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Raj Rayon Industries Ltd.

BSE: 530699 Sector: Industrials
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OPEN 0.26
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52-Week high 0.39
52-Week low 0.19
Mkt Cap.(Rs cr) 9
Buy Price 0.26
Buy Qty 22000.00
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Sell Qty 0.00

Raj Rayon Industries Ltd. (RAJRAYON) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting their 23rdAnnual Report on thebusiness and operations of the Company and the accounts for the Financial Year ended on 31stMarch 2016.


Particulars (Rs. in Lacs)
Current Year Previous Year
2015-2016 2014-2015
Net Sales and Other Income 453 87 .23 19179.94
Net Profit before interest 14967.81 565.25
Depreciation and Tax - -
Less: Interest 8863.65 7108.72
Depreciation 4834.69 4240.75
Profit/ (Loss) before Tax (28666.15) (10784.22)
Less: Provision for Current Tax 0.00 0.00
Provision for Deferred Tax 0.00 (3297.96)
Tax Adjustment for earlier years 1.64 0.12
Profit/(Loss) After Tax/ (28667.79) (7486.38)
Profit/(Loss) for the Period - -

*Previous years' figures have been regrouped wherever necessary to bring them in linewith the current year's representation of figures


During the financial ended 2016 year your Company recorded Net Sales and Other Incomeof? 45387.23 Lacs as compared to ' 19179.94 Lacs of previous year ended 2015 . The Companyincurred a Net Loss of ? 28667.79 Lacs as compared to previous year's Net Loss of '7486.38 Lacs. The Company incurred Cash losses of ' 23833.1 Lacs as compared to CashLosses of? 3245.63 Lacs ofprevious year.


In absence of profits for the year ended 31st March 2016 and pastaccumulated losses your directors do not recommend payment of any dividend for the yearended 31st March 2016.


In absence of profits for the year ended 31st March 2016 and pastaccumulated losses your directors does not recommend for transfer of any amount toreserves for the year ended 31st March 2016.


Management Discussion and Analysis Report (MDAR) for the year under review which alsodeals with the opportunities challenges and the future outlook for the Company asstipulated under Regulation 34 of the SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 Agreement with the Stock Exchange of India is presentedin a separate section forming part of the Annual Report.


The detailed key features of the CDR Proposal are given in under Notes No. 2 (A) ofNotes forming part of Notes to Accounts given in this Annual Report.


Due to continuous losses the compliance to sanctioned CDR package could not be methence Pursuant to RBI circular dated 8th June 2015

Lenders had invoked the proposal of strategic Debt Restructuring (SDR) w.e.f. 26*October 2015. It was decided that ' 36.06 crore would be converted into equity and to beheld by the Lenders so as to hold 51% stake in the Equity Capital Post Conversion.

The Shareholders of the Company had approved the Strategic Debt Restructuring (SDR)Scheme in the Extra Ordinary General Meeting (EGM) held on 17th January 2016for conversion of Debt into Equity shares ofthe company .

However State Bank of India (Lead Banker) has classified advances given to the companyas Non-Performing Assets (NPA) as on 30.03.2016 and allotment pursuant to SDR Scheme wasnot made.

The detailed key features of the SDR Proposal are given in under Notes No. 2 (B) ofNotes forming part of Notes to Accounts given in this Annual Report.


There have been no such material changes or commitments affecting the financialposition from the end of the Financial Year 2015-2016 till date of this report as may bedeemed to be material enough to affect the financial position of the Company otherwisethan in the normal course ofbusiness.


The Board has adopted the policies and procedures for ensuring orderly and efficientconduct of its business including adherence to the Company's policies safeguarding ofits assets prevention and detection of frauds and errors accuracy and completeness ofthe accounting records and timely preparation of financial disclosures.

The Company's Internal Audit department evaluates the efficiency and adequacy ofinternal control system and gives its report and recommendations to the Chairman of AuditCommittee and based on Internal Audit Report the corrective actions are taken.


Your Company does not have any subsidiary company or joint ventures Companies andassociate Company.


During the year under review the Company has not accepted any deposits within themeaning of Chapter V of the Companies Act 2013 read with the Companies (AcceptanceofDeposits) Rules 2014.



At the Annual General Meeting held on 30th September 2014 M/s. K.M. Garg& Co. Chartered Accountants (Registration No. 120712W) were appointed as StatutoryAuditors of the Company to hold office till the conclusion of the four consecutive AnnualGeneral Meetings to be held in year 2018. In terms of the first proviso to Section 139 ofthe Companies Act 2013 the appointment of Auditors shall be placed for ratification atevery Annual General Meeting.

Accordingly the appointment of M/s. K.M. Garg & Co. Chartered Accountants asStatutory Auditors of the Company is placed for ratification by the shareholders. In thisregards the Company has received a letter from them to the effect that theirre-appointment if made would be within the prescribed limits under Section 139 ofCompanies Act 2013 and that they are not disqualified for such reappointment within themeaning of Section 141 of Companies Act 2013.

Auditors observations and Management Response:

The Directors refer to the Auditors' observation in the Auditors' Report andprovidetheir explanation as under:

I) In respect of Note 2 of the Financial Statement regarding amount payable towardsrecompense:

The recompense payable is contingent on various factors including improved performanceof the Company (Borrowers) and many other conditions the outcome of which currently ismaterially uncertain and cannot be determine.

II) In respect of Auditors observation in Financial Statements regarding cashlosses incurred by the Company:

It is clarified that the cash losses were primarily attributable to the lower volumesdue to prevailing uncertain economic conditions lower sales volume coupled with increasein depreciation and interest/finance cost.

III) In respect of Auditors observation in Financial Statement regarding Net worthof the company is fully eroded:

It is clarified that management is continuously implementing various long term measuresto improve its cash flows and revival of the operation of the company and accordingly thecompanies's financial statement have been prepared on a going concern basis.

Auditor's Certificate on Corporate Governance:

As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the auditor's certificate on corporate governance is provided in this Annual Report.The certificate does not contain any qualification reservation or adverse remark.


The Central Government had approved appointment of Mr. Jayant J. Paleja CostAccountant Mumbai as Cost Auditor to conduct Cost Audit relating to the productsmanufactured by your Company for the financial year 2015-2016 the E-Form CRA-2 for hisappointment was filed on 27th June 2015. Further the Company has alsoappointed M/s S S Sawant & Co as Cost Auditor to conduct the Cost Audit for thefinancial year 2016-2017 as per Section 148 of Companies Act 2013 and there remunerationhas to be ratified at the ensuing Annual General Meeting.



The Company had appointed Miss Amisha Shah Practicing Company Secretary to undertakeSecretarial Audit of the Company pursuant to Section 204 of Companies Act 2013 and theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 to conductSecretarial Audit for the financial year 2015-2016.

The Secretarial Audit Report for the financial year 2015-2016 forms part ofthe AnnualReport as Annexure II to the Board's Report.

Secretarial Auditors' observation and Management's response:

1) It was observed that as per the provisions of the Securities and ExchangeBoard of India (Issue of Capital and Disclosure Requirements) Regulations 2009 M/s. FineFashion Private Limited falls into Promoter or Promoter Group but the same has beeninadvertently missed out to reclassify in promoter orpromoter group. The Company hasapplied to NSE and BSE for necessary procedure to be followed for shifting M/s FineFashion Private Limited from the category of 'Public Share Holding' to 'Promoter' Holding.However the reply is awaited from the Stock Exchanges.


The Company continues to engage M/s. S M Singhania & Co. (RegistrationNo.136179W) Chartered Accountants as its Internal Auditor. During the year the Companycontinued to implement their suggestions and recommendations to improve the controlenvironment. Their scope of work includes review of processes for safeguarding the assetsof the Company review of operational efficiency effectiveness of systems and processesand assessing the internal control strengths in all areas. Internal Auditors findings arediscussed with the process owners and suitable corrective actions taken as per thedirections of Audit Committee on an ongoing basis to improve efficiency in operations.


During the financial year ended 31st March 2016 the company has increasedits Authorised share capital from ' 50.00 crs. to ' 86.00 crs. by increasing ' 36.00 crs.The company took members approval for increase in authorised share capital on 17<hJanuary 2016. However the company took members approval for allotment of shares tolenders in pursuant to Strategic Debt Restructuring Scheme and Company has receivedin-principle approvals from National Stock Exchange of India (NSE) on 16thMarch 2016 and from BSE Limited on 8th March 2016. but the allotment was notmade as per directions received by consortium ofbanks.

Further the Company has on 24* April 2015 allotted 8.00 crs Equity Shares of ' 1/-each at par on preferential basis to allottees belonging to the category of Promoters andNon Promoters consequently the paid- up share capital increased from ' 406454000 as on31st March 2015 to ' 486454000 as on the date of allotment.

Further the net worth ofthe Company has reduced to (' 35570.60 Lacs) as compared to ('992.35) Lacs in previous year. Since the net worth of the Company had fully eroded theCompany made a necessary reference to the Board for Industrial and FinancialReconstruction (BIFR) in due course of time pursuant to the provisions of Sick IndustrialCompanies (Special Provisions) Act 1985 and on 15th July 2016 Companyreceived a reference letter for registration of company and above reference has beenregistered in this Board as case No. 95/2016


During the financial year 2015-16 new Articles of Association (AOA) of your Companywere adopted in accordance with the provisions of the Companies Act 2013 read with theRules issued thereunder.


Pursuant to Section 134 (3) (a) ofthe Companies Act 2013 an extract of the AnnualReturn in Form No. MGT-9 is annexed herewith as Annexure III.


The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:

A) Conservation of energy:

1. Use of LED LIGHTS for saving electrical consumption

We have taken a forward steps towards the conservation of energy in terms of electricalpower saving by using the LED LIGHTS . In this year we have replaced the plant lightingbulbs by the energy saving LED LIGHTS. Step by step we will try to replace the wholelighting bulbs by these LED .

2. Less use of Pta charging electrical host for saving electrical consumption .

PTA is the key raw material for CP plant. Now we brings the Pta in tankers to our plant. which save the electrical energy consume during the PTA bag lifting up & downmovement of electrical hoist .

3. Demand Based Use of Cooling tower Fan & Air Cooler Fan.

Due to the day & night atmosphere temp. difference. In day we require the 2 fans ofboth type of cooler to be run . In night we stopped the one electrical fan of both cooler.

4. Demand Based Reduction of load on chiller & cooling tower.

By optimizing the plant process parameter & process activity we reduce the load oncooling tower & chiller.

5. Use of turbo vent in place of electrical operated exhaust fan.

(B) Technology absorption

1. Installed HT Capacitor Bank for increasing power factor-

We have taken our steps towards the modern days technology absorption by installing theH.T. Power capacitor bank which will increase the power factor so thus it will be save thepower consumption directly

2. Installing direct polymer melt (DPM) to poy-

We have installed the direct melt line to poy which will save the energy consumptionalong with convenient source for supplying the polymer to py.

3. Installing new POY plant-

We have installed the new poy plant which will decrease the power consumption ratio ofper ton of production. New poy plant all machinery equipment efficiency is higher ascompared to the old one .

4. Saving of power cost (Power Purchase from IEX)

We have taken a forward steps by purchase power from (Shot Term Open Access) PowerExchange & it's per unit power rate is too less compared to the DNHPCL power rate.

(C) Foreign exchange earnings and Outgo:

The particulars regarding foreign exchange earnings and outgo are given in Note No. 38and 39 Notes forming part of the Accounts.


The Company has constituted a Corporate Social Responsibility (CSR) Committee as perprovisions of Section 135 of Companies Act 2013 to spend in various CSR initiatives asprovided under schedule VII of the Companies Act 2013 and rules made thereunder.

However due to losses suffered and your company been into Corporate Debt Restructuring(CDR) also consortium of lenders have invoked Strategic Debt Restructuring Scheme as percircular issued by RBI we didn't spend into any CSR activities/projects. However yourCompany is enthusiastic to serve the society at large which it will do in the comingyears.


The Securities and Exchange Board of India (SEBI) on 2nd September 2015 hasissued SEBI (LODR) Regulations 2015 with the aim to consolidate and streamline theprovisions of the Listing Agreement for different segments of capital market to ensurebetter enforceability. The said regulations were effective from 1st December 2015.Accordingly all the listed entities were required to enter into listing Agreement with insix months of effective date. The Company entered into Listing Agreement with BSE Limitedand National stock of India Limited.


In accordance with the provisions of the Companies Act 2013 and in terms of theMemorandum and Association of the Company Mrs. Rajkumari Sushilkumar Kanodia Chairman& Non-Executive Director of the Company retires by rotation at the ensuing AnnualGeneral Meeting and being eligible herself for re-appointment. The Board recommends there-appointment.

Board of Directors have appointed Mr. Bibhuti Bhusan Das as Nominee Director w.e.f.April 5 2016 and Mr. Jugal Kishor Poornamal Pareek as Additional Independent Directorw.e.f. August 12 2016.

During the year Miss Geeta Yadav has resigned from the post of Company Secretary &Compliance Officer effective from 31st October 2015. During the year on 13thJanuary 2016 Miss Deepa Gehani has been appointed as Company Secretary & ComplianceOfficer of the Company as per section 203 (1) of the Companies Act 2013 and Regulation 6of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015


The Company has received necessary declarations from each Independent Director underSection 149(7) ofthe Companies Act 2013 that he/she meets the criteria for Independenceas laid down in Section 149(6) of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2016.


Pursuant to the provisions of Section 178 of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has carried outannual performance evaluation of its own performance the directors individually as wellas evaluation ofworking of committees of Board of Directors.

Executive Directors were evaluated on the basis of targets / criteria given to them bythe board from time to time as well as per their terms of appointment. IndependentDirectors being evaluated by entire board except of Director being evaluated on meetingtheir obligations connected with their independence criteria as well as adherence with therequirements of professional conduct roles functions and duties specifically applicableto Independent Directors as contained in Schedule IV of the Companies Act 2013. Chairmanand other NonIndependent Directors were being evaluated by Independent Directors who alsoreviewed the performance of secretarial department. Performance evaluation of theCommittees and that of its members in effectively discharging their duties were alsobeing carried out by board.

The overall performance of Chairman Executive Directors and NonExecutive Directors ofthe Company is satisfactory. The review of performance was based on criteria ofperformance knowledge analysis quality of decision making etc.


The Current policy is to have an appropriate proportion of executive and independentdirectors to maintain the independence of the Board and separate its functions ofgovernance and management. On March 31

2016 the Board consists of four members including a whole-time director and two areindependent directors. The Company has framed a Nomination Remuneration and EvaluationPolicy. The information with respect to the Company's policy on directors' appointment andremuneration including criteria for determining qualifications positive attributesindependence of a director and other matters provided under sub-section (3) of section 178and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is outlined in the Annexure-1 of this report.


The Board met Eleven (11) times during the financial year 2015-16 viz. on 3 0/0 5/201516/07/2 0 153 1/0 7/201 514/08/201 521/09/201514/11/201517/12/201513/01/201606/02/2016 12/02/2016 10/03/2016. Detailedinformation on the meetings of the Board of Directors is included in the report onCorporate Governance which forms part ofthis Annual Report.


Following are the various Committees formed by Board:

• Audit Committee

• Nomination & Remuneration Committee

• Stakeholders Relationship Committee

• Allotment Committee

• Risk Management Committee

• Corporate Social Responsibility Committee

The details of the composition of committees its roles and responsibility along withno. of meetings held are given in the Report of Corporate Governance and is also placed onthe Company's website at (http://


Pursuant to the requirement of the Companies Act 2013 and provisions of ListingAgreement applicable to the Company your Company has adopted Vigil mechanism (WhistleBlower Policy) for complying with the Company's Code of Conduct and Ethics andparticularly to assuring that business is conducted with integrity and that the Company'sfinancial information is accurate. The reportable matters may be disclosed by theemployees to the Management / Managing Director / Chairman of the Audit Committee. Nocomplaint was received during the Financial Year 2015-16. During the year under review noemployee was denied access to the Audit Committee.


Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.


All the related party transactions which were entered by the Company during thefinancial year were done on arm's length basis and were in the ordinary course of businessof the Company. Also there are no materially significant related party transactions madeby the company with Directors Key Managerial Personnel Promoter or any other designatedpersons which may conflict with the interest of the Company at large.

The policy on Materiality of Related Party Transactions as approved by the Board ofDirectors is uploaded on company's website.


Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annual Report as Annexure IV.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules are required to be provided in the AnnualReport. However there were no employees who were in receipt of remuneration for whichdetails need to be disclosed.


The Directors' Responsibility Statement referred to in clause (c) of subsection (3) ofSection 134 ofthe Companies Act 2013 shall state that:-

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the directors had 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 at the end of the financial year and ofthe profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions ofthis Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(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 provisionsof all applicable laws and that such systems were adequate and operating effectively.


Although the company has long been following the principle of risk minimization as isthe norm in every industry it has now become a compulsion.

Therefore in accordance with Regulation 21 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board members were informed about risk assessment andminimization procedures after which the Board formally adopted steps for framingimplementing and monitoring the risk management plan for the company.

The main objective of this policy is to ensure sustainable business growth withstability and to promote a pro-active approach in reporting evaluating and resolvingrisks associated with the business. In order to achieve the key objective the policyestablishes a structured and disciplined approach to Risk Management in order to guidedecisions on risk related issues. In today's challenging and competitive environmentstrategies for mitigating inherent risks in accomplishing the growth plans of the Companyare imperative. The common risks inter alia are: Regulations Competition Business riskTechnology obsolescence Investments Retention of talent and Expansion of facilities.

Risk Management framework shall primarily focus on the elements such as Risk to CompanyAssets and Property Employees Related Risks Foreign Currency Risks Risks associatedwith Non-Compliance of Statutory enactments Competition Risks Operational Risks andvarious other types of risks which may affect the business or organization. Business riskinter-alia further includes financial risk Political risk Fidelity risk Legal risk. Asa matter of policy these risks are assessed and steps as appropriate are taken tomitigate the same. Pursuant the provision of Regulation 21 of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 with respect to the formation of the RiskManagement Committee is not applicable to your Company. Detailed policy framework isdisclosed on the website of the Company at

Details Of Significant And Material Orders Passed By The Regulators Or Courts OrTribunals Impacting The Going Concern Status And Company's Operation In Future:

There are no significant material orders passed by the Regulators / Courts / Tribunalwhich would impact the going concern status of the Company and its future operations.Hence disclosure pursuant to Rule 8 (5) (vii) of Companies (Accounts) Rules 2014 is notrequired.


The Company has adopted Policy on Prevention Prohibition and Redressal of SexualHarassment at the workplace to provide protection to employees at the workplace. TheCompany has constituted Internal Complaints Committee as per the requirement of The SexualHarassment of Women at Workplace (Prevention Prohibition & Redressal) Act 2013 toconsider and redress complaints of sexual harassment. The Committee has not received anycomplaints of sexual harassment during the year.


Your Company would like to bring to the notice of the shareholders that some of themhave not claimed the dividends as per the under mentioned Hp.tail

Financial Year ended Date of declaration of Dividend Last Date for claiming unpaid Dividend Due date for transfer to IEPF
31-03-2010 07-08-2010 06-08-2017 06-09-2017
31-03-2011 15-09-2011 14-09-2018 14-10-2018

The Board of Directors sincerely likes to remind the concerned shareholders to claimtheir dividends. The Board also likes to inform to the shareholders that any dividendremaining unclaimed for seven years gets transferred to Investor Education &Protection Fund as per Section 125 ofthe Companies Act 2013.


Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

a) Issue of equity shares with differential rights as to dividend voting or otherwise

b) Issue of shares (including sweat equity shares) to employees of the Company underany scheme

Voting rights which are not directly exercised by the employees in respect of sharesfor the subscription/purchase of which loan was given by the Company (as there is noscheme pursuant to which such persons can beneficially hold shares as envisaged undersection 67(3)(c) of the Companies Act 2013).


Your Directors' would like to express their grateful appreciation for assistance andco-operation received from the Banks Government Authorities Customers Vendors andMembers during the year under review. Your Directors also wish to place on record theirdeep sense of appreciation for the committed services of the Executives Staff members andWorkers ofthe Company.

For and on behalf of the Board of the Directors


Rajkumari Kanodia

Non Executive Chairperson & Director

Dated: 12th August 2016

Place: Mumbai