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Rainbow Denim Ltd.

BSE: 532441 Sector: Industrials
NSE: N.A. ISIN Code: INE820D01025
BSE 00:00 | 01 Mar 1.34 -0.06
(-4.29%)
OPEN

1.40

HIGH

1.40

LOW

1.34

NSE 05:30 | 01 Jan Rainbow Denim Ltd
OPEN 1.40
PREVIOUS CLOSE 1.40
VOLUME 1100
52-Week high 2.38
52-Week low 1.22
P/E
Mkt Cap.(Rs cr) 2
Buy Price 1.33
Buy Qty 35.00
Sell Price 1.53
Sell Qty 100.00
OPEN 1.40
CLOSE 1.40
VOLUME 1100
52-Week high 2.38
52-Week low 1.22
P/E
Mkt Cap.(Rs cr) 2
Buy Price 1.33
Buy Qty 35.00
Sell Price 1.53
Sell Qty 100.00

Rainbow Denim Ltd. (RAINBOWDENIM) - Director Report

Company director report

Dear Shareholders

BACKGROUND

Pursuant to the Order dated December 9 2019 of the Hon'ble National Company LawTribunal - Chandigarh Bench ("NCLT Order") Corporate Insolvency ResolutionProcess ("CIR Process") has been initiated for the Company in accordance withthe provisions of the Insolvency and Bankruptcy Code 2016 ("Code") and relatedrules and regulations issued thereunder. Mr. Dharmendra Kumar Bhasin (Registration No.IBBI/ IPA-002/IP-N00816/2019- 2020/12564) has been appointed as the Interim ResolutionProfessional ("IRP") in terms of the NCLT Order. Subsequently Mr DharmendraKumar Bhasin was confirmed as the Resolution Professional (RP) by the Committee ofCreditors in its meeting held on 07-01-2020. On appointment of IRP/RP the powers of Boardof Directors of the Company stand suspended and such powers along with the management ofaffairs of the Company are vested with the IRP/RP.

In the light of the above developments Your Directors present the 21st Annual Reportand the audited financial statement for the financial year ended March 312020.

FINANCIAL RESULTS

(? in Lakhs)

PARTICULARS YEAR ENDED 31.03.2020 YEAR ENDED 31.03.2019
Profit/(Loss) before Depreciation (1426.60) (931.92)
Depreciation 189.18 200.64
Tax expenses Nil Nil
Profit/(Loss) for the Year (1615.78) (1132.56)
Other comprehensive Income/(Expense) 74.31 (7.34)
Total Comprehensive Profit/(Loss) for the Year. (1541.47) (1139.90)

BRIEF DESCRIPTION OF THE COMPANY'S WORKING DURING THE YEAR AND THE STATE OF COMPANY'SAFFAIRS:

The total production of Denim fabric during the year under review was 1.81 lakh metersas compared to 54.69 lakh meters during the previous year. The Company has achieved asales turnover of ' 402 lakh during the year under review as compared to a turnover of '6964 lakh during the previous year.

DIVIDEND

In view of loss no Dividend was considered. No appropriation has been made to anyspecific reserve during the year under review.

SHARE CAPITAL

There was no change in the Equity share capital structure of the Company during theyear under review. The Company does not have an Employee Stock Option Scheme nor are thereany shares which are held in trust for the benefit of employees of the Company.

The Company does not have outstanding Warrants or Debt instruments as on the date ofthe Report and hence Credit Rating provisions are not applicable.

FUTURE PROSPECTS

The future prospects of the Company depend on the outcome of the ongoing CIR Process.During the year under review the manufacturing activities at the Lalru Plant situated inthe state of Punjab continue to remain suspended.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with the Auditor's Certificate regardingCompliance of the conditions of Corporate Governance pursuant to Regulation 34 of SEBI(LODR) Regulations 2015 is annexed hereto.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act 2013 the Directors confirm that :

1. In the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;

2. Appropriate policies have been selected and applied consistently and have madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at March 31 2020 and the loss of the Companyfor the year ended March 31 2020;

3. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 and for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

4. The annual accounts have been prepared on a going concern basis;

5. Internal financial controls to be followed by the Company have been laid down andthat such internal financial controls are adequate and were operating effectively; and

6. Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and are operating effectively.

AUDIT COMMITTEE

The Company has constituted an Audit Committee which presently comprises of thefollowing Directors viz. Mr. D.N. Singh - Chairman Mr. H.D. Ramsinghani and Mr. R.G.Kulkarni. All the members of the Audit Committee are financially literate and haveexperience in financial management. The Audit Committee acts in accordance with the termsof reference specified from time to time by the Board. There were no instances when therecommendations of the Audit Committee were not accepted by the Board during the yearunder review.

OTHER COMMITTEES

The Stakeholders Relationship Committee presently consists of Mr. D.N. Singh(Chairman) Mr. H.D. Ramsinghani and Mr. S. S. Arora.

The Risk Management Committee presently consists of Mr. D.N. Singh (Chairman) Mr. H.D.Ramsinghani and Mr. R.G. Kulkarni. The Board has formulated a Risk Management Policycovering various risks associated with the business of the Company.

The Nomination and Remuneration Committee consists of Mr. D.N. Singh (Chairman) Mr.H.D. Ramsinghani and Mr. R. G. Kulkarni.

The Company has not constituted a Corporate Social Responsibility Committee as theCompany does not fulfill the prescribed criteria.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company does not have any Subsidiary/Joint Venture/Associate Company as on the dateof this Report. DISCLOSURES

Information relating to the conservation of energy technology absorption foreignexchange earnings and outgo to the extent applicable is annexed hereto as Annexure A andforms a part of this Report.

The Whole Time Director was paid a remuneration of ' 25.20 lakhs during the year underreview. No remuneration was paid to non-executive Directors other than sitting fees forattending meetings of the Board or committees thereof. There were no employees drawingremuneration in excess of the limits prescribed under Rule 5(2) of the

Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 during theyear under review or part thereof. The Details pertaining to remuneration of top tenemployees as required under Section 197(12) of the Companies Act 2013 read with Rule 5(1)and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is annexed hereto as Annexure B and Annexure C and forms a part of the Report.

Details of loans guarantees and investments if any are given under the Notes toFinancial Statements.

All transactions entered in to with Related Parties during the year under review werein the ordinary course of business and at an arm's length at prevailing market rates.There were no material related party transactions with the Promoters Directors or the KeyManagerial Personnel or their relatives during the year under review.

Pursuant to the Order dated December 9 2019 of the Hon'ble National Company LawTribunal - Chandigarh Bench ("NCLT Order") Corporate Insolvency ResolutionProcess ("CIR Process") has been initiated for the Company in accordance withthe provisions of the Insolvency and Bankruptcy Code 2016 ("Code") and relatedrules and regulations issued thereunder.

There is no change in the nature of business of the Company during the year.

The Company has formulated a Whistle Blower Policy under which all personnel haveaccess to the Audit Committee to report genuine concerns or grievances relating to thebusiness activities of the Company in general.

There were no cases filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 during the year under review.

DIRECTORS

During the year under review 3 (three) Board Meetings were held on May 15 2019August 12 2019 and October 24 2019. As the powers of the Directors are suspended nomeetings of the Board of Directors were held after December 9 2019.

Mr. S S Arora (DIN 00033825) retires from the Board of Directors by rotation and iseligible for re-appointment. All Independent directors have given declarations that theymeet the criteria of independence as laid down in Section 149(6) of the Companies Act2013 and Regulation 16 of SEBI (LODR) Regulations 2015.

None of the Directors are disqualified from being appointed / reappointed as Directorsof the Company as per the disclosures filed by the Directors with the Company.

The Board of Directors have framed a policy in relation to remuneration of directorsKey Managerial Personnel and senior Management and it lays down criteria for selection andappointment of Board Members. The details of the policy are available on the website ofthe Company www.rainbowdenim.com.

The independent Directors of the Company are informed about their roles rights andresponsibilities in the Company and also about the nature of the industry in which companyoperates and other related matters. The details of the familiarization pogram areavailable on the website of the Company www.rainbowdenim.com.

STATUTORY AUDITORS

M/s. Khandelwal & Mehta LLP (Membership No W100084) were appointed as StatutoryAuditors of the Company at the 19th Annual General Meeting held on September18 2018 to hold office till the conclusion of the 24th Annual GeneralMeeting. M/s. Khandelwal & Mehta LLP have confirmed that they are not disqualifiedfrom continuing as Auditors of the Company.

STATUTORY AUDITORS REPORT

Your Directors refer to the observations made by the Auditors in their Report and wishto state that the management is hopeful that the Company would be able to continue itsoperations in the foreseeable future in the normal course of business and hence theaccounts have been prepared on a going concern basis and the value of impairment if anyhas not been ascertained. In view of the above the impact of the observations on thefinancial statements for the year under review is not ascertainable.

INTERNAL AUDIT

The Company has appointed M/s S.S Kothari Mehta & Co. Chartered Accountants as theInternal Auditors and their scope of work includes review of processes operationalefficiency and effectiveness of systems and processes and assessment of adequacy ofinternal controls and safeguards apart from specific operational areas as per thedirections of the Audit Committee. The findings of the Internal Auditor are reviewed bythe Audit Committee at each meeting and corrective measures are taken from time to time asper the directions of the Audit Committee.

CORPORATE SOCIAL RESPONSIBILITY

The provisions relating to Corporate Social Responsibility do not apply to the Companyas the Company does not meet the criteria laid down in Section 135 of the Companies Act2013.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate system of internal controls that are commensurate with itssize and nature of business to safeguard and protect the Company from losses andunauthorized use or disposition of its assets. All the transactions are properlyauthorized recorded and reported to the management. The Company is following all theapplicable Accounting Standards for properly maintaining the books of accounts andensuring timely reporting of financial statements. There were no frauds reported by theAuditors of the Company as on the date of this Report.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the rules madethere under the Company has appointed A. Arora & Co to undertake the SecretarialAudit of the Company. The Secretarial Audit Report is annexed hereto as Annexure D andforms a part of this Report. The Directors refer to the observations made by theSecretarial Auditor and wish to state that the non-appointment of women Director andnon-holding of Board and Committee meetings was due to the fact that the Company is underCIR Process and the powers of the Board are suspended. The delay in processing dematrequests was due to increased work load in the office of the R&T Agents.

COST AUDIT

The Resolution Professional has approved the appointment of M/s. Pawan & Associatesqualified Cost Auditors for conducting the Audit of cost records for the financial year2020 - 2021. The Company has received a Certificate from Cost Auditors certifying theirindependence and arm's length relationship with the Company. As required under theCompanies Act 2013 the remuneration payable to the Cost Auditors has to be ratified bythe Members. Accordingly necessary resolution is proposed at the ensuing AGM forratification of the remuneration payable to the Cost Auditors for the financial year 2020- 2021.

The Cost Audit Report for the financial year ended 31st March 2019 wasfiled on September 3 2019 with Ministry of Corporate Affairs in the prescribed formwithin the stipulated time period

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return in Form MGT 9 pursuant to the provisions of Section 92of the Companies Act 2013 is annexed hereto as Annexure E and forms a part of thisReport.

WEBADDRESS

The Annual Return referred to in Section 92(3) of the Companies Act 2013 and otherdetails about the Company are available on the website of the Companywww.rainbowdenim.com.

FIXED DEPOSITS

The Company has not accepted any public deposits and as such no amount on account ofprincipal or interest on public deposits was outstanding as on the date of the BalanceSheet.

SAFETY ENVIRONMENTAL CONTROL & PROTECTION

The Company has taken all the necessary steps for Safety and Environmental Control andProtection at its plant at Lalru.

INDUSTRIAL RELATIONS

The Industrial Relations were affected during the year under review due to labourunrest at the Lalru Plant. ACKNOWLEDGEMENT

Your Directors sincerely record their appreciation with gratitude for the continuedsupport and assistance extended to the Company by the Financial Institutions Banks andvarious Government Departments and Agencies.

By the Order of the Resolution Professional
H. D. RAMSINGHANI
Place : Mumbai CHAIRMAN
Date: August 20 2020 DIN 00035416

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