DIRECTORS' REPORT To The Members, Your Directors have great pleasure in presenting the 35th Annual Report together with the Audited Annual Accounts of the Company for the financial year ended on 31st March, 2015. OPERATIONS During the year, the turnover of the Company has decreased from Rs.425.46 lacs previous year to Rs.296.23 lacs current year. The profit after interest, depreciation & tax has also down Rs.28.21 against previous year profit Rs. 28.30 Lacs. DIVIDEND As the company has accumulated losses in the past, so the board of the company has not recommended any dividend for the current financial year. FIXED DEPOSITS Total members deposits as on 31st March 2015 were Rs.219.34 Lacs. No fresh of deposits were accepted during the financial year 2014-15. There were no unclaimed deposits as at March 31, 2015. DIRECTORS The Board comprises of 6 Directors, namely:- Mr.Anil Kumar Khanna, Mr.B.L. Khurana, Mr.Ashwini Kumar, Mr.Suman Kapur, Mr.Aditya Khanna & Mrs.Pushpa Latha CS. Mr.Anil Kumar Khanna is the Chairman & Managing Director, Mr.Aditya Khanna is the Executive Non Independent Director and CEO & CFO. Mr.B.L. Khurana, Mr.Ashwini Kumar, Mr.Suman Kapur and Pushpa Latha CS are the Independent Directors in the Company. In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr.Anil Kumar Khanna, Chairman & Managing Director (DIN: 00207839) of the Company retire by rotation and being eligible, offers himself for reappointment. Mrs. Pushpa Latha CS appointed on 26.5.2015 as an Additional Director of the Company. Mr. B.L. Khurana is the Chairman of the Committee. The terms of reference of the Audit Committee have been laid down by the Board at its meeting constituting the committee, held on 26.05.2015. All the Independent Directors have given Declaration that they meet criteria of Independence as laid down U/s 149(6) of the Companies Act, 2013 and Clause No.49 of the Listing Agreement. DIRECTORS' RESPONSIBILITY STATEMENT In pursuance of Section 134 of the Companies Act, 2013 the directors, based on the representation received from the operation management, confirm that : (i) In the preparation of the annual accounts for the year ended 31st March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; (ii) They 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 at the end of the financial year 2014-15 and of the profit or loss of the company for that period; (iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (iv) They have prepared the annual accounts on a going concern basis. (v) They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. AUDITORS & AUDIT The Statutory Auditors of the Company M/s.J.P Chawla Chartered Accountants LLP, Delhi (Firm Registration No.00l875N) who were appointed as Statutory Auditors by the members for five years. Their appointment would be ratified at the ensuing Annual General Meeting. The observations of the Auditors and the relevant notes on the accounts are self-explanatory and therefore do not call for any further comments. INTERNAL AUDITOR The Board of Directors of your Company has re-appointed Mr.Rakesh Sharma as Internal Auditors pursuant to the provision of Section 138 of the Companies Act, 2013 for the financial year 2015-16. SECRETARIAL AUDITORS The Board had appointed M/s. Choudhary Pankaj & Associates, Company Secretaries, Delhi as Secretarial Auditor pursuant to the provisions of Section 204 of the Companies Act, 20l3. The Report of the Secretarial Auditors annexed to the Report as per Annexure 'A'. There is a qualification in the Report that Company did not appoint Woman Director upto 31st March, 2015. The Management clarified that, it was in search for appointment of a Woman Director on the Board of the Company and appointed Mrs. Pushpa Latha CS as Woman Director w.e.f. 26th May, 2015. CORPORATE SOCIAL RESPONSIBILITY With the enactment of the Companies Act, 20l3 and the Companies (Corporate Social Responsibility) Rules, 20l4 read with various clarifications issued by the Ministry of Corporate Affairs every Company having the netwroth of Rs.500 Crores or more turnover of Rs.1000 crores or more or net profit of Rs.5 Crore or more during any financial year have to spend at least 2% of the average net profit of the Company made during the three immediately preceding financial years. In pursuance of the Companies Act, 2013 and the Companies (Corporate Social Responsibility) Rules, 2014, the above rules are not applicable to the company during the year as the company does not have adequate profits . REPORT ON CORPORATE GOVERNANCE The Company endeavors to attain highest values of Corporate Standards. The Company has adhered to the requirements set out by the Securities and Exchange Board of India's Corporate Governance practices and has implemented all the stipulations prescribed, in the Clause 49 of the Listing Agreement with Stock Exchanges. The Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report. A requisite certificate from the Statutory Auditors of the Company, M/s. J.P. Chawla & Company, Chartered Accountants, confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid clause 49, is attached to the Corporate Governance Report. RELATED PARTY TRANSACTIONS None of the transactions with any of related parties were in conflict with the Company's interest. Suitable disclosure as required by the Accounting Standards (ASI8) has been made in the notes to the Financial Statements. All related party transactions are negotiated on an arms-length basis and are in the ordinary course of business. Therefore, the Provisions of Section 188(1) of the Companies Act, 2013 has been in compliance. Further the board of the company has given its approval to transaction with the related parties. The details of the transaction with Related Party are provided in the accompanying financial statements. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS Details of Loans, Guarantees and Investments covered under the Provisions of Section 186 of the Companies Act, 2013 are given in the accompanying Financial Statements. DEMATERIALISATION OF SHARES The shares in the Company are under compulsory dematerialized trading. The Company's ISIN No. is INE629C0I0I4. The number of shares are dematerialized as on 31.3.2015 follows: NSDL : 27,33,732 Shares CDSL : 9,74,946 Shares COMPLIANCE UNDER THE COMPANIES ACT 2013 AND ADDITIONAL SEBI STIPULATIONS The Companies Act, 2013 (Act) came into force substantially from Ist April, 2014. Also, SEBI in its master circular dated 17th April, 2014 notified additional requirements on corporate governance which will be effective from Ist October 2014. The Act and the SEBI stipulations set the tone for a more modern legislation which enables growth, greater regulation and self-governance of India's corporate sector. The Act and SEBI's requirements are expected to improve corporate governance norms, enhance the accountability of companies and their auditors, improve transparency and protect the interest of investors, particularly small ones. These requirements substantially increase the compliance requirements for companies. The Company is taking all the necessary steps to be compliant with the Act within the time stipulated. COMPANY SECRETARY Ms.Pallavi Jain, Company Secretary and Compliance Officer has been resigned w.e.f. 28th February, 20I5. The Company is making it's efforts to appoint the new Company Secretary as early as it find the suitable candidate. AUDIT COMMITTEE Brief description of terms of reference The role and the powers of the Audit Committee are as per the guidelines set out in the Listing Agreement with the Stock Exchanges. The Committee also acts as a link between the auditor and the Board of Directors. The Committee meets the auditors periodically and reviews the quarterly/ half yearly and annual financial statements and discusses their findings and suggestions and seeks clarifications thereon. Composition of the Committee and category of Directors Mr. B.L. Khurana - Independent Director Mr.Ashwini Kumar - Independent Director Mr. Suman Kapur - Independent Director Mrs.Pushpa Latha CS - Independent Director (Woman Director) Mrs. Pushpa Latha CS appointed on 26.5.20I5 as an Additional Director of the Company. Mr. B.L. Khurana is the Chairman of the Committee. The terms of reference of the Audit Committee have been laid down by the Board at its meeting constituting the committee, held on 26.05.20I5. NOMINATION & REMUNERATION COMMITTEE The Nomination & Remuneration Committee constituted by the Board of Directors consists of 3 non-executive independent directors : Mr.Ashwini Kumar (Chairman) Mr.B.L. Khurana Mr.Suman Kapur. STAKEHOLDER RELATIONSHIP COMMITTEE The Stakeholder Relationship Committee consists of Mr.Suman Kapur as its Chairman and Mr.B.L. Khurana as the member. VIGIL MECHANISM AND WHISTLE BLOWER POLICY Fraud-free and corruption-free work culture has been the core of the Company' functioning. In view of the potential risk of fraud and corruption due to rapid growth and geographical spread of operations, the company has put even greater emphasis to address this risk. To meet this objective a Whistle Blower Policy has been laid down. The same policy as approved by the Board was uploaded on the Company's website www.rlfltd.com . DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. There were no complaint received from any employee during the financial year 20I4-I5 and hence no complaint is outstanding as an 3I.3.20I5 for compliance. CONSERVATION OF ENERGY The Company does not belong to the category of power intensive industries and hence consumption of power is not significant. However, the management is aware of the importance of conservation of energy and also reviews from time to time the measures taken/ to be taken for reduction of consumption of energy. During the year, your Company was running successfully its embroidery unit in Gurgaon comprising 8 computerized, high quality embroidery machines purchased from Saurer, Switzerland, the company is going for up gradation of these machines on phase manner which is likely to bring higher efficiency in the coming years . Foreign Exchange Earnings and Outgo Total Foreign exchange earned : Rs. Nil Total Foreign exchange used : Rs. 30,39,377/- Particulars of Employees None of the Employees of the Company was in receipt of remuneration, which was more than the limits as prescribed under Section I97(I2) of the Act read with Rule 5(I) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 20I4 and hence no particulars are required to be disclosed in this Report. MANAGEMENT DISCUSSION & ANALYSIS 2014-15 Industry Scenario India's Textiles and Garments industry, which accounts for 14% of India's total industrial production and 4% of India's GDP,is considered as one of the significant contributor to the national economy.After witnessing challenges during the year 2013 and for most part of 2014 given unfavorable economic conditions, the Indian textiles and garments sector has seen reversal of trends in second half of 2014. With domestic and global economic conditions gradually improving along with the focused efforts made by Ministry of Textiles, Indian textiles and garments sector is set for growth, buoyed by revival in domestic consumption and export demand. 'Make in India' campaign launch by the government to boost the Indian textile industry and enable it achieve 20% growth in exports and sustain 12% growth rate in domestic market till 2024-25 as suggested by report of IndianTextiles and Apparel Sector. The campaign also focused on providing investment opportunities for foreign companies and entrepreneurs across the entire value chain of synthetics, value-added and speciality fabrics, fabric processing set-ups for all kinds of natural and synthetic textiles, technical textiles, garments and retail brands.While US and EU continue to remain primary markets for Indian textile and garment products, Indian government has taken various initiatives to reduce India's dependence on these markets. In order to encourage textile exporters to focus on new markets and reduce their reliance on US and EU, the government, under the Focus Market Scheme, introduced duty credit scrip which the textile exporters can avail on export to 26 additional countries apart from existing destinations..The increase in growth rate is expected to be contributed majorly by the industrial sector, Estimated to grow at 4% next year (up from ~l% in last FY). Unclogging of domestic policy logam as well as improvement in private consumption demand is likely to drive the growth. The Indian textile industry has an overwhelming presence in the economic life of the country. OUTLOOK India is the world's second largest producer of textiles and garments, with a massive and diverse raw material base. Due to this, Indian Textile Industry is not only of paramount importance to the national economy, it also has an influential presence in global market. Textile industry contributes to nearly 12% of India's forex earnings. But, the branding of India's prowess especially pertaining to the exports have been about technology. It's a pity that textile industry, despite being on the export forefront, has never been given its due despite its heavy potential irrespective of the weather in the market. India has always been self-sufficient with textiles and is not dependant on imports.This is the only industry which has been posting growth graph year after year. However, textile industry is expected to grow well into the future, with improved bilateral relationships with countries that have been the biggest clients of India. Though India is self sufficient in textile industry, country's share in the world market is a mere 4% compared to 35% of China. India needs to focus on scaling operations if this scenario has to change. It can be achieved only through investments in mega textile park, which can then be single point manufacturing and disbursing centres for export needs.This can also be a safe revenue model for the country's textile needs too. The country which is looking forward to seize opportunities on the world stage by way of realizing its full potential, is waiting for the government to announce a slew of measures on part of the government to have the momentum set for the sector. There are varied opinions on this front where technology plays a role in bringing down the manufacturing and operative costs. While one section would always argue that money saved is money earned, by way of adapting new technology; there is another section that believes technology alone cannot save textile industry without appropriate measure being taken in its favour. An extension in the TUFS scheme - Technology Upgradation Fund Scheme - needs to have small, medium, heavy textile industries as well, to be able to meet the needs in a Technology being the second largest sector that has generated employment for people after agriculture in India, this surely holds more opportunities than what the industry is currently witnessing now. It is imperative to keep pace with the changing times and meet challenges right in their path.That Indian economy is growing is a fact and this needs to be acknowledged by way of bringing in positive changes in corresponding areas as well.Textile industry being old and new at the same time has a unique ability to adapt itself to changing circumstances. It is India's winning horse, of all times. Embroidery serves as the major value addition factor for manufacturing garments and made ups and the main emphasis of the company is to concentrate on orders from embroidery exporters. The company during the year has taken an step to modernize the embroidery machine which has been going on and will be completed by middle of the next year as a result of this modernization carried out by the company the company expects increase in turnover and better quality and efficiency during the coming year . Threats, Risk & Concerns On exports front, there are both positive and negative factors. Positive factors include the weak currency and decreasing cost competitiveness of China that are likely to give positive impetus to the Indian exports.At the same time, factors like slowdown and uncertainty in the global markets, volatile foreign exchange rates and increase in cotton and yarn prices are likely to negatively affect growth and profitability for the textile exports. Interest expenses are part of the finance costs, therefore any major upward fluctuations in the Interest rates leads to increase in the cost of debt of the Company. The interest rate risks are mitigated to an extent through fixed interest rates on the non convertible debentures. The biggest challenge facing the Indian textile industry is competition from the other low cost neighbouring countries which attract more business from the international market because of lower production costs, ease in doing business and easier trade routes, according to an industry expert. Research & Development (R&D) Your Company continues to derive sustainable benefit from the strong foundation and long tradition of Research & Development (R&D), which differentiates it from many others. New products, processes and benefits flow from work done by he team of in house designers .This allows us to enhance quality, productivity and customer satisfaction through continuous innovation. In order to successfully carve a niche of our own we need to develop a vital competitive edge in the design development to stay ahead of the competition. Human Resource Development /Industrial Relation Human resource is the biggest asset of the Company and it remains one of the core focus areas of the Company. The Management of the Company lays special emphasis on the welfare of its employees and training, welfare and safety measures are undertaken on a regular basis. The Company has a well qualified and experienced team of professionals with a dedicated human resource department, which is competent to deliver when needed. The Company aims to provide a congenial work environment that respects individuals and encourages professional growth, innovation and superior performance. In the years, we have transformed our structure to enable us to move faster, innovate better . This initiative has assisted in achieving operating efficiencies and resulted in enhancing overall productivity levels within the company. Environment .Occupational Health & Safety Company's Environment, Health & Safety (EHS) strategies are directed towards achieving the greenest and safest operations by optimising natural resource usage and providing a safe and healthy workplace. Systemic and structured efforts continue to be made towards natural resource conservation by continuously improving resource-use efficiencies. As we continue to bring about energy efficiencies in our operations, we also strive to substitute our energy consumptions with increased component of renewable energy. The Plant of the Company is eco-friendly and do not generate any harmful effluents. Safety devices have been installed wherever necessary. Risk Management System Management of the Company maintains adequate internal control system which is designed to provide reasonable assurance that assets are safeguarded and transactions are rightly executed and recorded in accordance with management authorization and accounting policies. All the records are adequately maintained for preparation of financial statements and other financial information. Apart from internal controls, the Company also audits the efficiency and security of its operations, its information technologies and data, in accordance with the global standards. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis Acknowledgement: Your Directors are pleased to place on record their sincere gratitude to the Government, Financial Institutions, Bankers and Business Constituents for their continued and valuable co-operation and support to the Company. They also take this opportunity to express their deep appreciation for the devoted and sincere services rendered by the employees at all levels of the operations of the Company during the year. On Behalf of the Board For RLF Limited Sd/- (Anil Kumar Khanna) Chairman DIN : 00207839 Date : 13th August, 2015 Place : Gurgaon (Haryana) |