TO THE MEMBERS OF RUBFILA INTERNATIONAL LIMITED
The Directors have pleasure to present their 23rd Annual Report and the audited AnnualAccounts for the year ended 31st March 2016.
1. Financial Results
|Particulars ||Year ended 31st March 2016 (Rs in lakhs) ||Year ended 31st March 2015 (Rs in lakhs) |
|Gross Income ||17193.90 ||16905.93 |
|Profit before Interest and Depreciation ||1629.45 ||2283.40 |
|Finance Charges ||21.06 ||8.98 |
|Profit before Depreciation ||1608.39 ||2274.42 |
|Provision for Depreciation ||290.55 ||272.61 |
|Net Profit before Tax ||1317.84 ||2041.76 |
|Provision for Tax ||515.01 ||682.90 |
|Net Profit after Tax ||802.83 ||1358.86 |
|Balance of Profit brought forward ||4415.76 ||3514.98 |
|Balance available for appropriation ||5218.59 ||4873.84 |
|Dividend on Equity Shares ||216.09 ||324.13 |
|Tax on proposed Dividend ||44.00 ||66.00 |
|Transfer to General Reserve ||40.14 ||67.94 |
|Surplus carried to Balance Sheet ||4918.37 ||4415.76 |
2. Performance Review
Your company achieved a higher turnover of Rs.17193.90 Lakhs an increase of 1.7 % ascompared to last year. The Profit before depreciation and taxes is Rs.1608.39 Lakhs ascompared to Rs.2274.42 Lakhs posted during the previous year. The earnings per equityshare (face value Rs. 5) for the year is Rs. 1.86 as against Rs.3.14 for the previousyear. The loss of production at the Kerala plant for 42 days due to labour unrest andother challenges in the market contributed to the dip in the profits. With the rubberprices in the international markets at lower levels than India imports of rubber threadsat cheaper prices were dumped into the country. This led to severe pressure on the marginsand hence the profitability. Through a series of prudent operational and financialstrategies the Company managed to limit the impact of above issues on the performance ofthe Company.
3. Dividend and Transfer of Reserves
Your Directors have recommended a dividend of 10% (Re.0.50 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 2015-16 (including DividendDistribution Tax) of Rs.260.09 Lakhs. (Rs. 390.13 Lakhs in 2014-15). An amount of Rs.40.14Lakhs has been transferred to General Reserve as per the provisions of Companies Act2013.
4. Capital Expenditure
As on 31st March 2016 the gross fixed assets of the company stand at Rs.7465.15 Lakhsand net fixed assets Rs 2778.92 Lakhs. Capital additions during the year amounted to Rs195.11 Lakhs which include addition to Building for Rs.39.09 Lakhs Plant & Machineryand other assets amounting to Rs.156.02 Lakhs.
5. Future Prospects
The market for rubber threads has been growing though mutedly and alternate materialshave gained acceptance in the user industry. Hence the growth of elastic market will notentirely reflect in the growth of rubber thread market since it will share the space withalternate materials used by customers.
One of the biggest challenges faced by the rubber thread industry is with regards topricing of latex the major raw material. The government has been under pressure toprotect the farmers and steps have been initiated to restrict imports of natural rubberinto the country. This makes the Indian manufacturers to compete against the players fromSouth East Asia who have access to latex at much lower prices. The international playershave been dumping rubber threads into the Indian market compressing the margins available.
With India having trade agreements with ASEAN countries the lower customs duty onrubber thread adds more challenges to the domestic industry. The customs duty is slated tobe reduced to zero in the next few years and this could be a major challenge for theindustry. Since your company has achieved a position of repute in the market over the pasttwo decades it remains as an important supplier of choice for the rubber thread customersof India. Rubfila also has carved a name for itself in the international market withcustomers spread out in many countries.
Even as challenges remain as a grave concern the company believes that its credentialsin the market along with the ability and agility to face challenges would help to steerout of any adverse situations.
6. Directors' Responsibility Statement
The Directors report 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 and loss account of the company for that period.
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 Bombay stock exchange Ltd. During the yearunder review your company's share price had touched Rs.67.40 per equity share. Theclosing price on shares on BSE as on 31.03.2016 was Rs.34.10 as against Rs.38.40 for theyear ended 31.03.2015.
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 theIndenpendent 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) havegiven declaration to the Company that they qualify the criteria of independence asmentioned below:
(a) in the opinion of the Board are persons of integrity and possess relevantexpertise and experience;
(b) (i) who were 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.
A note on the familiarizing programme adopted by the Company for the orientation andtraining of the Directors and the Board evaluation process undertaken in compliance withthe provisions of the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is provided in the Corporate Governance Report which formspart of this Report.
Further the Independendent Directors of the Company met once during the year on12.02.2016 to review the performance of the Non-executive directors Chairman of theCompany and performance of the Board as a whole.
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 Sections 73to 76 of Companies Act 2013 read with Companies (acceptance of Deposit) Rules 2014 andno amount remain unpaid or unclaimed as at the end of the period under review.
11. Related Party Transactions
All Transaction entered into with the Related Parties during the financial year underthe review were on an arm's length basis and were in the ordinary course of business.There was no materially significant transaction with the Company's Promoters DirectorsManagement or their relatives that could have had a potential conflict with the interestsof the Company. All Related Party Transaction upto March 31 2016 were placed before theAudit Committee as also the Board for approval. The policy on Materiality of and dealingwith Related party transactions as approved by the Board is uploaded on the Company'swebsite on the below link: http:/rubfila.com/policies
None of the Directors has any pecuniary relationships or transactions exept to theextent of remuneration drawn by the directors. The Form AOC - 2 containing the particularsof contracts or arrangements with related parties made during the period under review isannexed herewith.
12. 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 the Act are given in Annexureforming part of this report.
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.
The CSR Policy may be accessed on the Company's website at thelink:http:www.rubfila.com/about us
The CSR activities are overseen by a committee of Directors comprising of Mr. Bharat J.Dattani (DIN 1462746) Mr. S.N. Rajan (DIN 00105864) and Mr. G Krishna Kumar on a regularbasis.
During the year Company has spent Rs.24.07 Lakhs towards CSR expenditures. The areas inwhich amounts spent are palliative care infrastructure development for charitablesocieties financial assistance to the needy in the society contribution to the dialysiscentre and other public health sector for treatment. A report on the Corporate SocialResponsibility activities is annexed to this report.
The Board of directors of the company is comprises of aNon-Executive Chairman ManagingDirector (Executive) four Non-Executive Promoter Directors and four Non-executiveIndependent Directors Including a women director in compliance to the provisions of theCompanies Act and SEBI regulations. The Details of composition of the mandatory Boardcommittees namely Audit Committee Nomination and Remuneration Committee CSR CommitteeStakeholders Relationship Committee number of meetings held during the year under reviewand other related details are set out in the Corporate Governance Report which forms apart of this Report. In accordance with the Companies Act 2013 Mr.Bharat J. Dattani (DIN1462746) and Mr. Thomas Calton III (Tommy Thompson) (DIN 1509260) retires by rotationand being eligible offers themselves for reappointment in the ensuring Annual GeneralMeetings.
No directors of Key Managerial Personnel were appointed or have resigned during theperiod under review.
During the year 2015-16 five Meetings of the Board of Directors were held. Pursuant tothe provisions of Companies Act 2013 and Clause 49 of the Listing Agreement the Board ofDirectors has carried out an annual performance evaluation of its own SubCommittees ofBoard and individual directors based on the criteria laid down in the NominationRemuneration and Evaluation Policy of the Company.
15. Policy on Nomination and Remuneration and Performance evaluation of Directors KMPand Senior Management Personnel:
The Board based on the recommendation of the Nomination and Remuneration Committee hasfurnished a Nomination and remuneration Policy of Directors Key Managerial Personnel ofthe Company. The same is available in the following weblink:www.rubfila. com/policeies
The policy covers the appointment including criteria for determining qualificationpositive attributes independence and remuneration of its Directors Key ManagerialPersonnel and Senior Management Personnel. The Nomination and Remuneration Policy isannexed to this report.
16. Statutory Auditors
M/s Mohan & Mohan Associates Chartered Accountants Thiruvananthapuram StatutoryAuditors of the Company will retire at the forthcoming Annual General Meeting and areeligible for reappointment. In accordance with the Provisions of Companies Act 2013 it isproposed to reappoint them as Statutory Auditors for the financial year 2016-17 from theconclusion of this Annual General Meeting till the conclusion of the next Annual GeneralMeeting subject to the approval of shareholders. M/S Mohan & Mohan Associates havegiven necessary Certificate as per Section 141 of the Companies Act 2013 read withCompanies (Audit and Auditors) Rules 2014.
There is no qualification disclaimer reservation or adverse remark made by theStatutory Auditors in Auditor's Report.
During the period under review there were no frauds reported by the auditos underprovisions of the Companies Act 2013
17. Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Prosonnel) 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 2016. The SecretarialAuditors have submitted their report and the Board took note of the same. The SecretarialAudit Report is annexed herewith.
18. Cost Audit
M/s Ajith Sivadas & Co. Cost Accountants was appointed as Cost Auditors for theyear 2015-16 and a resolution for ratification of the remuneration payable is included inthe Notice calling the Annual General Meeting.
19. 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 2015-16.
20. Disclosures :
I) Information Pursuant to Rule 5 of the Companies (Appointment & Remuneration ofManagerial Personnel) Rules 2014
In terms of Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the company has no employee drawing salary exceeding Rs. 60.00Lakhs per annum or Rs. 5.00 lakhs per month during the year under review.
The Company is not paying any commission to its Directors.
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 whistle blower policy of the Company is available in the following weblink:http:www. rubfila.com/ policies
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 thefollowingweblink:www.rubfila.com/ policies
iv) Disclosure under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013
The Company has an Anti Sexual Harassment Policy in line with the requirements of TheSexual Harassment of Women at the Workplace (Prevention Prohibition and Redressal) Act2013. An Internal Complaints Committee (ICC) has been set up to redress complaintsreceived regarding sexual harassment.
The Company has not received any complaint under the Sexual Harassment of Women at workplace (Prevention and Redressal) Act 2013.
v) Employees Stock Option Scheme (ESOS):
The Company in its Annual General Meeting held on 12.08.2014 has approved an EmployeeStock Option Scheme (ESOS) pursuant to the provisions of the Companies Act and SEBIRegulations.
During the period under review your Company has not granted or vested any options.Further no options was exercised and have lapsed during the period ended 31.03.2016.
vi) Change in the Nature of Business if any
There was no change in the nature of business of the Company during the Financial Year2015-16.
vii) Material changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the Financial Year of the Company to whichthe financial 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
The Company has established adequate internal control system which is commensurate withits nature and volume of operations.
xi) Extract of Annual Return
The Extract of Annual Return in Form No.MGT-9 as per Section 134 (3) (a) of theCompanies Act 2013 is annexed hereto and forms part of this report.
xii) 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 thereport on CorporateGovernance.
21. 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 Enterprises India Ltd Banks and other agencies of the Central and Stategovernment.
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 |
| ||DIN 01100361 |
| ||Chairman |
|Mumbai || |
|05-08-2016 || |