TO THE MEMBERS OF RUBFILA INTERNATIONAL LIMITED
The Directors have pleasure to present their 24 Annual Report and the audited AnnualAccounts for the year ended 31 March 2017.
|1. Financial Results || ||` in Lakhs |
|Particulars ||Year ended 31 March 2017 ||Year ended 31 March 2016 |
| ||(Rs in lakhs) ||(Rs in lakhs) |
|Gross Income ||18513.09 ||17299.73 |
|Profit before Interest and Depreciation ||1633.49 ||1629.45 |
|Finance Charges ||6.47 ||21.06 |
|Profit before Depreciation ||2149.54 ||1608.39 |
|Provision for Depreciation ||299.60 ||290.55 |
|Net Profit before Tax ||1932.20 ||1317.84 |
|Provision for Tax ||679.93 ||515.01 |
|Net Profit after Tax ||1252.27 ||802.83 |
|Balance of Profit brought forward ||4918.37 ||4415.76 |
|Balance available for appropriation ||6170.64 ||5218.59 |
|Dividend on Equity Shares ||324.13 ||216.09 |
|Tax on proposed Dividend ||66.00 ||44.00 |
|Transfer to General Reserve ||62.61 ||40.14 |
|Surplus carried to Balance Sheet ||5717.89 ||4918.37 |
2. Performance Review
Your company achieved a higher turnover of Rs.18513.09 lakhs an increase of 7.01% ascompared to last year. The profit before depreciation and taxes is Rs.2149.54. Lakhs ascompared to Rs.1608.49 lakhs posted during the previous year. The earnings per equityshare (face value Rs. 5) for the year is Rs.2.90 as against Rs.1.86 for the previous year.
3. Dividend and Transfer to Reserves
Your Directors have recommended a dividend of 15% (Re.0.75 per Share of face valueRs.5/-) for the year subject to the approval of shareholders at the ensuing Annual GeneralMeeting. This will result in total payout for the year 2016-17 (including DividendDistribution Tax) of Rs.390.13 Lakhs. (Rs. 260.09 Lakhs in 2015-16). An amount of Rs.62.61Lakhs has been transferred to General Reserve as per the provisions of Companies Act2013.
4. Capital Expenditure
As on 31st March 2017 the gross fixed assets of the company stand at Rs.7465.15 Lakhsand net fixed assets Rs 3617.55 Lakhs. Capital additions during the year amounted to Rs1146.19 Lakhs which include addition to Building for Rs.251.16 Lakhs Plant &Machinery and other assets amounting to Rs.862.48 Lakhs and Capital Work in Progress ofRs.32.55 Lakhs.
5. Future Prospects
The market for rubber threads has grown and to meet the enhanced market the Companyhad decided to put up two more additional production lines. The Commercial production ofthe 5th Line started in March 2017. One more line is being erected and it is expected tobe complete by end of August 2017. The company is hopeful of keeping the full capacityutilized though there is big challenge from international market as well as from thepricing policies of Government in respect of latex.
6. Directors' Responsibility Statement
In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard of Directors hereby affirms that:
i. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures.
ii. 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 at the end of the financial year and ofthe profit of the company for the period 2016-17.
iii. The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities.
iv. The Directors have prepared the annual accounts on a going concern basis.
v. The Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and are operatingeffectively.
vi. The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
7. Listing on Stock Exchanges
Your Company's shares are listed on the BSE Ltd. During the year under review yourcompany's share price had touched Rs.56.00 per equity share. The closing price on shareson BSE as on 31.03.2017 was Rs.50.50 as against Rs.34.10 for the year ended 31.03.2016.The Company has paid the listing fees to BSE Limited for the year 2017-18.
8. Declaration on Independent Directors
Pursuant to sub section (6) of Section 149 of the Companies Act 2013 and Reg 16(1) (b)of the SEBI (Listing Obligations and Disclosure Requirement) Regulations 2015 theIndependent Directors of the Company Mr.Samir K. Shah (DIN 01714717) Mr.S.N.Rajan (DIN00105864) Mr. Patrick M Davenport (DIN 00962475) and Ms.R.Chitra (DIN 01560585) and theproposed appointed Mr. S.H. Merchant (DIN: 0075865) have given declaration to the Companythat they qualify the criteria of independence as mentioned below:
(a) in the opinion of the Board are persons of integrity and possess relevantexpertise and experience;
(b) (i) who are not Promoters of the company or its holding subsidiary or associatecompany
(ii) who are not related to Promoters or Directors in the company its holdingsubsidiary or associate Company;
(c) who have or had no pecuniary relationship with the company its holding subsidiaryor associate company or their Promoters or Directors during the two immediately precedingfinancial years or during the current financial year;
(d) None of whose relatives has or had pecuniary relationship or transaction with thecompany its holding subsidiary or associate company or their Promoters or Directorsamounting to two percent or more of its gross turnover of total income or fifty lakhrupees or such higher amount as may be prescribed whichever is lower during the twoimmediately preceding financial years or during the current financial year;
(e) Who neither himself nor any of his relatives -
i) holds or has held the position of a key managerial personnel or is or has beenemployee of the company or its holding subsidiary or associate company in any of thethree financial year immediately preceding the financial year in which he is proposed tobe appointed;
ii) is or has been an employee or propriety or a partner in any of the three financialyears immediately preceding the financial year in which he is proposed to be appointed of-
(A) a firm of auditors or company secretaries in practice or cost auditors or thecompany or its holding subsidiary or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the companyits holding subsidiary or associate company amounting to ten percent or more of the grossturnover of such firm;
(iii)holds together with his relative two per cent or more of the total voting powerof the company; or
(iv) is a Chief Executive or Director by whatever name called of any non-profitorganization that receives twenty-five percent or more of its receipts from the companyany of its Promoters Directors or its holding subsidiary or associate company or thatholds two per cent or more of the total voting power of the company; or
(f) Who possess appropriate skills experience and knowledge in one or more fields offinance law management sales marketing administration research corporategovernance technical operations and other disciplines related to the Company's business.
During the period under review the Independent Directors of the Company met on21.03.2017. The Independent Directors in their meeting has:
a) Reviewed the performance of non-independent directors and the Board as a whole.
b) Reviewed the performance of the Chairperson of the Company taking into account theviews of the executive and non executive directors.
c) Assessed the quality quantity and timeliness of flow of information between theCompany management and the Board that is necessary for the Board to effectively andreasonably perform their duties.
9. Particulars of Loans guarantees or investments
Pursuant to Section 186 of the Companies Act 2013 your company has not directly orindirectly -
a) given any loan to any person or other body corporate other than usual advancesenvisaged in a contract of supply of materials if any
b) given any guarantee or provide security in connection with a loan to any other bodycorporate or person and
c) acquired by way of subscription purchase or otherwise the securities of any otherbody corporate
d) exceeding sixty percent of its paid-up share capital free reserve and securitiespremium account or one hundred percent of its free reserves and securities premium accountwhichever is more.
Your company has not accepted any deposits from public as envisaged under Chapter V ofCompanies Act 2013 read with Companies (Acceptance of Deposit) Rules 2014 and no amountsremain unpaid or unclaimed as at the end of the period under review.
11. Conservation of Energy technology absorption foreign exchange earnings and outgo
Information relating to conservation of energy technology absorption foreign exchangeearnings and outgo as required to be disclosed under Section 134 (3) (m) of the CompaniesAct 2013 read with Companies (Accounts) Rules 2014 are given in Annexure I forming partof this report.
12. Related Party Transactions
All contracts/ arrangements/ transactions entered by the Company during the financialyear were in compliance with the applicable provisions of the Companies Act 2013 andRules made thereunder and according to SEBI (Listing obligations and DisclosureRequirements) Regulations 2015. All Transaction entered into with the Related Partiesduring the financial year under the review were on an arm's length basis and were in theordinary course of business. There are no materially significant Related Partytransactions made by the Company with its Promoters Directors Management or theirrelatives that could have had a potential conflict with the interests of the Company atlarge. All Related Party Transactions were placed before the Audit Committee and alsobefore the Board for their approval.
The Company has framed a policy on materiality of related party transactions and ondealing with related party transactions. The policy as approved by the Board is uploadedon the Company's website : http://www.rubfila.com/policies. The Form AOC - 2 containingthe particulars of contracts or arrangements with related parties made during the periodunder review is annexed herewith as "Annexure II".
13. Corporate Social Responsibility:
The Board of Directors the Management and all of the employees subscribe to thephilosophy of compassionate care. The company believes and acts on an ethos of generosityand compassion characterized by a willingness to build a society that works for everyone.
In accordance with the provisions under Section 135 of the Companies Act 2013 theCompany has constituted a Corporate Social Responsibility Committee consisting of Mr.Bharat J. Dattani (DIN 1462746) Mr. S.N.Rajan (DIN 00105864) and Mr. G Krishna Kumar tooversee the CSR activities.
The CSR Policy may be accessed on the Company's website at the link:http://www.rubfila.com/about us/CSR policy.
The areas focused by the Company for which CSR amounts spent are palliative careinfrastructure development for charitable societies and schools financial assistance tothe needy in the society. The Company also undertakes other need based initiatives incompliance with Schedule VII to the Act. During the year Company has spent Rs.22.30 Lakhstowards CSR expenditures.
The annual report on CSR activities is annexed herewith marked as Annexure III.
14. Directors and Key Managerial Peronnel
The Board of directors of the Company comprises of 10 directors as on the date ofreport. Your Board comprises Mr. Bharat J. Patel as Non-Executive Chairman Mr. G.Krishnakumar as the Managing Director (Executive) Mr. Tommy Thompson Mr. Bharat J.Dattani Mr. Dhiren S Shah Mr. Hardik B Patel as Promoter Non-Executive Non-IndependentDirectors and four Non-executive Independent Directors namely Mr. Samir K. Shah Mr.Patrick M. Davenport Mr. S. N. Rajan and Ms. R Chitra (Woman Director). The Details ofcomposition of the mandatory Board committees namely Audit Committee Nomination andRemuneration Committee CSR Committee Stakeholders Relationship Committee number ofmeetings held during the year under review and other related details are provided in theCorporate Governance Report which forms a part of this Report.
In accordance with the provisions of the Companies Act 2013 Mr. Bharat J. Patel (DIN01100361) and Mr. Dhiren S. Shah (DIN 01149436) retires by rotation and being eligibleoffer themselves for re-appointment in the ensuing Annual General Meeting.
No directors or Key Managerial Personnel were appointed or have resigned during theperiod under review.
During the reporting period your Board met seven times. The details of the meeting andattendance of directors are provided in the Corporate Governance Report annexed herewith.There were no instances in which the Board had not accepted any recommendation of theAudit Committee.
15. Performance Evaluation
The Companies Act 2013 and SEBI (LODR) Regulations 2015 stipulates the performanceevaluation of the Directors including Chairman the Board and its Committees. The Companyhas devised a Policy for performance evaluation of the Board Committees and otherindividual Directors (including Independent Directors) which includes criteria forperformance evaluation of the Non-executive Directors and Executive Directors. Theevaluation process inter alia considers attendance of Directors at Board and committeemeetings acquaintance with business communicating inter se board members effectiveparticipation domain knowledge compliance with code of conduct vision and strategybenchmarks established by global peers etc which is in compliance with applicable lawsregulations and guidelines.
The Board carried out annual performance evaluation of the Board Board Committees andIndividual Directors and Chairperson. The Chairman of the respective Board Committeesshared the report on evaluation with the respective Committee members. The performance ofeach Committee was evaluated by the Board based on report on evaluation received fromrespective Board Committees.
The reports on performance evaluation of the Individual Directors were reviewed by theChairman of the Board.
16. Policy on Nomination and Remuneration and
Performance evaluation of Directors KMP and Senior Management Personnel:
The Company has framed a Nomination and Remuneration Policy in accordance with theprovisions of Section 178 of Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. The Nomination and Remuneration Committee ofthe Company oversees the implementation of the Nomination and Remuneration Policy. TheNomination and Remuneration Policy prescribes for the criteria for determining thequalifications positive attributes independence of a Director and the policy onremuneration of Directors Key Managerial Personnel senior management employees includingfunctional heads and other employees. The Nomination and Remuneration Policy of theCompany is available on the website of the Company in the following weblink :http://www.rubfila.com/img/pdf/Nomination -RemunerationPolicy.pdf
a) Statutory Auditors
M/s. Mohan & Mohan Associates Chartered Accountants (Firm's Registration No. 02092S) Statutory Auditors of the Company retires at the ensuing Annual General Meeting. Asper Section 139 of the Companies Act 2013 read with Companies (Audit and Auditors) Rules2014 an Audit firm shall not be appointed as the Statutory Auditors for more than twoterms of five consecutive years and after completing such term the audit firm shall notbe eligible for re-appointment as Auditors in the same company for five years fromcompletion of such term. The board places on record its appreciation for the contributionof M/s. Mohan & Mohan Associates Chartered Accountants during their tenure as theStatutory Auditors of the Company.
Accordingly your directors have recommended the appointment of M/s. Jim Syriac &Co. Chartered Accountants (Firm Registration No.
..) as StatutoryAuditors of the Company subject to the approval of shareholders for a term of 5 years tohold office from the conclusion of 24th Annual General Meeting until the conclusion of29th Annual General Meeting. The Company had obtained a certificate from the proposedAudit firm that the appointment if made shall be in accordance with the provisions ofSection 141 of the Companies Act 2013.
A resolution seeking their appointment forms part of the Notice convening the 24thAnnual General Meeting and the same is recommended for your consideration and approval.
Further your directors confirm that there are no qualifications disclaimerreservation or adverse remark made by the Statutory Auditors in their Auditors' Report forthe period 2016-17. During the period under review there were no frauds reported by theauditors under provisions of the Companies Act 2013
b) Secretarial Auditors
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of the Directors of theCompany had appointed M/s. SVJS & Associates Company Secretaries to undertake theSecretarial Audit of the Company for the year ended March 31 2017. The Secretarial AuditReport in form MR-3 submitted by the Secretarial Auditors for the financial year 2016-17is annexed to this Report as Annexure .
The Secretarial Auditors in their report have observed that atleast half of the Boardof Directors should consist of Independent Directors and out of the 10 directors of theCompany only 4 are Independent Directors. The Board took note of the same and proposes toappoint an Independent Director in the ensuing Annual General Meeting.
c) Cost Auditors
The Board has appointed M/s. Ajith Sivadas & Co. Cost Accountants as the CostAuditors for conducting the audit of cost records of the Company for the financial year2016-17. The remuneration payable for the financial year 2016 - 17 and the remunerationfor the financial year 2017-18 will be ratified in the ensuing Annual General Meeting ofthe Company.
d) Internal Auditors
The Board has appointed M/s. Pratapkaran Paul & Company Chartered AccountantsChennai as the Internal Auditors of the Company pursuant to Section 138 of the CompaniesAct 2013 for the period 2016 - 17.
18. Disclosures :
i) Particulars of employees:
Your Company is well aware of the importance of its human capital and thus providespositive work environment which is conducive flexible and enriched. No employee of theCompany was in receipt of remuneration exceeding the amount prescribed under Section 197of the Companies Act 2013 read with Rule 5 of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014. The Company is not paying any commission to itsDirectors.
The details of other employees required to be provided in compliance with theprovisions of Section 197 of the Companies Act 2013 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexed herewith asAnnexure.
ii) Vigil Mechanism / Whistle Blower Policy
Pursuant to Section 177 of the Companies Act 2013 the rules made thereunder and theRegulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the Company has established a Vigil Mechanism and has adopted a whistle blower policy forthe directors and employees to report genuine concerns about any instance of anyirregularity unethical practice and/or misconduct.
The vigil mechanism and whistle blower policy of the Company is available in thefollowing web link: http://www.rubfila.com/img/pdf/Vigil_Policy.pdf
iii) Risk Management Policy :
The Company has set up a robust risk management framework to identify monitor andminimize risk and also to identify business opportunities. The Audit Committee alsofunctions as the Risk Management Committee.
The Risk Management policy of the Company is available in the following weblink :http://www.rubfila.com/img/pdf/Risk_Management_Polic y_1464860004.pdf.
iv) Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition and Redressal)Act 2013. An Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment.
The following is the summary of sexual harassment complaints received and disposed offduring the period under review:
No. of complaints at the beginning of the year: Nil No. of complaints received duringthe year: Nil No. of complaints disposed off during the year: Nil No. of complaints at theend of the year: Nil
v) Employees Stock Option Scheme (ESOS):
The Employee Stock Option Scheme approved by the shareholders in the Annual GeneralMeeting of the Company held on 12th August 2014 as per the Securities and Exchange Boardof India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines1999 could not proceed further; no options were created granted offered issued andallotted under the said Scheme. Subsequently Securities and Exchange Board of India hasrepealed the existing regulations and introduced the Securities and Exchange Board ofIndia (Share Based Employee Benefits) Regulations 2014 with effect from 28th October2014. Hence the Employee Stock Option Scheme approved by the shareholders on 12th August2014 be treated as cancelled. The Board of directors of the Company at its meeting held on28th July 2017 considering the recommendation of the Nomination and Remuneration Committeehereby proposes a new scheme "RUBFILA ESOS 2017" subject to the approval ofshareholders in the ensuing Annual General Meeting to provide stock options to theeligible employees and directors (excluding the independent directors) of the Company.
The proposed Scheme "RUBFILA ESOS 2017" is intended to reward the eligibleemployees of the Company for their performance and to motivate them to contribute to thegrowth and profitability of the Company. Your Company also intends to use this Scheme toretain talent in the organization as it views Employee Stock Options as instrumental thatwould enable the employees to share the value they create for the Company and alignindividual objectives of employees with objectives of the Company in the years to come.
The disclosures as stipulated under Regulation 14 of SEBI circularCIR/CFD/POLICYCELL/2/2015 dated 16th June 2015 has been made available at the Company'swebsite at http://www.rubfila.com/investors.
vi) Change in the Nature of Business
There was no change in the nature of business of the Company during the Financial Year2016-17.
vii) Material changes and commitments affecting the financial position of the Companywhich have occurred between the end of the Financial Year of the Company to which thefinancial statements relate and the date of the report.
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the Financial Year to which this financial statements relateand the date of report.
viii) Significant or Material Orders passed by Regulators / Courts / Tribunals
During the year under review there were no significant or material orders passed bythe regulators or courts or tribunals impacting the going concern status and Company'soperations in future.
ix) Subsidiaries Joint Ventures and Associate Companies
The Company does not have any subsidiaries Joint Ventures and Associate Companies ason the reporting date. During the year under review no companies have become or ceased tobe Company's subsidiaries joint ventures or associate companies.
x) Internal Financial Controls
Internal Financial Controls are an integrated part of the risk management processaddressing financial and financial reporting risks. The internal financial controls havebeen documented digitised and embedded in the business processes.
Assurance on the effectiveness of internal financial controls is obtained throughmanagement reviews control self assessment continuous monitoring by functional expertsas well as testing of the internal financial control systems by the internal auditorsduring the course of their audits. We believe that these systems provide reasonableassurance that our internal financial controls are designed effectively and are operatingas intended.
xi) Extract of Annual Return
The Extract of Annual Return in Form No. MGT-9 as per Section 134 (3) (a) read withSection 92 of the Companies Act 2013 is annexed hereto as Annexure and forms part of thisreport.
xii) Management Discussion Analysis Report
Management Discussion Analysis Report for the year under review as stipulated underSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is presented in aseparate section forming part of the Annual Report.
xiii) Corporate Governance
The report on Corporate Governance as stipulated under the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 forms an integral part of this Report. Therequisite certificate from the Statutory Auditors of the Company confirming compliancewith the conditions of corporate governance is attached to the report on CorporateGovernance.
19. Appreciation and Acknowledgement
Your Directors acknowledge with gratitude the cooperation and assistance given by M/s.Rubpro Sdn. Bhd. Malaysia Kerala State Industrial Development Corporation Ltd M/s.Integrated Registry Management Services Private Limited Banks and other agencies of theCentral and State government.
Your Directors also wish to place on record the sincere appreciation of servicesrendered by the employees at all the levels towards your company's success during the yearunder review and shareholders for their active support and co-operation.
For and on behalf of Board of Directors
Bharat J. Patel