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 31st March 2016.
Your Companys performance during the year 2015-2016 is summarised below:
|Financial Results || || |
| || ||(Rs. in Crore) |
| ||2015-16 ||2014-15 |
|Turnover || || |
|Export ||907.33 ||1024.94 |
|Domestic ||2058.86 ||1989.37 |
|TOTAL ||2966.19 ||3014.31 |
|Profit before Interest & Depreciation ||420.18 ||377.45 |
|Less: Interest/Finance Costs ||(124.38) ||(125.22) |
|Profit before Depreciation & Amortisation ||295.80 ||252.23 |
|Less: Depreciation & Amortisation ||(149.23) ||(135.27) |
|Profit/(Loss) before Tax ||146.57 ||116.96 |
|Less: Current Tax ||(28.73) ||(24.50) |
|Deferred Tax Liability ||(14.51) ||(7.55) |
|Tax of earlier years provided (written back) ||2.66 || |
|Profit/(Loss) after Tax ||105.99 ||84.91 |
|Add: Opening Balance ||204.99 ||165.24 |
|Profit available for appropriation ||310.98 ||250.15 |
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. C12.50/-per Equity Share of C10/- each for the year ended the 31st March 2016.
Further your Company subsequent to Orders of the Honble High Courts of Rajasthanat Jodhpur dated 26th March 2015 and Honble High Court of Madras at Chennai dated31st March 2015 approving
Scheme of Amalgamation of Cheslind Textiles Limited with the Company allotted13665435 Optionally Convertible Redeemable Preference Shares (OCRPS) of C7.50 eachcarrying a coupon rate of 12% per annum on 30th May 2015 to the eligible Shareholders oferstwhile Cheslind Textiles Limited as per Scheme.
Your Directors recommend the payment of preference dividend @ 12% per annum i.e. C0.75per OCRPS on pro-rata basis from the date of allotment.
The proposal for payment of dividend on Equity Shares and Preference Shares of theCompany will absorb an amount of C36.07 Crore (inclusive of distribution tax).
The proposals with regard to the payment of dividend on Preference Shares as well as onEquity Shares for the year ended 31st March 2016 shall be placed before the Shareholdersat the ensuing Annual General Meeting.
No amount is proposed to be transferred to General Reserve. The amount of C274.91 crorehas been carried over to next year.
Your Directors are pleased to inform the members that during the financial year underreview your Company reported encouraging performance. Your Directors during the periodunder review focussed on the consolidation of the operations of the Company. As a resulteven though there was marginal decrease in the turnover of the Company the operatingprofit of the Company surged by 11.32% at C420.18 Crore from C377.45 Crore. The profitbefore depreciation also increased by 17.27% at C295.80 Crore against C252.23 Crorerecorded in the previous year. The profit after tax also recorded an increase of 24.82% atC105.99 Crore from C84.91 Crore in the last year. This performance was achieved due tomultiple factors viz. improved market conditions products rationalisation capacityoptimisation and cost control measures etc. taken by the Management of your Company. YourDirectors are hopeful that your Company shall reap the benefits of recently completedexpansion in the current financial year and with ongoing expansion and modernisationprogramme shall report good performance in the current financial year.
The analytical reviews of the Companys 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 2013-14 to 2015-16 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 thecommissioning of 25344 spindles for mlange yarn at Kanya Kheri Bhilwara and 50 MTGreen Polyester Fibre Project at Ringas. Your Directors feel pleasure in informing theMembers that both the plants had been running in full capacity throughout the year andprovided a boost to both turnover and profitability. Your Directors further inform themembers that the capex proposal entailing the modernisation of Fabric Unit at Banswara andYarn division at Bagalur amounting to C3.17 crore and C10.00 crore were completed duringthe year thereby improving the overall productivity.
Your Directors feel pleasure in informing the members that encouraged with the responsein the Denim Segment your Company has undertaken the Denim Sheet Dyeing Project at acapital outlay of C42.75 crore. This project shall be implemented during the currentfinancial year. This project once implemented will boost up the production of Denim from17 Million Mtrs. to 25 Million Mtrs.
Your Directors further inform the members that during the year under review yourCompany has also undertaken a Debottlenecking & up-gradation of equipments andfacilities across seven units of the Company at an estimated capital outlay of C45.76crore.
Your Directors are hopeful that with the implementation of above initiatives theoverall productivity and profitability of the Company will improve considerably.
Subsidiary Company and Joint Venture
Your Directors inform the members that with the amalgamation of M/s. Cheslind TextilesLimited (CTL) in the previous financial year your Company has no Subsidiary Company. YourDirectors take this opportunity to inform the members that your Company during the yearunder review has completed all formalities with regard to the issuance of OptionallyConvertible Redeemable Preference Shares (OCRPS) to the eligible shareholders of erstwhileCTL as per the Orders of the Honble High Courts of Rajasthan and Madrasrespectively. The OCRPS of the Company have been listed on the BSE Limited and NationalStock Exchange of India Limited with effect from 29th April 2016.
Your Directors further inform the members that during the current financial year theEquity Shares of the Company will be issued to the eligible OCRPS holders who would beindicating willingness to exercise the right of conversion of OCRPS into the Equity Sharesof the Company in terms of the Scheme of Amalgamation approved by the High Courts ofRajasthan and Madras respectively upon completion of formalities by the said OCRPSholders. Your Directors inform the members that the Equity Shares proposed to be issued asabove shall rank pari-passu in all respects including the dividend and shall be listed onthe Stock Exchanges where the existing Equity Shares of the Company are listed.
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.
A statement containing the salient features of the financial statements of LNJ PowerVentures Limited in the prescribed format AOC 1 is annexed as Annexure - II
Contribution to the Exchequer
Your Company has contributed an amount of C130.81 crore in terms of taxes and duties tothe Exchequer.
Corporate Social Responsibility
Your Directors take this opportunity to inform the members that your Company had alwaysbeen following its core philosophy of serving the society ever since its inception. YourCompany endeavours to be involved in whole gamut of activities such as sanitation and safedrinking water promoting education empowering women ensuring environmentalsustainability ecology balance protection of national heritage promoting rural sportsand building roads for village etc. Apart from activities as above your Company supportsall other activities in the nearby localities by means of donations and othercontributions.
Your Directors inform the members that the Corporate Social Responsibility Committeecomprising Shri Arun Churiwal Shri Riju Jhunjhunwala and Shri Amar Nath Choudhary formedby the Board of Directors of your Company monitor the expenditure incurred on the CSRactivities and formulate an annual budget for these activities.
The details of the CSR spend by the Company is 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 lookout 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 is 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 Riju Jhunjhunwala and Shri J.C. Laddha Directors retire by rotation and beingeligible offer themselves for reappointment.
Your Directors inform the members that during the year under review Shri PrakashMaheshwari was co-opted on the Board of Directors w.e.f. 1st April 2015 and was alsodesignated as Executive Director for a period of three years from the same date. YourDirectors inform the members that Shri Prakash Maheshwari had been associated with theCompany and the Group for a very long period spanning over three decades.
Your Directors further inform the members that the term of Shri Arun Churiwal ManagingDirector and Chief Executive Officer as well as Key Managerial Personnel completed on 31stMarch 2016. Your Directors place on record their deep sense of appreciation for theservices rendered by Shri Arun Churiwal during his tenure as Managing Director and ChiefExecutive Officer of the Company. As the appointment of Shri Arun Churiwal as Directorliable to retire by rotation was approved by the members at the previous Annual GeneralMeeting held on 25th September 2015 Shri Arun Churiwal continued to serve on the Boardof Directors of the Company as Non-Executive and Non-Independent Director with effect from1st April 2016.
As the members are aware as part of Succession Planning at the top Management of theCompany Shri Riju Jhunjhunwala was designated as Managing Director with effect from 10thFebruary 2015 for his remaining tenure upto 30th April 2016. Your Directors inform themembers that Shri Riju Jhunjhunwala was also appointed as Chief Executive Officer as wellas Key Managerial Personnel of the Company with effect from 1st April 2016 after thecompletion of the term of Shri Arun Churiwal. Further Shri Riju Jhunjhunwala wasre-appointed as Managing Director with effect from 1st May 2016 for a term of five years.
During the financial year under review Shri Sushil Jhunjhunwala Independent Directorresigned with effect from 1st February 2016 due to pre-occupation. Your Directors placeon record the appreciation of services rendered by Shri Sushil Jhunjhunwala during histenure on the Board.
Your Directors further inform the members that Shri Deepak Jain was appointed asan Additional Director in the category of Independent Director with effect from 11th May2016. Shri Deepak Jain is renowned industrialist and brings with him the diversifiedexperience in the industry. The proposal for confirmation of his appointment as Directoras well Independent Director for a term of 5 years shall be put up before the ensuingAnnual General Meeting.
Your Directors further inform the members that declarations have been taken from theIndependent Directors at the beginning of the financial year stating that they met 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 Arun Churiwal Managing Director Shri Surender Gupta CompanySecretary and Shri B.M. Sharma Chief Financial Officer acted as Key Managerial Personnel.However with effect from 1st April 2016 Shri Riju Jhunjhunwala Managing Director wasnominated as Key Managerial Personnel in place of Shri Arun Churiwal.
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 as 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 members 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 arms length basis and in the ordinarycourse of business. During the financial year there were no material contracts orarrangements entered into by the Company with any of the related party. Your Directorsdraw attention of the members to note 40 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 http://www.rswm.in/pdf/Policy on Related PartyTransaction.pdf
Significant and Material orders passed by the Regulators or Courts
During the year the Honble Supreme Court upheld constitutional validity ofnotifications imposing Renewable Energy Obligations (RPOs) on power produced from captivepower plants. However your Company based on legal opinion obtained is not exposed toRPOs in view of setting up of Wind Power Unit in 2011-12 and Waste Heat Recovery for useas steam. You may kindly refer to Note No. 44(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 asAnnexure VII.
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 Auditors of the Company who retire at the conclusion of the ensuingAnnual General Meeting are eligible for re-appointment.
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 16th September 2014for a term of 5 years till the conclusion of 58th AGM subject to ratification by membersat every subsequent Annual General Meeting will be placed before the members at thisAnnual General Meeting for ratification.
Further both the statutory auditors have confirmed their eligibility under Section 141of the Companies Act 2013 and the Rules framed thereunder.
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) and M/s. SSMS & AssociatesChartered Accountants (Firm Registration No. 019351C) M/s Ashim & AssociatesChartered Accountants (Firm Registration No. 006064N) and M/s Anil Nupur & Co.Chartered Accountants (Firm Registration No. 007626N) to act as the Internal Auditors ofthe Company for the financial year 2015-16 pursuant to Section 138 of the Companies Act2013 read with 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 2015-16 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 and Notification issuedby Ministry of Corporate Affairs dated 31st December 2014 the textile Companies werenotified to get its cost records audited from the financial year commencing on or after1st day of April 2015. Accordingly your Directors appointed M/s N D Birla & CompanyCost Accountants (Firm Reg No. 000028) Ahmedabad as the Cost Auditor of the Company forthe financial year ended 31st March 2016.
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 Companys Code of Conduct the Company has adopted a WhistleBlower Policy. Policy adopted by the Company contains a framework whereby the identity ofthe complainant is not disclosed. The policy has been disclosed on the website of theCompany the link of which is given hereunder: http://rswm.in/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 endeavour to help the Company to grow faster.
| ||For and on behalf of the Board |
| ||Ravi Jhunjhunwala |
|Place: Noida (U.P.) ||Chairman |
|Date: 11th May 2016 ||DIN - 00060972 |
Annexure - I to Directors Report
|Particulars || ||2015-16 ||2014-15 ||2013-14 |
|I PRODUCTION || || || || |
|YARN || || || || |
|A Own ||In Tonnes ||140623 ||133106 ||124428 |
|TOTAL || ||140623 ||133106 ||124428 |
|FIBRE || || || || |
|A Own ||In Tonnes ||17611 ||72 ||- |
|TOTAL || ||17611 ||72 ||- |
|FABRIC & DENIM || || || || |
|A Own ||(In 000 meters) ||29866 ||32903 ||33702 |
|B Job Weaving from outside (Domestic) ||(In 000 meters) ||4420 ||- ||- |
|TOTAL || ||34286 ||32903 ||33702 |
|II TURNOVER ||(Rs. in lac) || || || |
|YARN || || || || |
|A Domestic || || || || |
|Grey Yarn || ||102104 ||106599 ||103839 |
|Dyed Yarn || ||65015 ||55943 ||59763 |
|Job Spinning || ||1113 ||1050 ||926 |
|Job Spinning from outside (Domestic) ||In Tonnes ||- ||- ||- |
|TOTAL || ||168232 ||163592 ||164528 |
|B Export || || || || |
|Grey Yarn || ||57450 ||63519 ||53270 |
|Dyed Yarn || ||26540 ||29352 ||29132 |
| || ||83990 ||92871 ||82402 |
|Less: Inter Unit/Division Transfer/job receipt || ||7121 ||6716 ||6260 |
|TOTAL || ||76869 ||86155 ||76142 |
| || ||245101 ||249746 ||240670 |
|FIBRE || || || || |
|Domestic || ||11866 ||49 ||- |
|Less: InterUnit/Division Transfer || ||11369 ||45 ||- |
|Particulars ||2015-16 ||2014-15 ||2013-14 |
| ||497 ||5 ||- |
|FABRIC & DENIM || || || |
|A Domestic ||38871 ||36541 ||34642 |
|B Export ||6862 ||10298 ||9516 |
|Less: Inter Unit/Division Transfer ||5 ||- ||1 |
| ||45728 ||46839 ||44157 |
|PROCESSING CHARGES || || || |
|Weaving Charges ||643 ||5 ||5 |
|Processing Charges ||2727 ||1403 ||1817 |
| ||3370 ||1408 ||1822 |
|Less: Inter Unit/Division Transfer ||1871 ||- ||- |
| ||1499 ||1408 ||1822 |
|WASTE || || || |
|A Domestic ||4533 ||4100 ||2578 |
|Less: Inter Unit/Division Transfer ||739 ||667 ||794 |
| ||3794 ||3433 ||1784 |
|Total ||296619 ||301431 ||288433 |
Annexure - II to Directors Report
FORM: AOC - I
Statement pursuant to Section 129 (3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures
|Name of Associates/Joint Ventures ||LNJ Power Ventures Limited. |
|1. Latest audited Balance Sheet Date ||31st March 2016. (Audited) |
|2. Shares of Associate/Joint Ventures held by the Company on the year end || |
|No. ||260000 |
|Amount of Investment in Associates/Joint Venture ||Rs. 26 lacs |
|Extent of Holding% ||26% |
|3. Description of how there is Significant influence ||No Significant influence. |
|4. Reason why the associate/joint venture is not consolidated ||Not Applicable |
|5. Net worth attributable to shareholding as per latest ||Rs. 59.58 Lacs |
|audited Balance Sheet ||(26% of C 229.17 lacs) |
|6. Profit/Loss for the year ||(Rs. 181.22 Lacs) |
|i. Considered in Consolidation ||(Rs. 47.12 Lacs) |
|ii. Not Considered in Consolidation ||(Rs. 134.10 Lacs) |
1. Names of Associates or Joint Ventures which are yet to commence operations. NA
2. Names of Associates or Joint Ventures which have been liquidated or sold during theyear NA
| ||For and on behalf of Board of Directors || |
|Ravi Jhunjhunwala ||Riju Jhunjhunwala ||Prakash Maheshwari |
|Chairman ||Managing Director ||Executive Director |
|DIN: 00060972 ||DIN: 00061060 ||DIN: 02388988 |
|B. M. Sharma ||Surender Gupta || |
|Chief Financial Officer ||Company Secretary || |
|M. No. : FCA-35012 ||M. No. : FCS-2615 || |