w.e.f. 22nd August, 2014. Mr. Atit Agarwal, Whole Time Director of the Company draws remuneration from Subsidiary Company i.e. Axiom Cordages Limited. Mr. S.S. Thakur and Mr. V.K.Chopra were appointed as independent directors at the annual general meeting of the Company held on 09th August, 2014 for a period ofthree consecutive years. All Independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. During the year, non-executive directors of the Company had no pecuniary relationship or transactions with the Company. Mr. Michael Freedman (DIN 03289409) & Mr. V.K. Chopra (DIN 02103940), Non-Executive Independent Directors of the Company resigned from the Board w.e.f. 30th May, 2014 and 29th September, 2014 respectively. 10. DIRECTORS' RESPONSIBILITY STATEMENT Your Directors state that: (a) in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards have been followed and there are no material departures; (b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the Profit & loss of the Company for the year ended on that date; (c) the Directors have taken proper and sufficient care for 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; (d) the annual accounts have been prepared on a going concern basis; (e) the Directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; and (f) the Directors have devised proper system to ensure compliance with the provisions of allapplicable laws and that such system are adequate and operating effectively. 11. PLEDGE OF SHARES None of the equity shares of the Directors of the Company are pledged with any banks or financial institutions. 12. PUBLIC DEPOSITS The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing details of deposits which are not in compliance with the Chapter V of the Act is not applicable. 13. DISCLOSURES UNDER SECTION 134(3)(l) OF THE COMPANIES ACT, 2013 No material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year of the Company and date of this report. 14. MANAGEMENT DISCUSSION AND ANALYSIS Pursuant to Clause 49 of the Listing Agreement with the stock exchanges, the Management Discussion & Analysis Report for the year under review is given under a separate section and forms part of the Annual Report. 15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO In accordance with the provisions of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, required information relating to the conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the "Annexure A" to the Directors' Report. 16. GROUP Pursuant to intimation from the promoters, the names of the promoters & entities comprising the "Group" are disclosed in the Annual report for the purpose of SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011 in "Annexure B". 17. CORPORATE SOCIAL RESPONSIBILITY (CSR) Your Company has developed a CSR Policy which indicates the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013. The CSR Policy has been uploaded on the website of the Company. The Annual Report on CSR activities is annexed as "Annexure C" and forms a part of this Report. 18. EXTRACT OF ANNUAL RETURN Extract of the Annual Return in form MGT 9, as required under Section 92(3) of the Companies Act, 2013 is included in this Report as "Annexure D" and forms an integral part of this Report 19. AUDITORS 19.1 Statutory Auditors Pursuant to the provisions of Section 139 of the Act and rules framed thereunder, M/s. Haribhakti & Co. LLP, Chartered Accountants, were appointed as Statutory Auditors of the Company from the conclusion of the thirty second annual general meeting (AGM) of the Company held on 09th August, 2014 till the conclusion of AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. They have confirmed their eligibility and submitted the Certificate in writing that their appointment, if ratified, would be within the prescribed limit under the Act and they are not disqualified for appointment. The Auditor's Report does not contain any qualification, reservation or adverse remark. A Resolution seeking member's approval for ratification of appointment of Statutory Auditor forms part of the Notice convening the Annual General Meeting. 19.2 Cost Auditors Pursuant to Section 148 of Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, on recommendations of Audit Committee, your Directors has appointed M/S. S.K. Agarwal & Associates to audit the cost accounts of the Company for the financial year 2015-16. A Resolution seeking member's approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting. 19.3 Secretarial Auditor Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made thereunder, the Company has appointed M/S. P.P.Shah & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report in Form MR-3 is annexed herewith as "Annexure E". It does not contain any qualification, reservation or adverse remark except for Non- appointment of Chief Financial Officer (CFO) and not spending of amount towards Corporate Social Responsibility (CSR) by the Company. As per the provisions of section 203 (1) of the Companies Act, 2013, the Company is required to appoint CFO. The Company is in process of finding suitable person as its Chief Financial Officer. The said provision will be complied in near future. The company was unable to spend the two per cent of the average net profit of the last three financial years as this is the first year of implementation of CSR Policy and it was time consuming to understand the exact nature of project, location of suitable site, finalization of project etc. However, the Company is in process of identifying the areas for implementation of CSR. The Company would ensure in future that all the provision are compiled to the fullest extent. 20. RELATED PARTY TRANSACTIONS All related party transactions that were entered into during the year under review were in the ordinary course of business and on arm's length basis. The Company has not entered into any contract/arrangement/transaction with related parties which could be considered material in nature. All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. Your Directors draw attention of the members to note no. 32 to the standalone financial statement which sets out related party disclosures. The Company has developed a Related Party Transactions Policy which has been uploaded on the website of the Company and web-link thereto has been provided in the Corporate Governance report. 21. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has set up an Internal Complaints Committee (ICC) for providing redressal mechanism pertaining to Sexual harassment of women employees at workplace. The Company has not received any compliant pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. 22. RISK MANAGEMENT The Company has laid down the procedures to inform to the Board about the risk assessment and minimization procedures and the Board has formulated Risk management policy to ensure that the Board, its Audit Committee and its executive management should collectively identify the risks impacting the Company's business and document their process of risk identification, risk minimization, risk optimization as a part of a risk management policy/ strategy. At present there is no identifiable risk which, in the opinion, of the Board may threaten the existence of the Company. 23. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is also defined. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, corrective action are undertaken in the respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. Internal Financial Control The Company has in place adequate internal financial controls with reference to financial statements. During the year under review, no material or serious observation has been observed for inefficiency or inadequacy of such controls. 24. VIGIL MECHANISM / WHISTLE BLOWER POLICY In line with the best Corporate Governance practices, Company has put in place a system through which the Directors and employees may report concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct & Ethics without fear of reprisal. The employees and directors may report to the Compliance officer and have direct access to the Chairman of the Audit Committee. The Whistle-blower Policy is placed on the website of the Company. 25. BOARD MEETINGS During the Financial year, total 4 (Four) meetings of the Board of Directors were held on 30th May, 2014, 11th August, 2014, 14th November, 2014 and 13th February, 2015 respectively. 26. AUDIT COMMITTEE The Board has well-qualified Audit Committee with majority of Independent Directors including Chairman. As on date, it comprises of Mr. S. S. Thakur (Chairman of Committee), Mr. Rajesh Pandey, Mr. Jagannadham Thunuguntla and Ms. Jyoti Rai. The Company Secretary of the Company acts as Secretary of the Committee. 27. NOMINATION & REMUNERATION POLICY The Board has in accordance with the provisions of sub-section (3) of Section 178 of the Companies Act, 2013, formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and other employees. The detail of the same has been disclosed in the corporate governance report. 28. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, performance evaluation of Board and that of its committees and individual Directors was carried out. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. 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 judgment, participation by all directors and developing consensus amongst the directors for all decisions. The Chairman was evaluated on the key aspects of his role. In a separate meeting of independent directors, performance of non-independent directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the view of the executive directors and non-executive directors. 29. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant material orders passed by the Regulators / Courts/tribunals which would impact the going concern status of the Company and its future operations. 30. VOLUNTARY DELISTING OF SHARES FROM METROPOLITAN STOCK EXCHANGE OF INDIA LIMITED (*ERSTWHILE MCX STOCK EXCHANGE LIMITED) As there was no trading of the equity shares of the Company on Metropolitan Stock Exchange of India Limited*, the Board of Directors has, at its meeting held on 30th May, 2014 has approved voluntarily delisting of total 266912700 equity shares of Re. 1/- each of the Company from the Metropolitan Stock Exchange of India Limited*. On application of the Company, the Metropolitan Stock Exchange of India Limited*has, vide letter dated June 30, 2014 approved the delisting of the aforesaid equity shares of the Company from the exchange and the said shares has been suspended from trading w.e.f. July 03, 2014 and delisted from capital market segment of the Exchange w.e.f. July 08, 2014. However, the equity shares of the Company continue to be listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited having nationwide trading terminals. 31.PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES During the year under review, the Company has not given any loan or guarantee or provided security in connection with loan to any other body corporate or person as specified in Section 186 of the Companies Act, 2013. For information pertaining to Investments, kindly refer notes to financial statements. 32. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES ASPER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 There were no employees of the Company drawing remuneration exceeding the specified limit during the year under consideration, hence the details prescribed under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are not applicable. *Details not given for Mr. V.K. Chopra, Mr. Michael Freedman, Mr. JagannadhamThunuguntla and Ms. Jyoti Rai as they were Directors only for part of the financial year 2014-15.Details not given for Mrs. Swati Agarwal and Mr. Rajesh Pandey as they did not receive any remuneration from the Company. (iii) The Median Remuneration of employees of the Company for the financial year 2014-15 is Rs. 0.24 Million and there was an increase of 21.69 % compared to the previous financial year. (iv) The number of permanent employees on the rolls of the Company is 267 for the financial year ended March 31, 2015. (v) Average increase in employee's remuneration was around 16%. Revenue for the financial year ended March 31, 2015 decreased by 17.34 % as compared to previous year. Factors considered while recommending increase in compensation are Industry bench marking and overall Contribution made by the individuals. (vi) The remuneration of Key Managerial Personnel(KMP) of the Company and the percentage increase in the remuneration of the KMP during 2014-15 is as given in (i) and (ii) above. The total remuneration of Key Managerial Personnel increased by approx. 27% .The performance of the Company is as stated in (v) above. (vii) The market capitalization of the Company as on March 31, 2015 was around 33,097 million as compared to 25,423 million as on March 31, 2014. Price Earnings Ratio of the Company was 100 as on March 31, 2015 as against 50.13 as on March 31, 2014. Percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer- Not Applicable (viii) Average percentage increase made in the salaries of employees other than the key managerial personnel for the FY 2014-15 was approx. 16%. The increase in the remuneration of key managerial personnel was approx.27%. The increase in remuneration is determined based on the performance of the employees of the company. (ix) The remuneration of each of the KMP is given in (i) and (ii) above. The performance of the Company, in comparison, is stated in (v) above. (x) The remuneration of Whole-Time Director of the Company does not include any variable component. The key parameters for the variable component of remuneration availed by Independent Non-Executive Directors is based on their attendance and contribution at the Board and Committee Meetings. (xi) The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year - Not Applicable. (xii) It is hereby affirmed that the remuneration is as per the Remuneration Policy of the Company. 33. HUMAN RESOURCES The industrial relations at the manufacturing facilities of your Company have been cordial during the year. Employees are considered to be team members being one of the most critical resources in the business which maximize the effectiveness of the Organization. Human resources build the Enterprise and the sense of belonging would inculcate the spirit of dedication and loyalty amongst them towards strengthening the Company's Polices and Systems. The Company maintains healthy, cordial and harmonious relations with all personnel and thereby enhancing the contributory value of the Human Resources. 34. ENVIRONMENT AND SAFETY The Company is conscious of the importance of environmentally clean and safe operations. The Company's policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources. 35. ENHANCING SHAREHOLDERS VALUE Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company's operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development. 36. ACKNOWLEDGEMENTS Your Directors gratefully acknowledge the support given by the Customers, Dealers, Distributors, Suppliers, Bankers, various departments of the Central and State Governments, Local Authorities and members of the Company. Your Directors would further like to record their appreciation for the unstinted effort put by all Employees of the Company during the year. For and on behalf of the Board, AtitAgarwal Chairman & Whole Time Director Place : Mumbai Date : 26th May, 2015 |