You are here » Home » Companies » Company Overview » Rain Industries Ltd

Rain Industries Ltd.

BSE: 500339 Sector: Others
NSE: RAIN ISIN Code: INE855B01025
BSE LIVE 15:53 | 13 Dec 354.65 -14.45
(-3.91%)
OPEN

369.45

HIGH

370.50

LOW

351.60

NSE 15:50 | 13 Dec 354.50 -14.80
(-4.01%)
OPEN

368.00

HIGH

370.55

LOW

351.10

OPEN 369.45
PREVIOUS CLOSE 369.10
VOLUME 352140
52-Week high 402.00
52-Week low 49.10
P/E 398.48
Mkt Cap.(Rs cr) 11,929
Buy Price 0.00
Buy Qty 0.00
Sell Price 354.65
Sell Qty 332.00
OPEN 369.45
CLOSE 369.10
VOLUME 352140
52-Week high 402.00
52-Week low 49.10
P/E 398.48
Mkt Cap.(Rs cr) 11,929
Buy Price 0.00
Buy Qty 0.00
Sell Price 354.65
Sell Qty 332.00

Rain Industries Ltd. (RAIN) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 41st Annual Report and the AuditedFinancial Statements for the Financial Year ended December 31 2015.

FINANCIAL RESULTS

A) STANDALONE:

The Standalone performance for the Financial Year ended December 31 2015 are as under:

The financial summary
(INR Million)
PARTICULARS December 31 2015 December 31 2014
Total Revenue 1423.10 689.17
Profit before finance cost depreciation and tax expense 516.97 566.69
Finance cost 235.43 221.56
Profit before depreciation and tax expense 281.54 345.13
Depreciation 15.71 5.16
Profit before tax expense 265.83 339.97
Tax expense 4.96 94.18
Net Profit for the year 260.87 245.79
Profit brought forward from earlier year 923.99 1014.55
Profit available for appropriation 1184.86 1260.34
Appropriations:
Dividend (Including Tax on Dividend) 336.35 336.35
Transfer to general reserve 26.09 -
Depreciation as per Transitional provisions of Companies Act 2013 1.64 -
Surplus in Statement of Profit and Loss 820.78 923.99

B) CONSOLIDATED :

The Consolidated performance for the Financial Year ended December 31 2015 are asunder:

The financial summary
(INR Million)
PARTICULARS December 31 2015 December 31 2014
Total Revenue 102981.67 120143.37
Profit before finance cost depreciation and amortization
impairment loss exceptional items and tax expense 14288.37 12918.10
Finance cost 5964.47 6198.72
Profit before depreciation and amortization impairment loss
exceptional items and tax expense 8323.90 6719.38
Depreciation and amortization 3278.16 3469.79
Profit before Impairment loss exceptional items and tax expense 5045.74 3249.59
Impairment loss - 95.23
Profit before exceptional items tax expense share of loss of
Associates and Minority Interest 5045.74 3154.36
Exceptional items 60.91 2577.42
Profit before tax expense share of loss of Associates and
Minority Interest 4984.83 576.94
Tax expense/ (Profit) 1962.08 (120.61)
Profit after tax and Before share of loss of Associates and
Minority Interest 3022.75 697.55
Share of loss of associates 6.50 1.24
Minority interest (217.14) (188.99)
Net profit for the year 3233.39 885.30
Profit brought forward from earlier year 25072.11 24523.16
Profit available for appropriation 28305.50 25408.46
Appropriations:
Dividend (Including Tax on Dividend) 519.81 336.35
Transfer to general reserve 265.00 -
Depreciation as per Transitional provisions of Companies Act 2013 21.17 -
Surplus in Statement of Consolidated Profit and Loss 27499.52 25072.11

State of the Company's Affairs

During the period under review the Company has achieved revenue of Rs.1423.10 Millionand net profit of Rs.260.87 Million on a standalone basis. During the same period theGroup has achieved revenue of Rs.102981.67 Million and net profit of Rs.3233.99 Millionon a consolidated basis.

Overview of Carbon Products Business

Rain Group is one of the leading producers of Carbon products with Six operatingfacilities in North America three operating facilities in Europe and one facility each inIndia Canada Russia and Egypt. Rain Group has expertise to co-generate Energy from wasteheat recovered in the calcining process. Rain Group is co-generating Energy from four ofits Carbon plants in the United States and one Carbon plant in India. In addition to therevenues generated from the sale of energy to third-parties these co-generationfacilities also reduce overall energy costs and dependence on third party suppliers forsourcing electricity.

Rain Group owns and operates dedicated deep-water vessel loading terminals at three ofthe Calcined Petroleum Coke (CPC) facilities (Lake Charles Chalmette and Gramercy) and abarge dock at West Virginia CPC facility in the United States. Rain Group also operatestwo full-service petroleum coke laboratories.

The Group has recorded net revenue of Rs.71814 million from the Carbon Productsbusiness during the financial year ended December 31 2015 as compared to net revenue ofRs.83972 million during the year ended December 31 2014.

The Company has successfully completed the construction of its fourth Coal TarDistillation Plant (CTP Plant) with a capacity of 300000 metric tons per annum inCherepovets Russia on February 11 2016 via a Joint Venture with PAO Severstal Russia.The CTP Plant is expected to operate at about 70% of its capacity in the first year of itsoperation. The advanced technologies installed in this CTP Plant will enable production ofvacuum-distilled CTP which is of a higher quality vaccum in a higher margin product. TheJoint Venture Partner "PAO Severstal" has brought a long-term supply contractfor the raw material - Coal Tar into this Joint Venture.

Outlook for Carbon Products Business

Calcined Petroleum Coke ("CPC") is produced from Green Petroleum Coke("GPC") a by-product of Crude Oil Refining process through a process known as"Calcining" that removes moisture and volatile matter from GPC at hightemperature. Similarly the key raw material for Coal Tar Pitch ("CTP") is CoalTar a liquid by product produced in the coking process of converting coal intoMetallurgical Coke.

Together CPC and CTP constitute the critical component of Carbon Anodes used in theAluminum smelting process. CPC and CTP are considered as essential materials for theAluminum industry as there are no known economically viable substitutes for theseproducts. As per the recent industry reports approximately 77% of the world's CPCproduction and 79% of the world's CTP production is used in the production of CarbonAnodes in the Aluminum Smelting Process.

Production of primary Aluminum is one of the most important determinants of CPC and CTPdemand. World production of primary Aluminum totaled approximately 57.6 million metrictons in 2015 and is expected to grow to approximately 68.4 million metric tons by 2020representing a compounded annual growth rate of 3.5%. The growth in demand for Aluminum isexpected to be driven by increasing use of lightweight materials in many key industriessuch as Automobiles Aerospace construction packing and consumer electronics. Thisdemand growth is expected to be met through the addition of new Aluminum smelters largelyin Asia and the Middle East.

From a medium to long term perspective the performance of Rain Group being one of theleading carbon producers with operating facilities across Globe is expected to be stablewith continued demand from the growing Aluminum industry and the long term relationshipwith Aluminum Smelters Crude Oil Refineries and Steel Producers.

Overview of Chemical Business

The Chemical products of Rain Group are derived from the downstream refining of primarycoal tar distillates into chemical products such as aromatic chemicals superplasticizersresins and modifiers. These chemical products are used in a broad variety of end-marketsincluding paints coatings construction plastics paper tyres rail ties insulationand foam.

The Coal Tar distillation business of Rain can be grouped into two categories theprimary coal tar distillation business ("primary distillation") and thefollow-on processing of selected co-products of primary distillation into chemicals("downstream"). Therefore the supply of Chemicals mostly depends on CTPproduction. Primarily the Chemicals business can be categorized into four sub productcategories: Superplasticizers: Superplasticizer business comprises of polymer-basedproducts that are used especially as additives for concrete gypsum and for otherapplications. Resins & Modifiers: Resins business delivers specialty resins under thebrand name NOVARES to niche markets with applications in the adhesives coatings rubberand printing ink industries as well as modifiers for high-performance coating systemsalternative environmental friendly substitutes for coatings applications and paperproduction applications. Aromatic Chemicals: Aromatic Chemicals comprises aromatichydrocarbons including anthracene carbazole and other specialty chemicals that are usedin a wide range of industries such as paper pharmaceutical pigments and fragranceindustries. They are even used in applications for growing high-tech industries includingmagnet wire for electrical motors.

Chemical Trading: ChemTrade business comprises the trading of crude benzene betweencoke operators and crude benzene processors as well as the trading of diverse chemical rawmaterials and products.

The Group has recorded net revenue of Rs.19616 Million from the Chemical Businessduring the financial year ended December 31 2015 as compared to net revenue of Rs. 24629Million during the year ended December 31 2014.

Outlook for Chemical Business

With improving economic prospects particularly through the development of themanufacturing sector global annual growth in Chemicals is projected to be 3.3% in CY16and 3.7% in CY17. The most significant growth will originate in the developing nations ofAsia-Pacific Africa and the Middle-East.

Due to competitive advantages from shale gas which led to an increasing supply ofcheap shale-derived raw materials like natural gas North America is also expected togenerate strong growth. According to the US chemical industry association AmericanChemistry Council (ACC) chemical output in the US is expected to grow by 2.9% in CY16 andby 4.4% in CY17.

Growth is estimated to be moderate in Europe since reliable access to low-costfeedstock from shale gas is not available. But European chemical exports are expected tobe supported by favorable Euro exchange rates. According to ACC chemical production inWestern Europe is expected to grow by 2% and in Central/Eastern Europe by 3.1% and 3.7% inCY16 and CY17 respectively. In general the global chemical industry expects improvementfor years to come through stronger global growth in both the manufacturing industry and byconsumer demand.

Overview of Cement Business

Rain Industries Limited through one of its wholly owned subsidiaries is engaged inthe business of production and sale of Cement.

Rain Group is operating one Cement plant in the state of Andhra Pradesh and anotherCement plant in the state of Telangana and one Fly Ash Handling and Cement Packingfacility in the state of Karnataka.

Rain Group through its vast chain of dealer network sells Cement under the brand name"Priya Cement" in the states of Andhra Pradesh Telangana Tamil NaduKarnataka Maharashtra Odisha and Kerala.

The Group has recorded net revenue of Rs.10288 Million from Cement Business during theFinancial Year ended December 31 2015 compared to net revenue of Rs. 8735 Million duringthe year ended December 31 2014.

Outlook for Cement Industry

The Indian cement industry has witnessed a massive capacity addition of overapproximately 197 million metric tons during last 7 years. This capacity addition isdisproportionately high in South India. During the same period South Indian cementcapacity alone has increased by approximately 78 million tons. This has resulted insignificant pressure on capacity utilization and price realization as well.

India's cement industry's average utilization has come down drastically fromapproximately 95% in CY08 to approximately 71% in CY15 led by weak demand and anoversupply in the industry. Cement demand and capacity utilization are expected toimprove led by a slower pace in capacity addition and better demand prospects.

Until CY14 the Southern region (especially Andhra Pradesh) was facing demand issuesdue to political instability and delays in projects across the sectors. However with thesplit of Andhra Pradesh into two states which required the establishment of a newgovernment in the new state of Telangana we expect demand to pick up and utilization toimprove on the back of fresh demand for housing urban and infrastructure development fromthe new states. Telangana is undertaking major irrigation projects and Andhra Pradesh iscommitted to building a new capital city by CY18.

Listing of Equity Shares

The Company's Equity shares are listed at the following Stock Exchanges:

(i) BSE Limited Phiroze JeeJeebhoy Towers Dalal Street Mumbai-400 001; and (ii)National Stock Exchange of India Limited Exchange Plaza Floor 5 Plot No. C/1 G BlockBandra-Kurla Complex Bandra (East) Mumbai - 400051. The Company has paid the AnnualListing Fees to the said Stock Exchanges for the financial year 2015-16.

Subsidiary Companies

As per the provisions of Section 129 of the Companies Act 2013 read with Companies(Accounts) Rules 2014 a separate statement containing the salient features of thefinancial statements of the Subsidiary Companies/ Associate Companies/Joint Ventures inForm AOC-1 is enclosed as Annexure- 1 to this Report.

Performance and financial position of each of the subsidiaries associates and jointventures

As per Rule 8 of Companies (Accounts) Rules 2014 a Report on the performance andfinancial position of each of the subsidiaries associates and joint venture companies ofthe Company is enclosed as Annexure - 1A to this Report.

Consolidated Financial Statements

The consolidated financial statements prepared and annexed in accordance with theAccounting Standards 21 and 23 as prescribed under Section 133 of the Companies Act 2013read with Rule 7 of Companies (Accounts) Rules 2014 and Guidelines issued by Securitiesand Exchange Board of India ("SEBI") also forms part of this Annual Report.

As per the provisions of Section 136 of the Companies Act 2013 the Company has placedseparate audited accounts of its subsidiaries on its website www.rain-industries.com andcopy of separate audited financial statements of its subsidiaries will be provided to theshareholders at their request.

Share Capital

The Paid-up Share Capital of the Company as on 31st December 2015 is Rs. 672691358.

Number of Meetings of the Board of Directors

During the year under review six Board Meetings were held. The dates on which theBoard meetings were held are 27th February 2015 5th May 2015 11th June 2015 14thAugust 2015 10th November 2015 and 30th December 2015.

The details of the attendance of the Directors at the Board meetings held during theyear ended December 31 2015 are given below:

Name of the Director Number of Board Meetings
Held Attended
Mr. N. Radhakrishna Reddy 6 5
Mr. N. Jagan Mohan Reddy 6 6
Mr. N. Sujith Kumar Reddy 6 4
Mr. G. Krishna Prasad 6 5
Mr. V. Narayanamurthy 6 1
Mr. S L Rao 6 5
Mr. Dipankar Basu 6 4
Mr. H L Zutshi 6 6
Ms. Radhika Vijay Haribhakti 6 6

Management Discussion And Analysis

The Management Discussion and Analysis forms an integral part of this Report and givesdetails of the overall industry structure developments performance and state of affairsof the Company's various businesses viz. Carbon Products Chemicals Cement internalcontrols and their adequacy risk management systems and other material developmentsduring the financial year.

Directors Responsibility Statement as required under Section 134 of the Companies Act2013

Pursuant to the requirement under Section 134 of the Companies Act 2013 with respectto the Directors' Responsibility Statement the Board of Directors of the Company herebyconfirms:

i) that in the preparation of the Annual Accounts the applicable accounting standardshave been followed;

ii) that the Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at December 31 2015and of Profit and Loss Account of the Company for that period;

iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

iv) that the Directors have prepared the Annual Accounts for the Financial Year endedDecember 31 2015 on a going concern basis;

v) that the Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively; and

vi) that the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

Statement on Declaration given by Independent Directors under Sub-Section (6) ofSection 149

The independent directors have submitted the declaration of independence as requiredpursuant to sub-section (7) of section 149 of the Companies Act 2013 stating that theymeet the criteria of independence as provided in sub-section(6) of Section 149.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee consists of the following Directors namelyMr. H. L. Zutshi

Chairman Mr. S. L. Rao Mr. Dipankar Basu Mr. V. Narayanamurthy and Ms. Radhika VijayHaribhakti.

Brief description of terms of reference:

• Identifying persons who are qualified to become directors and who may beappointed in senior management in accordance with the criteria laid down and recommend tothe Board for their appointment and removal;

• Carry on the evaluation of every director's performance;

• Formulation of the criteria for determining qualifications positive attributesand independence of a director;

• Recommend to the Board a policy relating to the remuneration of the directorskey managerial personnel and other employees; and

• Formulation of criteria for evaluation of Independent Directors and the Board.

Nomination and Remuneration policy

The objectives of the Policy

1. To lay down criteria and terms and conditions with regard to identifying persons whoare qualified to become Directors (Executive and Non-Executive) and persons who may beappointed in Senior Management and Key Managerial positions and to determine theirremuneration.

2. To determine remuneration based on the Company's size and financial position andtrends and practices on remuneration prevailing in peer companies.

3. To carry out evaluation of the performance of Directors.

4. To provide them reward linked directly to their effort performance dedication andachievement relating to the Company's operations.

5. To retain motivate and promote talent and to ensure long term sustainability oftalented managerial persons and create competitive advantage.

Nomination and Remuneration Committee meetings

3 During the period from January 1 2015 to December 31 2015 Nomination andRemuneration Committee Meetings were held on February 27 2015 November 9 2015 andDecember 30 2015.

Attendance at the Nomination and Remuneration Committee Meeting

Name of the Director Designation Number of Meetings
Held Attended
Mr. H L Zutshi Chairman 3 3
Mr. Dipankar Basu Member 3 1
Mr. S L Rao Member 3 2
Mr. V. Narayanamurthy Member 3 1
Ms. Radhika Vijay Haribhakti Member 3 3
Mr. G. Krishna Prasad1 Member 3 1

 

1Mr. G. Krishna Prasad is ceased to be member of Nomination and RemunerationCommittee with effect from February 28 2015.

Particulars of Loans Guarantees or Securities or Investments under Section 186

The details of Loans Guarantees Securities and Investments made during the FinancialYear ended December 31 2015 are given in Annexure - 2 in compliance with the provisionsof Section 186 of the Companies Act 2013 read with Companies (Meetings of Board and itsPowers) Rules 2014.

Particulars of Contracts or Arrangements with Related Parties

The particulars of contracts or arrangements with related parties in Form No. AOC-2 areenclosed as Annexure - 3 to this Report.

Transfer of Amount to Reserves

The Company proposes to transfer 10% of its Net Profits for the Financial Year ended31st December 2015 i.e. Rs. 26.09 Million to the general reserve for the Financial Yearended 31st December 2015.

Dividend

The Board of Directors of the Company at its meeting held on August 14 2015 havedeclared interim dividend @ 50% on the paid up Equity share capital of the Company i.e.Rs.1.00 per Equity share on face value of Rs.2 each. The Board of Directors of the Companynow recommend that the Interim Dividend be the Final Dividend for the financial year endedDecember 31 2015.

Extracts of Annual Return

The Extracts of Annual Return as per the provisions of Section 92 of the Companies Act2013 and Rule 12 of Companies (Management and Administration) Rules 2014 in Form MGT-9are enclosed as Annexure - 4 to this Report.

The conservation of energy technology absorption foreign exchange earnings and outgopursuant to provisions of Section 134(3)(m) of the Companies Act 2013 (Act) read with theCompanies (Accounts) Rules 2014

Information with respect to conservation of energy technology absorption foreignexchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies(Accounts) Rules 2014 is enclosed as Annexure - 5 to this Report.

Risk Management Committee

Risk Management Committee consists of the following persons namely Mr. N. Jagan MohanReddy Managing Director Mr. N. Sujith Kumar Reddy Director and Mr. T. Srinivasa RaoChief Financial Officer.

Mr. T. Srinivasa Rao is the Chief Risk Officer and Mr. S. Venkat Ramana Reddy acts asSecretary to the Committee. The Committee had formulated a Risk Management Policy fordealing with different kinds of risks which it faces in day to day operations of theCompany. Risk Management Policy of the Company outlines different kinds of risks and riskmitigating measures to be adopted by the Board. The Company has adequate internal controlsystems and procedures to combat the risk. The Risk management procedure will be reviewedby the Audit Committee and Board of Directors on a Quarterly basis at the time of reviewof Quarterly Financial Results of the Company.

During the Financial Year Risk Management Committee Meeting was held on November 72015.

Attendance at the Risk Management Committee Meeting:

Name of the Director Designation Number of Meetings
Held Attended
Mr. N. Jagan Mohan Reddy Chairman 1 1
Mr. N. Sujith Kumar Reddy Member 1 1
Mr. T. Srinivasa Rao Chief Risk Officer 1 1

Corporate Social Responsibility (CSR)

Corporate Social Responsibility is commitment of the Company to improve the quality oflife of the workforce and their families and also the community and society at large. TheCompany believes in undertaking business in such a way that it leads to overalldevelopment of all stake holders and Society.

The Board of Directors of the Company have constituted Corporate Social ResponsibilityCommittee consisting of following persons namely Mr. N. Jagan Mohan Reddy Chairman Mr.N. Sujith Kumar Reddy Member and Mr. G. Krishna Prasad Member (Independent Director) andadopted policy for Corporate Social Responsibility. Corporate Social Responsibility policywas adopted by the Board of Directors on the recommendation of Corporate SocialResponsibility Committee.

Report on Corporate Social Responsibility as Per Rule 8 of Companies (Corporate SocialResponsibility Policy) Rules 2014 is enclosed as Annexure - 6 to this Report.

During the Financial Year Corporate Social Responsibility Committee Meeting was heldon November 9 2015.

Attendance at the Corporate Social Responsibility Committee Meeting

Name of the Director Designation Number of Meetings
Held Attended
Mr. N. Jagan Mohan Reddy Chairman 1 1
Mr. N. Sujith Kumar Reddy Member 1 1
Mr. G. Krishna Prasad Member 1 1

Mechanism for Evaluation of Board

Evaluation of all Board members is done on an annual basis. The evaluation is done bythe Board Nomination and Remuneration Committee and Independent Directors with specificfocus on the performance and effective functioning of the Board and Individual Directors.

The criteria covered various aspects for evaluation of Independent Directors such asParticipation at the Board/Committee meetings Commitment (including guidance provided tosenior management outside of Board/Committee meetings) Effective deployment of knowledgeand expertise Effective management of relationship with stakeholders Integrity andmaintaining of confidentiality Independence of behaviour and judgment Impact andinfluence Exercise of objective independent judgment in the best interest of the CompanyAbility to contribute to and monitor corporate governance practice and Adherence to thecode of conduct for independent directors for Evaluation of the Board aspects such asDevelopment of suitable strategies and business plans at appropriate time and itseffectiveness Implementation of robust policies and procedures and Size structure andexpertise of the Board were considered for Evaluation of the Whole Time Director aspectssuch as Achievement of financial/business targets prescribed by the Board Developing andmanaging/executing business plans operational plans risk management and financialaffairs of the organization and Development of policies and strategic plans aligned withthe vision and mission of Company and which harmoniously balance the needs ofshareholders clients employees and other stakeholders were considered for evaluation ofNon-Executive Directors aspects such as Participation at the Board/Committee meetingsEffective deployment of knowledge and expertise; Independence of behaviour and judgmentwere considered for evaluation of the Committees aspects such as Discharge of itsfunctions and duties as per its terms of reference Process and procedures followed fordischarging its functions Effectiveness of suggestions and recommendations received wereconsidered for evaluation of Chairperson of the Board aspects such as Managingrelationship with the members of the Board and management Providing ease of raising ofissues and concerns by the Board members and Promoting constructive debate and effectivedecision making at the board were considered.

Directors

Mr. N. Radhakrishna Reddy and Mr. N. Sujith Kumar Reddy Directors of the Companyretires by rotation and being eligible offer themselves for re-appointment.

The Board of Directors of the Company at their meeting held on November 10 2015re-appointed Mr. N. Jagan Mohan Reddy (DIN: 00017633) as a Managing Director of theCompany for a period of 5 years with effect from November 10 2015 (i.e. from November10 2015 to November 9 2020) subject to the approval of shareholders of the Company.Except Mr. N. Jagan Mohan Reddy Managing Director no other Director or Key ManagerialPersonnel were Appointed or have resigned during the Year.

Deposits

The Company has not accepted any deposits from public in terms of Section 73 of theCompanies Act 2013 and as such no amount on account of principal or interest on publicdeposits was outstanding as on the date of the balance sheet.

Statutory Auditors

The shareholders of the Company at the 40th Annual General Meeting held on 11th June2015 approved the appointment of M/s. B S R & Associates LLP Chartered Accountants(ICAI Regn. No.116231W/W-100024) as Statutory Auditors of the Company to hold office tillthe conclusion of 43rd Annual General Meeting subject to ratification of shareholders atevery Annual General Meeting.

M/s. B S R & Associates LLP Chartered Accountants (ICAI Regn. No.116231W/W-100024)have confirmed that their appointment if made shall be in accordance with the provisionsof Section 139 of the Companies Act 2013. Accordingly a resolution seeking Members'ratification on appointment of M/s. B S R & Associates LLP Chartered Accountants asthe Statutory Auditors of the Company for the financial year ending 31st December 2016 isincluded at Item No.6 of the Notice convening the Annual General Meeting.

Auditors Report

There are no qualifications reservations or adverse remarks made by M/s. B S R &Associates LLP Chartered Accountants (ICAI Regn. No.116231W/W-100024) Statutory Auditorsin their report for the Financial Year ended December 31 2015.

The Statutory Auditors have not reported any incident of fraud to the Audit Committeeof the Company in the year under review.

Internal Auditors

The Board of Directors of the Company have appointed M/s. Ernst & Young LLP asInternal Audtiors to conduct Internal Audit of the Company for the Financial Year ended31st December 2015.

Audit Committee

Audit Committee consists of the following Directors namely Mr. S. L. Rao Chairman Mr.Dipankar Basu Mr. H. L. Zutshi Ms. Radhika Vijay Haribhakti and Mr. V. Narayanamurthy.

Except Mr. V. Narayanamurthy Nominee Director IDBI Bank Limited all the members ofthe Audit Committee are Independent Directors.

There is no such incidence where Board has not accepted the recommendation of the AuditCommittee during the year under review.

Six Audit Committee Meetings were held during the Financial year ended December 312015. The maximum time gap between any of the two meetings was not more than one Hundredand Twenty days.

The Audit Committee meetings were held on February 26 2015 May 4 2015 June 112015 August 13 2015 November 9 2015 and December 30 2015.

3 Attendance at the Audit Committee Meetings:

Name of the Director Designation Number of Meetings
Held Attended
Mr. S L Rao Chairman 6 5
Mr. Dipankar Basu Member 6 4
Mr. H L Zutshi Member 6 6
Mr. V. Narayanamurthy Member 6 1
Ms. Radhika Vijay Haribhakti Member 6 5
Mr. G. Krishna Prasad1 Member 6 1

 

1Mr. G. Krishna Prasad is ceased to be member of Audit Committee with effect fromFebruary 28 2015.

Corporate Governance

A separate report on Corporate Governance and Management Discussion and Analysis isannexed as part of the Annual Report along with the Auditor's Certificate on itscompliance.

Vigil Mechanism

The Company has adopted a Whistle Blower Policy establishing vigil mechanism toprovide a formal mechanism to the Directors and employees to report concerns aboutunethical behavior actual or suspected fraud or violation of Code of Conduct and Ethics.It also provides for adequate safeguards against the victimization of employees who availof the mechanism and provides direct access to the Chairperson of the Audit Committee inexceptional cases. It is affirmed that no personnel of the Company has been denied accessto the Audit Committee. The policy of vigil mechanism is available on the Company'swebsite The Whistle Blower Policy aims for conducting the affairs in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behavior. All permanent employees of the Company are covered under the WhistleBlower Policy.

Secretarial Auditor Report

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. DVM Gopal & Associates Practising Company Secretaries as SecretarialAuditors to conduct Secretarial audit of the company for the Financial year ended December31 2015.

The Secretarial Audit Report issued by M/s. DVM Gopal & Associates PractisingCompany Secretaries in Form MR-3 is enclosed as Annexure - 7 to this Annual Report.

The Secretarial Audit Report does not contains any qualifications reservation oradverse remarks.

Statement of particulars of appointment and remuneration of managerial personnel

The Statement of particulars of Appointment and Remuneration of Managerial personnel asper Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is enclosed as Annexure - 8 to this Annual Report.

Insurance

All properties and insurable interests of the Company including building plant andmachinery and stocks have been fully insured.

Details in respect of adequacy of internal financial controls with reference to theFinancial Statements

1. The Company maintains all its records in SAP System and the work flow and approvalsare routed through SAP;

2. The Company has appointed Internal Auditors to check the Internal Controls and alsocheck whether the workflow of the organization is in accordance with the approved policiesof the Company. In every Quarter during approval of Financial Statements InternalAuditors will present to the Audit Committee the Internal Audit Report and ManagementComments on the Internal Audit observations; and

3. The Board of Directors of the Company have adopted various policies like RelatedParty Transactions Policy Whistle Blower Policy Material Subsidiaries Policy CorporateSocial Responsibility Policy Anti corruption and Anti Bribery policy Risk ManagementPolicy Dissemination of Material Events Policy Documents preservation policy Monitoringand Reporting of Trading by Insiders Code of Internal Procedures and Conduct forRegulating Code of Practices and Procedures for Fair Disclosures policy on prevention offraud and such other procedures for ensuring the orderly and efficient conduct of itsbusiness for safeguarding of its assets the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information.

The names of companies which have become or ceased to be Company's Subsidiaries jointventures or associate companies during the year:

During the Financial Year Zhenjiang Xin Tian Tansu Co. Ltd ceased to be subsidiary ofthe Company and Rain RTGERS CTP LLC Rain Holding Germany GmbH RTGERS WohnimmobilienGmbH & Co. KG and RTGERS Gewerbeimmobilien GmbH & Co. KG have becomeSubsidiaries of the Company.

Change in the nature of business

There is no change in the nature of business of the Company.

The details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future

There are no significant material orders passed by the Regulators or Courts orTribunals which would impact the going concern status of the Company and its futureoperations.

Material changes and commitments

There are no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year 31st December 2015 to whichthe financial statements relates and the date of signing of this report.

Scheme of Arrangement between the Company Rain Cements Limited (Wholly OwnedSubsidiary Company) and Moonglow Business Inc. (Step down Wholly Owned SubsidiaryCompany).

The Company made an application with the Hon'ble High Court of Judicature at Hyderabadfor the State of Telangana and the State of Andhra Pradesh for approval of the Scheme ofArrangement between the Company Rain Cements Limited (Wholly Owned Subsidiary Company)and Moonglow Business Inc. (Step down Wholly Owned Subsidiary Company) and theirrespective Shareholders and Creditors under Section 391 to 394 of the Companies Act 1956.The Hon'ble High Court of Judicature at Hyderabad for the State of Telangana and the Stateof Andhra Pradesh vide its order dated November12 2015 directed the Company to conveneMeeting of the Shareholders of the Company on January19 2016 at 11.00 a.m. at K L NPrasad Auditorium FTAPCCI Red Hills Hyderabad for obtaining approval for the Scheme ofArrangement between the Company Rain Cements Limited Moonglow Company Business Inc. andtheir respective shareholders and creditors.

The Company has duly convened the meeting of the Shareholders and obtained approval forthe Scheme of Arrangement with the requisite majority.

The Company has filed a Petition with the Hon'ble High Court of Judicature at Hyderabadfor the State of Telangana and the State of Andhra Pradesh for approval of the Scheme ofArrangement.

Company Law Board Order allowing Company to follow calendar year as financial year

As per the provisions of Section 2(41) of the Companies Act 2013 every Company isrequired to follow a uniform financial year i.e. from 1st April to 31st March.

The Company follows financial year which is from 1st January to 31st December.

As per the provisions of Section 2(41) of the Companies Act 2013 a Company is allowedto have financial year different from the financial year prescribed under Companies Act2013 provided such Company takes approval from Company Law Board.

The Company made an application to Company Law Board to seek its approval to follow thefinancial year from 1st January to 31st December.

The Company Law Board vide its order dated 16th October 2015 permitted the Company tofollow the Financial year from 1st January to 31st December.

Human Resources

The industrial relations of the Company continued to be harmonious during the yearunder review.

Policy on Sexual Harassment

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplacein accordance with The Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.

During the financial year ended 31st December 2015 the Company has not received anyComplaints pertaining to Sexual Harassment.

Acknowledgement

The Directors take this opportunity to place on record their sincere thanks to theBanks and Financial Institutions Insurance Companies Central and State GovernmentDepartments and the shareholders for their support and co-operation extended to theCompany from time to time. Directors are pleased to record their appreciation of thesincere and dedicated services of the employees and workmen at all levels.

On behalf of the Board of Directors
for Rain Industries Limited
N. Jagan Mohan Reddy N. Sujith Kumar Reddy
Place: Hyderabad Managing Director Director
Date : February 19 2016 DIN: 00017633 DIN: 00022383