The Directors present the Annual Report together with the audited Balance Sheet and theStatement of Profit and Loss of RSWM Limited for the year ended March 31 2017.
Your Company's performance during the year 2016-2017 is summarised below:
| || ||(RS in Crores) |
| ||2016-17 ||2015-16 |
|Turnover || || |
|Export ||917.29 ||906.08 |
|Domestic ||2078.91 ||2038.71 |
|Total ||2996.20 ||2944.79 |
|Profit before Interest & Depreciation ||357.87 ||422.70 |
|Less: Interest/Finance Cost ||110.36 ||125.90 |
|Profit before Depreciation & Amortisation ||247.51 ||296.80 |
|Less: Depreciation & Amortisation ||132.17 ||149.27 |
|Profit/(Loss) before Tax ||115.34 ||147.53 |
|Less: Current Tax ||24.30 ||28.73 |
|Tax of earlier years provided (written back) ||0.11 ||(2.66) |
|Deferred Tax Liability ||(10.04) ||14.51 |
|Profit/(Loss) after Tax ||100.97 ||106.95 |
|Add: Opening Balance ||311.27 ||233.56 |
|Less: Dividends & Others ||40.29 ||29.24 |
|Profit available for appropriation ||371.95 ||311.27 |
Number of Meetings of the Board
The particulars of the meetings held during the year along with the details regardingthe meetings attended by the directors form part of the Corporate Governance Report.
The composition of the Board and its committees has also been given in detail in thereport on Corporate Governance.
Dividend and other Appropriations
Your Directors are pleased to recommend a dividend on Equity Shares @ 125% i.e. Rs12.50 per Equity Share of Rs 10/- each for the year ended the March 31 2017.
Further your Directors recommend the payment of Preference dividend on 12% OCRPS of Rs7.50 each on pro-rata basis for the period of holding these shares by the OCRPS holders.Your Directors draw the attention of the Members that upon amalgamation of M/s. CheslindTextiles Limited (CTL) the erstwhile shareholders of the CTL were allotted 13665435OCRPS of Rs 7.50 each aggregating to Rs 102490762.50 carrying a coupon rate of 12% asper Scheme of Amalgamation of CTL with the Company with a right to exercise theconversion option within a period of six months and accordingly the option was exercisedby holders of 8854111 OCRPS and resultantly 402153 Equity Shares of the Company wereallotted to the OCRPS holders on November 10 2016. The Preference dividend in respect of8854111 OCRPS of Rs 7.50 each amounting to Rs 48.70 Lakhs for
the period upto November 10 2016 is recommended for approval of the Members.
Further the option of conversion was not exercised in respect of 4811324 OCRPS of Rs7.50 each and accordingly these OCRPS were redeemed by the Company on February 28 2017 bygiving due notice in terms of Scheme of Amalgamation of the Company. Accordingly thepreference dividend in respect of 4811324 OCRPS of Rs 7.50 each upto the date ofredemption i.e. February 28 2017 amounting to Rs 39.45 Lakhs is recommended for paymentby your Directors.
The total dividend on OCRPS amounts to Rs 88.15 Lakhs (exclusive of dividenddistribution tax).
The proposal for payment of dividend on Equity Shares and Preference Shares of theCompany will absorb an amount of Rs 36.49 Crore (inclusive of dividend distribution tax).
The proposals with regard to the payment of dividend on Preference Shares as well as onEquity Shares for the year ended March 31 2017 shall be placed before the Shareholders atthe ensuing Annual General Meeting.
No amount is proposed to be transferred to General Reserve. The amount of Rs 49.10Crores has been carried over to next year.
Yours Directors inform the members that the operational performance of your Companyduring the year under review was marked with various events both domestically as well asglobally. The biggest domestic event was the demonetisation announced by the RBI and theGovernment on November 08 2016 which impacted the sales and profitability of your Companyseverely and particularly the fabric and denim segment of the Company. Further theinternational market particularly the US and partially the European market demonstratedsome sense of recovery. Your Directors during the year under review focused on to getready to face the challenges thrown by domestic and international events.
Despite all the difficulties your Company recorded a marginal increase in turnover atRs 2996.20 Crores against Rs 2944.79 Crores in the previous year. However operating profitof the Company declined to Rs 357.87 Crores from Rs 422.70 Crores. Profit beforedepreciation also declined to Rs 247.51 Crores against Rs 296.80 Crores recorded in theprevious year and the profit after tax also decreased marginally to Rs 100.97 Croresagainst Rs 106.95 Crores in the previous year. Your director inform the member that thefinancial statement of your Company had been drawn on the IND-AS for the financial yearended March 31 2017 with comparatives.
Yours Directors are focusing on cost rationalisation product rationalisation as wellas capacity optimisation to achieve larger organisational goal. Your Directors are hopefulthat your Company shall reap the benefits of recently completed expansion in the currentfinancial year and with ongoing expansion and modernisation programme shall report goodperformance in the current financial year.
The analytical reviews of the Company's performance and its businesses includinginitiatives in the areas of human resources and information technology have beenpresented in the section on Management Discussion and Analysis of the Annual Report.
Working results of last three financial years 2014-15 to 2016-17 are given in Annexure 1 and form part of this report.
Expansion and Modernisation
Your Directors in their previous report had informed the members about the Denim SheetDyeing Project at a capital outlay of Rs 42.75 Crores. Your Directors feel pleasure ininforming the members that the project has been commissioned during the year andaccordingly the production capacity of Denim Fabric stand increased to 25 million metersfrom the earlier 17 million meters. The full benefits of this expansion shall be reaped inthe current financial year.
Your Directors in their previous report had also informed the members aboutDebottlenecking & up-gradation of equipments and facilities across various Units ofthe Company. Your Directors feel pleasure in informing the members that this programme hadbeen completed by the end of financial year under review. Your Directors further informthe members that during the year second phase of technology up-gradation anddebottlenecking programmes at a capital outlay of Rs 48.76 Crores has been initiated to becompleted during the current financial year. Further your Company has installed andcommissioned Roof Top Solar Power Project of 1.8 MW Capacity at Bhilwara Rajasthanduring the year.
Your Directors are hopeful that with the implementation of above initiatives theoverall productivity and profitability of the Company will improve considerably.
Subsidiary Company Joint Venture & Associates
Your Directors inform the members that during the financial year under review yourCompany has no Subsidiary.
Your Directors feel pleasure in informing the members that your Company continued toreceive throughout the year wind power supply from LNJ Power Ventures Limited. YourDirectors gladly inform the members that power supply from the LNJ Power Venture alsomeets the Renewable Power Obligations of the Company and leads a long way to the GreenPower initiative of the Company.
Further your Directors inform the members that your Company holds significantinvestment in Bhilwara Energy Limited. Your Directors had been regularly reviewingprogress of BEL and suggestions comments and concerns of your Company were beingconveyed to the Board of BEL by Common Directors which included Shri Riju JhunjhunwalaManaging Director (MD) of your Company who is also MD of BEL. Your Directors have nowdecided under a formal arrangement to nominate at least one Director of your Company onthe Board of BEL and accordingly formally nominated Shri Riju Jhunjhunwala on the Board ofBEL w.e.f. May 12 2017.
A statement containing the salient features of the financial statements of LNJ PowerVentures Limited and Bhilwara Energy Limited in the prescribed format AOC 1 is annexed asAnnexure - II.
Contribution to the Exchequer
Your Company has contributed an amount of Rs 128.56 Crores in terms of taxes and dutiesto the Exchequer.
Corporate Social Responsibility
Your Directors in their previous report had informed the members that the Company hadbeen following its core philosophy of serving the society and endeavours to be involved inwhole gamut of activities such as sanitation and safe drinking water promoting educationempowering women ensuring environmental sustainability ecology balance protection ofnational heritage promoting rural sports and building roads for village etc. YourDirectors feel pleasure in informing the members that your Company during the year underreview had undertaken at the request of State Government of Rajasthan to build thedamaged wall of Check Dam at Beneshwar near Mordi Banswara at an estimated cost of Rs 250Lakhs. Similarly your Company had also at the request of the State Government hadundertaken to build two Tennis Courts at SMS Stadium Jaipur at an estimated cost of Rs 38Lakhs. These activities were besides the other activities undertaken by the Company fromtime to time.
Your Directors inform the members that the Corporate Social Responsibility Committeecomprising Shri Arun Churiwal Shri Riju Jhunjhunwala and Shri Amar Nath Choudharymonitors the expenditure incurred on the CSR activities and formulate an annual budget forthese activities.
The details of the CSR spend by the Company are annexed as Annexure III forming part ofthis report.
Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo
Your Directors inform the members that your Company continuously looks out for energyconservation measures in all areas of operation across its various Units. Similarly yourCompany endeavours to lookout for up-gradation and absorption of technology. Your Companyalso spends continuously on Research and Development. Your Directors are glad to informthe members that your Company is a net foreign exchange earner. The relevant detail asrequired to be disclosed with respect to Energy conservation Technology absorption andforeign exchange earnings and outgo pursuant to Section 134(3) (m) of the Companies Act2013 read with the Rule 8(3) of the Companies (Accounts) Rules 2014 are given in Annexure IV forming part of this report.
Extract of Annual Return
Pursuant to Section 92 of the Companies Act 2013 read with Rule 12 of The Companies(Management and Administration) Rules 2014 the Extract of Annual Return in prescribedformat MGT-9 is annexed as Annexure V.
Directors & Key Managerial Personnel
Shri Shekhar Agarwal and Shri Prakash Maheshwari Directors retire by rotation andbeing eligible offer themselves for reappointment.
As informed to the members in their previous report by your Directors Shri DeepakJain Independent Director was appointed for a term of 5 years by the Shareholders at thelast Annual General Meeting held on September 27 2016.
Your Directors further inform the members that declarations have been taken from theIndependent Directors at the beginning of the financial year stating that they meet thecriteria of independence as specified under sub-section (6) of Section 149 of CompaniesAct 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
During the year Shri Riju Jhunjhunwala Managing Director & CEO Shri SurenderGupta Company Secretary and Shri B.M. Sharma Chief Financial Officer acted as KeyManagerial Personnel.
Directors' Appointment and Remuneration Policy
As your Directors informed the members in their previous report a Nomination andRemuneration Policy had been framed by your Company for the appointment of Directors andSenior Management and fixation of their remuneration. The Nomination and RemunerationPolicy as framed is annexed as Annexure VI and forms part of this report.
Your directors inform the members that the Nomination and Remuneration Committee aswell your Directors endeavour to follow the policy and all appointments at Board andSenior Management are considered at the meetings of the Committee and the Board.
Annual Evaluation by the Board
Your Board of Directors during the financial year under review has carried out annualevaluation of its own performance as well as its Committees and also of the individualDirectors in the manner as enumerated in the Nomination and Remuneration Policy inaccordance with the provisions of Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. Your Directors feel pleasure in informing themembers that the performance of the Board as a whole and its member individually wasadjudged satisfactory.
Particulars of Loans Guarantees or Investments
Details of loans Guarantees and Investments are given in the notes to the FinancialStatements at appropriate places.
Particulars of Contracts or Arrangements with Related Parties
All contracts/ arrangements/ transactions entered into by the Company during thefinancial year with the related parties are on arm's length basis and in the ordinarycourse of business. During the financial year there was no material contracts orarrangements entered into by the Company with any of the related party. Your Directorsdraw attention of the members to Note No.39 to the financial statement which containparticulars with respect to related parties. The policy on dealing with the related partytransactions as approved by the Board of Directors is disclosed on the website of theCompany under the following link
Significant and Material Orders Passed by the Regulators or Courts
During the year the Hon'ble Supreme Court upheld constitutional validity ofnotifications imposing Renewable Power Obligations (RPOs) on power produced from captivepower plants. However your Company based on legal opinion obtained is not exposed to RPOsin view of setting up of Wind Power Unit in 2011-12 and Waste Heat Recovery for use assteam. Further during the year your Company has also commissioned Roof Top Solar PowerUnit at Bhilwara Rajasthan to meet Renewal Purchase Obligations. You may kindly refer toNote No.37(D) to the financial statement.
Risk Management Policy
The Company has adopted the risk management policy which aimed at creating andprotecting shareholders value by minimising threats and losses and identifying andmaximising opportunities. Your Directors periodically review the risks associated with thebusiness or which threaten the prospects of the Company.
Internal Control Systems
Your Directors feel that adequate control systems are the backbone of any Company. YourDirectors endeavour to place adequate control systems commensurating with the size of theCompany to ensure that all assets are properly safeguarded and that all the informationprovided to the management is reliable and also the obligations of the Company areproperly adhered to.
Your Directors inform the members that in pursuit of strengthening internal controlsystems your Company has put in place a system whereby all areas of the operations of theCompany are reviewed by the internal as well as external professionals and independentaudit firms. Your Company takes adequate measures with respect to gaps if any reported.The Audit Committee of your Company regularly monitors the annual operating plans riskassessment and minimisation procedures as well as mitigation plans.
Your Directors endeavour to continuously improve and monitor the internal controlsystems.
Particulars of Employees
The information pursuant to Section 197 read with Rule 5 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 of the employees is annexed as AnnexureVII.
Further pursuant to Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 the relevant statement is annexed as Annexure - VIII.
M/s. S. Bhargava Associates Chartered Accountants (Firm Registration No. 003191C)joint Statutory Auditor of the Company retires at the conclusion of the ensuing AnnualGeneral Meeting and shall not be eligible for re-appointment pursuant to Section 139 ofthe Companies Act 2013 and rules made thereunder.
In view of the retirement of M/s. S. Bhargava Associates and their non eligibilityyour Directors recommend appointment of M/s. Lodha & Co. Chartered Accountants (FirmRegistration No.301051E) as joint statutory auditors of the Company to hold office for aperiod of 5 consecutive years from the conclusion of the 56thAnnual General Meeting of theCompany scheduled to be held in the year 2017 till the conclusion of 61st Annual GeneralMeeting to be held in the year 2022.
Further the appointment of M/s S. S. Kothari Mehta & Co. Chartered Accountants(Firm Registration No.00000756N) joint Statutory Auditors of the Company who wereappointed at the 53rd Annual General Meeting of the Company held on September 16 2014 fora term of 5 years till the conclusion of 58th AGM subject to ratification by members atevery subsequent Annual General Meeting will be placed before the members at this AnnualGeneral Meeting for ratification.
Further both the Statutory Auditors have confirmed their eligibility under Section 141of the Companies Act 2013 and the Rules framed thereunder.
The observations of the Auditors if any are explained wherever necessary in theappropriate notes to the accounts. The Auditors' Report does not contain qualificationreservation or adverse remark.
Your Directors during the year under review appointed M/s. P.K. Deora & Co.Chartered Accountants (Firm Registration No.004167N) M/s. Doogar & AssociatesChartered Accountants (Firm Registration No.000561N) M/s Ashim & AssociatesChartered Accountants (Firm Registration No.006064N) M/s Anil Nupur & Co. CharteredAccountants (Firm Registration No.007626N) and M/s. Singhi & Co. CharteredAccountants (Firm Registration No.302049E) to act as the Internal Auditors of the Companyfor the financial year 2016-17 pursuant to Section 138 of the Companies Act 2013 readwith The Companies (Accounts) Rules 2014
Your Directors during the year under review also appointed Shri Mahesh GuptaPractising Company Secretary (Membership No. FCS 2870 and CP No.1999) Proprietor of M/sMahesh Gupta & Company Company Secretaries Delhi as the Secretarial Auditor of theCompany for the financial year 2016-17 pursuant to Section 204 of the Companies Act 2013read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules2014. The Report of Secretarial Audit is annexed as Annexure IX.
Your Directors inform the Members that Pursuant to Section 148 of the Companies Act2013 read with The Companies (Cost Records and Audit) Rules 2014 textile Companies arerequired to get their cost records audited. In this connection the Board of Directors ofthe Company on the commendation of Audit Committee had approved the appointment of M/s. N.D. Birla & Company Cost Accountants (Firm Reg No. 000028) Ahmedabad as the CostAuditor of the Company for the year ending March 31 2017.
Report on Corporate Governance along with the Certificate of Auditors M/s S. BhargavaAssociates Chartered Accountants (Firm Registration No. 003191C) 1 Pareek College RoadBani Park Jaipur (Rajasthan) and M/s. S. S. Kothari Mehta & Co. CharteredAccountants (Firm Registration No 000756N) 146-149 Tribhuvan Complex Ishwar NagarMathura Road New Delhi-110065 confirming compliance to conditions of Corporate Governanceas stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 form part of the Annual Report.
Whistle Blower Policy
Your Directors inform the Members that with the objective of pursuing the business in afair and transparent manner by adopting the highest standards of professionalism honestyintegrity and ethical behavior and to encourage and protect the employees who wish toraise and report their genuine concerns about any unethical behavior actual or suspectedfraud or violation of Company's Code of Conduct the Company has adopted a Whistle BlowerPolicy. Policy adopted by the Company contains a framework whereby the identity of thecomplainant is not disclosed. The policy has been disclosed on the website of the Companythe link of which is given hereunder:http://rswm.in/investor/pdf/Whistle-Blower-Policy.pdf
Management Discussion and Analysis Report
Management Discussion and Analysis Report as required by SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 forms part of the Annual Report.
Directors' Responsibility Statement
Pursuant to Section 134(3) (c) of the Companies Act 2013 the Directors 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) they had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitand loss of the Company for that period;
(c) they had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) they had prepared the annual accounts on a going concern basis; and
(e) they had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively.
(f) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
Your Directors take this opportunity to thank customers members suppliers bankersbusiness partners / associates Central and State Governments for their consistent supportand co-operation extended to the Company. We also acknowledge the significant contributionmade by the employees by their dedication and hard work and trust reposed on us. We lookforward to have the same support in our endeavor to help the Company to grow faster.
| ||For and on behalf of the Board |
| ||Ravi Jhunjhunwala |
|Place: Noida (U.P) ||Chairman |
|Date: May 12 2017 ||DIN - 00060972 |