Your Directors' have pleasure in presenting the 31st Annual Report of theCompany together with the Audited Accounts for the financial year ended 31stMarch 2017.
1. Financial Highlights
The standalone and consolidated financial results of the company for the year ended 3151March 2017 are as under:
|FINANCIAL RESULTS || |
| ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Revenue from Operations ||5273 || ||35763 ||44275 |
|Depreciation ||13648 || ||13642 ||13642 |
|Profit before Exceptional & Extraordinary Items & Tax ||(16946) || ||(43978) ||(55785) |
|Prior Period items / Exceptional items || || ||(2781) ||(2781) |
|Taxation: Less/ (Add) Current Tax || || ||0 ||0 |
|MAT credit reversal of earlier years /mat credit entitlement || || ||(2463) ||(2463) |
|Deferred Tax || || ||(2555) ||(2554) |
|Short/Excess Provision of Earlier Years || || ||(181) ||(181) |
|Net Profit After Tax For The Year ||(16946) || ||(51958) ||(64155) |
|Add: Balance brought forward ||(33080) || ||18622 ||30819 |
|Net Surplus Available For Appropriation ||(50027) || ||(33336) ||(33336) |
|Capital Reserve on Consolidation || || ||- ||- |
|Dividend Paid / Dividend Add Back || || ||212 ||212 |
|Corporate Tax on Dividend / Corporate Tax on Dividend Add Back || || ||43 ||43 |
|Transfer to General Reserve || || ||- ||- |
|Surplus carried forward to Balance Sheet ||(50027) || ||(33080) ||(33080) |
|EPS (Face Value of Rs. 2 per share) Basic ||(15.95) ||_ ||(48.92) ||(60.40) |
|Diluted || || ||- ||- |
Considering the continued losses in the Financial Year 2016-17 Board of Directors donot recommend any dividend for the year.
Since all the credit facilities provided to your Company has been classified as Non -Performing Asset (NPA) as on 31st March 2016 a Joint Lender's Forum (JLF) wascreated by the secured lenders consisting of Bankers Financial Institutions and AssetReconstruction Company.. Many meetings are being held at regular intervals to discusssuccessful revival of the Company and a way forward to address the crisis in totality& bring the liquidity issues at manageable level. The Company is pursuing within &outside JLF for the long term resolution to the current financial issues.
During the period under review the Company's operations continued to be affected dueto non availability of adequate working capital which has adversely affected the plant.
Furthermore the Company could not undertake necessary and regular capital expenditureas per industry norms for proper maintenance and upkeep of plant and equipment in theprevious year due to paucity of funds.
Axis Bank has vide its assignment agreement dated 27th March 2017 hasassigned the total debts of Consortium Limits excluding the short term loan due from theCompany alongwith the underlying rights benefits and obligations to an AssetReconstruction Company M/s.
Asset Care and Reconstruction Enterprises Limited (ACRE).
Your Company is in discussion with all the Joint Lenders Forum Members i.e. Axis BankAllahabad Bank Bank of India Corporation Bank Dena Bank Indian Overseas Bank PunjabNational Bank of India Union Bank of India IFCI Limited and TFCI Limited for thepossible revival of the Company.
6. Exports & Imports
During the Year under review your Company has exported 1978.28 MT of paper. The exportproceeds amounted to Rs. 69.21 Lacs. Exports have gone down due to liquidity crunch andunviable operations.
Your Company imported 5165.64 MT of raw material during the year under review. Theimports amounted to Rs. 515.20 Lacs.
7. Public Deposits
The Company has not accepted or renewed any deposits from the public during thefinancial year 201617.
8. Human Resources
During the year under review workmen strenght has gone down substaintially due tooperations being adversely affected.
9. Corporate Social Responsibility (CSR)
In line with the provisions of the Companies Act 2013 and rules made thereunderCorporate Social Responsibility (CSR) Committee has been formed and the Composition of theCSR Committee is as under:
|Name of Director ||Category of Directorship ||Designation |
|Shri Ajay Goenka ||Managing Director ||Chairperson |
|Shri Rahul Maheshwari ||Executive Director ||Member |
|Shri Kantibhai Patel ||Independent Director ||Member |
The details about the CSR policy recommended by the CSR Committee and approved by theBoard of Directors alongwith other details required as per the Companies Act 2013 andrules made thereunder are given in the Annual Report on CSR Activities as an Annexure A tothis Report.
10. Environment Health and Safety
The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliance of environmental regulations and preservationof natural resources.
The Company accords the highest priority to Environment Health and Safety. YourCompany continues to be accredited with ISO 9001 ISO 14401 OHSAS 18001.
11. Directos and Key Managerial Personnel
Shri Ajay Goenka Managing Director and Shri Indrasinh Zala Independent Director ofthe Company retires by rotation and being eligible have offered themselves forre-appointment.
Shri Rahul Maheshwari Executive Director of the Company whose term ends on 14thAugust 2017 and in the board meeting held on 12th August 2017 has extendedterm of his appointment for further period of
5 years subject to approval of Members in the General Meeting of the Company.
Smt. Aanal Triwedi who was appointed as Director on 12th August 2014 andholds office upto the ensuing Annual General Meeting of the Company and in respect of whoma request has been received for Confimation of Director and thus her appointment has beenplaced for your approval.
Shri Kantibhai Patel who was appointed as Independent Director and whose term ends atthe ensuing Annual General Meeting of the Company and being eligible for appointment haveoffered himself for re-appointment as Independent Director.
The Board recommends their re-appointment as Directors as detailed in the noticeconvening the Annual General Meeting.
12. Composition and number of meetings of the Board
The Board of Directors of the Company comprises of well qualified and experiencedpersons having expertise in their respective areas. It has appropriate combination ofExecutive and Non-Executive Directors consisting of one Chairman & Managing Directorone Executive Director three Independent Director and one Woman Director as requiredpursuant to Section 149 of the Companies Act 2013.
The Board meets at regular intervals with gap between two meetings not exceeding 120days. During the year under review the Board met 6 times on 30th May 2016 07thJune 2016 18th June 2016 13th August 2016 14thNovember 2016 and 14th February 2017.
13. AUDIT AND RISK MANAGEMENT COMMITTEE
In compliance with the requirement of Section 177 of the Companies Act 2013 the Boardof Directors has constituted Audit Committee. The members of the Audit Committee possessfinancial/accounting expertise and exposure. The Audit Committee assists the Board in itsresponsibility for overseeing the quality and integrity of the accounting auditing andreporting practices of the Company and its compliance with the legal and regulatoryrequirements.
The Audit & Risk Management Committee comprises of the Independent Directors of theCompany under the Chairmanship of Mr. Kantibhai Patel. The other independent directors ofthe Committee are Mr. Indrasinh B. Zmdala and Mr. Abhilash Delwadia.
Statutory Auditors Internal Auditors and Chief Financial Officer are the permanentinvitees at the committee meetings. Company Secretary acts as the Secretary of theCommittee.
For the Finanacial year 2016-17 the Audit Committee met 4 times on the followingdates: 30th May 2016 13th August 2016 14thNovember2016 and 14th February 2017.
The recommendations given by the Audit Committee are considered and reviewed by themembers of the Board of the Company. However there is no such case where the Boarddissented or did not accept the recommendation of the Audit Committee.
The Company has established the vigil mechanism through Whistle Blower Policy for allthe stakeholders of the Company which also provides for direct access to the chairpersonof the Audit Committee in appropriate or exceptional cases as per the Policy.
The Whistle Blower Policy will be applicable to all the stakeholder of the Companywhich is an extension of the Code of Business Conduct through which the Company seeks toprovide a mechanism for the Stakeholders to disclose their concerns and grievances onUnethical Behavior and Improper/Illega l Practices and Wrongful Conduct taking place inthe Company for appropriate action. The Company shall oversee the vigil mechanism onlythrough the Audit Committee. If any of the members of the Audit Committee have a conflictof interest in a given case they should excuse themselves and the others in the Committeewould deal with the matter on hand.
14. Policy on Directors' appointment and remuneration including criteria fordetermining qualifications positive attributes Independence of a Director and othermatters provided under Sub-section (3) of Section 178
Pursuance to Section 178 of the Companies Act 2013 as applicable to the Company theCompany has renamed a "Remuneration Committee" during the financial year2016-17. The Composition of the Nomination & Remuneration Committee is as under:
1. Shri Kantibhai Patel - Independent Director
2. Shri Indrasinh B. Zala - Independent Director
3. Smt. Aanal N. Trivedi - Professional Director
The Committee met once on 1st July 2016.
The Nomination & Remuneration Committee considers the requirement of the skill setson the Board integrity of the persons having standing in their respectivefield/profession and who can effectively contribute to the Company's business and policydecisions recommend the appointment to the Board for approval.
The Committee has approved a policy with respect to the appointment and remuneration ofthe Directors and Senior Management personnel. The objectives of this policy are:
(a) to create a transparent system of determining the appropriate level of remunerationthroughout all levels of the Company;
(b) encourage people to perform to their highest level;
(c) allow the Company to compete in each relevant employment market;
(d) provide consistency in remuneration throughout the Company;
(e) align the performance of the business with the performance of key individuals andteams within the Company;
(f) long term value creation; and
(g) attract and retain the best professionals.
The policy details of the types of remuneration to be offered by the Company andfactors to be considered by the Board Nomination & Remuneration Committee andmanagement in determining the appropriate remuneration strategy.
15. Board Evaluation
The board of directors has carried out an annual evaluation of its own performanceBoard committees
and individual directors pursuant to the provisions of the Act and the corporategovernance requirements as prescribed by Securities and Exchange Board of India (SEBI)under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
The performance of the committee was evaluated by the board after seeking inputs fromthe committee members on the basis of the criteria such as the composition of committeeseffectiveness of committee meetings etc.
In a separate meeting of the independent Directors held on 24th March 2017performance of non-independent directors performance of the board as a whole andperformance of the Chairman was eva luated taking into account the views of executivedirectors and nonexecutive directors.
The Company's properties including Building Plant and Machinery Stocks Stores etc.have been adequately insured.
17. Transfer of Unclaimed Dividend to Investor Education and Protection Fund
In terms of Section 125 of the Companies Act 2013 the unclaimed dividend aggregatingto Rs. 231071/- lying with the Company for a period of seven years pertaining to theyear ended on 31st March 2009 was transferred during the year 2016-17 to theInvestor Education and Protection Fund established by the Central Government.
18. Information Technology
Most of the functional areas of your company are working on IT (Information Technology)platform. To name a few of them: Planning Raw Material Purchase Finance Sale WeightBridge Production HR etc.
We are working with live ERP systems modules and functions. Our entire plant is underobservation on CCTV cameras and PA System (Public Announcements) for safety and securitypurpose.
19. Corporate Governance
Corporate Governance is an ethically driven business process that is committed tovalues aimed at enhancing an organization's brand and reputation. This is ensured bytaking ethical business decisions and conducting business with a firm commitment tovalues while meeting stakeholders expectation. At Rainbow Papers Limited it isimperative that our company affairs ae managed in a fair and transpaperent manner. This isvital to gain and retain the trust of our stakeholders.
As stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Management Discussion and Analysis Report and Report on Corporate Governanceform part of this Annual Report. Certificate of the Auditors regarding compliance with theconditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement andChapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isalso annexed to the Directors' Report.
The Equity shares of the Company are in compulsory demat segment and are available fortrading in the depository system of both National Securities Depository Ltd (NSDL) and theCentral Depository Services (India) Ltd. (CDSL). 105253395 nos. of equity sharesforming 99.09% of the equity share capital of the Company stands dematerialized on 31stMarch 2017.
21. Listing of Shares
The equity shares of the Company are presently listed on the BSE Ltd (BSE) and theNational Stock Exchange of India Limited (NSE). The BSE & NSE have nationwideterminals and therefore shareholders/investors are not facing any difficulty in tradingin the shares of the Company from any part of the Country.
Your Company has not paid annual listing fees for financial year 2016-17 to BSE onaccount of short term liquidity crisis being faced by the Company. Your Company has paidcustodial fees to National Securities Depository Ltd. and Central Depository Services(India) Ltd.
22. Statutory Auditors and their Report
M/s. Mehta Lodha & Co. Chartered Accountants the Statutory Auditors of theCompany who were appointed at the 29th Annual General Meeting to hold officetill 33rd Annual General Meeting are subject to ratification. They haveconfirmed their eligibility under Section 141 of the Companies Act 2013 and the rulesframed there under for ratification as Auditors of the Company. As required under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the auditors havealso confirmed that they hold a valid certificate issued by the Peer Review Board of theInstitute of Chartered Accountants of India. furnished a certificate regarding theireligibility for re-appointment as Statutory Auditors of the Company pursuant to Section139 (1) of the Companies Act 2013 read with rules. The Board of Directors recommendstheir re-appointment.
The Auditors Report contains following qualification
"We draw attention to Note No. 36 of the accompanying financial statements inrespect of non-provision of interest on NPA accounts of banks of Rs.143.31 Crore. Theexact amounts of the said non provisions are not determined and accounted by thecompany"
23. Internal Auditors
Pursuant to the provisions of Section 138 read with Rule 13 of the Companies (Accounts)Rules 2014 your Company has appointed M/s RNCA & Associates. Chartered Accountantsas the Internal Auditors of the Company for conducting internal audit for the financialyear 2017-18.
24. Cost Auditors
M/s. V. H. Shah Cost Accountant has been appointed as Cost Auditors for the financialyear 2017-18 to conduct the cost audit of the accounts maintained by the company. He hasconfirmed his eligibility for appointment under the provisions of Section 148 of theCompanies Act 2013. The remuneration proposed to be paid to the Cost Auditor is submittedfor ratification for approval of the shareholders at the ensuing Annual General Meeting ofthe Company.
25. Secretarial Audit Report
Pursuant to Section 204 read with Section 134(3) of the Companies Act 2013 the Boardof Directors has appointed M/s. Yogesh Chhunchha & Co. Company Secretaries Ahmedabadas Secretarial Auditor of the Company for FY 2016-17. The Secretarial Audit Reportprovided by M/s Yogesh Chhunchha & Co. is annexed with the Board's report as AnnexureB.
The Secretarial Audit Report contains following qualification
"The Company had not filed the Disclosures under the Securities and Exchange Boardof India (Substantial Acquisition of Shares and Takeovers) Regulations 2011 to RespectiveStock Exchanges in relation to change in Shareholding Position of Promoters due toinvocation of Pledge by Financial Institution(s) to whom the Shares were pledged forproviding credit Assistance to the Company.
The Company had not filed e-Form MGT-10 in relation to to change in ShareholdingPosition of Promoters due to invocation of Pledge by Financial Institution(s) to whom theShares were pledged for providing credit Assistance to the Company.
During the Financial Year under review the Company has not complied with Section 135of Companies Act 2013 and Rules made thereunder in respect of amount to be spent on CSRactivities.
The Company had not filled up the Casual Vacancy of "Chief Financial Officer"in terms of Section 203 of the Companies Act 2013."
26. MANAGEMENT'S VIEW ON QUALIFICATION
Directors would like to state that your Auditors have given Qualified Report for theFinancial Year 2016-17 and in that connection your Directors are of the following views.
"Financial Institutions and Banks have declared advances as NPA and thus theserequire no provision of interest in the books of accounts."
With regards to the qualifications mentioned in the Secretarial Audit Report yourdirectors would like to state that "Company was not in receipt of full receipt ofinformation for invocation of pledged shares as required to provide full disclosures tothe stock exchanges under Securities and Exchange Board of India (Substantial Acquisitionof Shares and Takeovers) Regulations 2011 and to the Registrar of Companies in e-FormMGT-10.
Your Company is going through financial crisis and thus the amounts required to bespent towards Corporate Social Responsibility (CSR) has not been spent.
With respects to filing of casual vacancy for the post of Chief Financial Officer interms of Section 203 of the Companies Act your Directors were not able to find anysuitable candidate for the post and thus the position of KMP remains vacant. YourDirectors will strive harder to find a suitable candidate and will comply with thelaw"
27. REFERENCE TO BIFR
On account of erosion of 100% net worth of the Company The Company has become a SickIndustrial Company under the provisions of the Sick Industrial Companies (SpecialProvisions) Act 1985.The Company was registered with Honourable Board for Industrial andFinancial Reconstruction (BIFR) with reference registration number 99/2016 which standsabated vide notification dated 25th November 2016 issued by Ministry ofFinance Government of India.
28. Directors' Responsibility Statement
In terms of Section 134 (3) of the Companies Act 2013 in relation to the financialstatements for FY 2016-17 the Board of Directors states that:
a) In preparation of the annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures if any;
b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as on 31st March 2017 and ofthe loss for the year ended 31st March 2017;
c) The Directors have taken proper and sufficient care for maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; and
d) the financial statements have been prepared on a going concern basis.
e) the Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively
29. Statement on Declaration given by Independent Directors under Sub-Section (6) ofSection 149
Shri Kantibhai Patel Shri Indrasinh B. Zala and Shri Abhilash Delwadia IndependentDirectors of the Company have given their declarations to the Board that they meet thecriteria of Independence as provided under the applicable provisions of the Companies Act2013 and Listing Regulations.
30. Particulars of Contracts or Arrangements with Related Parties
During the year under review there are no related party transactions that have takenplace between the related parties.
31. Code of Conduct
The Company has adopted a Code of Business Conduct based on the business principles ofthe Company. The Board has laid down the code of conduct for all Board members and Seniormanagement of the Company. The code of conduct has been posted on the website of thecompany. All Board members and Senior management personnel affirms the compliance with thecode on an annual basis in the prescribed format.
32. Disclosure under the Sexual Harassment of Women at workplace (PreventionProhibition and Redressal) Act 2013
The Company has put in place an Anti-Sexual Harassment mechanism in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. Internal Complaints Committees have been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy. The Company has not received anycomplaint of sexual harassment during the year 2016-17.
33. Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
Operations of the Company were adversely affected due to liquidity crunch and we couldnot make plant fully operational throughout the year thus the details relating toconservation of energy technology absorption as prescribed under section 134 of theCompanies Act 2013 read with Companies (Account) Rules 2014 would not be applicable.
34. Risk Management Policy
The Board of Directors has developed and implemented risk management policy for theCompany ensuring that systems of risk management are in place. It has identified andassessed internal and external risks with potential impact and likelihood that mayimpact the Company in achieving its strategic objectives or may threaten its existence.The policy lays down procedures for risk identification assessment monitoring reviewand reporting.
35. Particulars of Employees
The information required underpursuant to Section 197 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided below:
1. The ratio of the remuneration of each director to the median employee'sremuneration:
|Name of the Director ||Ratio (Remuneration of Director to Median Remuneration) |
|1. Ajay Goenka ||NA |
|2. Rahul Maheshwari ||4.26 times |
2. The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year:
|Name ||Designation || |
% increase (incl. sitting fees)
|1. Ajay Goenka ||Managing Director ||0.00 |
|2. Rahul Maheshwari ||Executive Director ||0.00 |
|3. Kanitibhai Patel ||Independent Director ||0.00 |
|4. Indrasinh Zala ||Independent Director ||0.00 |
|5. Abhilash Delwadia ||Independent Director ||0.00 |
|6. Aanal Trivedi ||Director ||0.00 |
|7 Shashikant Thakar ||Company Secretary ||0.00 |
3. The percentage increase in the median remuneration of employees in the financialyear:
0% (% increase in the remuneration of median employee as on 31.03.2017)
4. Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company:
Shri Ajay Goenka (Managing Director) has vide his letter dated 04/04/2016 requestedcompany to waive off total remuneration payable to him and the same has been honored bythe Board.
Shri Rahul Maheshwari (Executive Director) has vide his letter date 25/05/2016requested the Board to reduce his Remuneration to Rs 693600/- p.a. from Rs. 2400000/-p.a. and the same has been honored by the Board
During the year under review no remuneration has been paid to them thus it remainspayable to that extent.
5. Variations in the market capitalisation of the company price earnings ratio as atthe closing date of the current financial year and previous financial year:
|Market Capitalization ||BSE ||NSE |
|31.3.2017 ||506656521 ||504532175 |
|31.3.2016 ||1656989880 ||1694165935 |
|P/E Ratio ||BSE ||NSE |
|31.3.2017 ||(0.30) ||(0.30) |
|31.3.2016 ||(0.32) ||(0.33) |
percentage increase over decrease in the market quotations of the shares of the Companyin comparison to the rate at which
the Company came out with the last public offer in case of listed companies.
6. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year:
Average percentage increase is NIL in FY 16-17
7. Comparison of the each remuneration of the Key Managerial Personnel against theperformance of the company
There is no increase in the remuneration paid to the Company Secretary.
8. The key parameters for any variable component of remuneration availed by theDirectors: NOT APPLICABLE.
9. The ratio of the remuneration of the highest paid Director to that of the employeeswho are not Directors but receive remuneration in excess of the highest paid Directorduring the year:
|Name of the Employee ||Designation ||Ratio |
|Not Applicable || |
10. Affirmation that the remuneration is as per the remuneration policy of the company:
We hereby affirm that the remuneration paid to the Key Managerial Personnel is as perthe remuneration policy of the Company.
11. Name of every employee of the company who-
i. if employed throughout the financial year was
in receipt of remuneration for that year which in the aggregate was not less thansixty lakh rupees NIL
ii. if employed for a part of the financial year was in receipt of remuneration forany part of that year at a rate which in the aggregate was not less than five lakhrupees per month NIL
iii. if employed throughout the financial year or part thereof was in receipt ofremuneration in that year which in the aggregate or as the case may be at a rate whichin the aggregate is in excess of that drawn by the Managing Director or Whole-TimeDirector or Manager and holds by himself or along with his spouse and dependent childrennot less than two percent of the equity shares of the company -NIL
36. Industrial Relations
Industrial Relations remained cordial throughout the year under review. Severalindustrial relation initiatives implemented by the Company have significantly helped inimproving the work culture enhancing productivity and enriching the quality of life ofthe workforce.
37. The Extract of the Annual Return
The details forming part of the extract of the Annual Return in Form MGT 9 as requiredunder Section 134 (a) of the Companies Act 2013 is attached as Annexure E to thisReport.
38. Appreciation and Acknowledgements
The Board of Directors places on record its appreciation for the continued support andconfidence received from its Bankers and employees of the Company.
The Directors are also thankful to all other stakeholders for their valuable sustainedsupport to the Company.
|FOR AND ON BEHALF OF BOARD OF DIRECTORS |
|PLACE : AHMEDABAD ||AJAY R. GOENKA |
|DATE : 12.08.2017 ||CHAIRMAN & MANAGING |
| ||DIRECTOR |