Your Directors have pleasure in presenting the Nineteenth Annual Report together withthe Audited Statement of Accounts for the year ended March 31 2018.
(Rs. in Lacs)
| ||YEAR ENDED 31.03.2018 ||YEAR ENDED 31.03.2017 |
|Profit/(Loss) before Depreciation ||(289.25) ||(596.12) |
|Depreciation ||226.83 ||305.44 |
|Profit/(Loss) after Depreciation ||(516.08) ||(901.56) |
|Profit/(Loss) before Tax ||(516.08) ||(901.56) |
|Tax expenses ||Nil ||Nil |
|Net Profit/(Loss) for the year ||(516.08) ||(901.56) |
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 107.05 millionmeters as compared to 117.18 million meters during the previous year. The Company hasachieved a sales turnover of Rs.14752 lakh during the year under review as compared to aturnover of Rs. 18013 lakh during the previous year.
In view of the loss your Directors regret their inability to recommend any Dividendfor the year under review.
INDUSTRY STRUCTURE AND DEVELOPMENTS
India is a major denim producing country in the world with a capacity of about 1500million meters per annum.
As a result of this large capacity the denim fabric manufacturers will continue to beunder pressure due to stiff competition and margin pressures. About 20% of the capacitycontinues to be under-utilized due to the fact that the fabric capacity is much more thanthe garmenting capacity in the country.
The Denim fabric industry is a cyclical industry as a result of which there are periodsof large over capacity. The present down turn is expected to be prolonged for a few moreyears after which the industry is expected to stabilize. The Denim Industry has a longterm potential due to the versatile fashion appeal growing income levels and untappedsemi urban population.
No appropriations were made to any specific Reserves for the year under review.
A Report on Corporate Governance along with the Auditor's Certificate regardingCompliance of the conditions of Corporate Governance pursuant to Regulation 34(3) 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 2018 and the loss of the Companyfor the year ended March 31 2018;
3. Proper and sufficient care has been taken for the maintenance of adequate accountingwith the provisions of the Companies Act 2013 for safeguarding the assets of the Companyand 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.
The Company has constituted an Audit Committee which presently comprises of thefollowing Directors viz.
Mr. N.R. Joshi Chairman Mr. D.N. Singh Mr. H D Ramsinghani and Mr. R GKulkarni. The Audit Committee acts in accordance with the terms of reference specifiedfrom time to time by the Board. There were no instances when the recommendations of theAudit Committee were not accepted by the Board during the year under review.
The Stakeholders Relationship Committee which presently consists of Mr. D. N. Singh(Chairman) Mr. H. D. Ramsinghani and Mr. S. S. Arora.
The Risk Management Committee which presently consists of Mr. D.N. Singh (Chairman)Mr. H. D. Ramsinghani Mr. R. G. Kulkarni and Mr. N. R. Joshi. The Board has formulated aRisk Management Policy covering various risks associated with the business of the Company.
The Nomination and Remuneration Committee which presently consists of Mr. R. G.Kulkarni (Chairman) Mr. D. N. Singh and Mr. N. R. Joshi.
The Company has not constituted a Corporate Social Responsibility Committee as theCompany does not fulfill the prescribed criteria.
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.
There was no change in the share capital structure of the Company.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
The Company does not have any Subsidiary/Joint Venture/Associate Company as on the dateof this Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of loans guarantees and investments if any are given under the Notes toFinancial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered in to with Related Parties during the year under review wereon an arm's length basis at prevailing market rates. There were no material related partytransactions with the Promoters Directors or the Key Managerial Personnel or theirrelatives during the year under review.
CHANGE IN NATURE OF BUSINESS
There is no change in the nature of the business of the Company during the year.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNIG & OUTGO
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.
COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT AND PAYMENT OF REMUNERATION
The Whole Time Director was paid a remuneration of Rs. 26.88 Lakh during theyear under review and no remuneration was paid to non executive Directors other thansitting fees for attending meetings of the Board or committees thereof. There were noemployees drawing remuneration in excess of the limits prescribed under Rule 5(2) of theCompanies (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 form a part of the Report.The Board of Directors have framed a policy in relation to remuneration of directors KeyManagerial 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.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
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.
During the year under review four Board Meetings were held on May 26 2017 August 42017 December 1 2017 and February 5 2018.
Mrs N. H. Ramsinghani has ceased to be a Director of the Company with effect from March28 2018.
Mr H. D. Ramsinghani retires by rotation at the forthcoming Annual General Meeting andis eligible for reappointment. 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.
No Directors of the Company are subject to disqualification under Section 164(2) of theCompanies Act 2013 and the rules made thereunder for the year under review.
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 program areavailable on the website of the Company www.rainbowdenim.com.
The performance evaluation of the Chairman and the non executive Directors was carriedout by the Independent Directors of the Company in their meeting held on February 5 2018.The criterion for evaluation are available on the website of the Companywww.rainbowdenim.com.
STATUTORY AUDITORS REPORT
The Report submitted by the Statutory Auditors does not contain any Audit qualificationfor the year under review.
M/s. Khandelwal & Mehta LLP the Auditors of the Company retire at the conclusionof the forthcoming Annual
General Meeting and being eligible offer themselves for reappointment. It is proposedto reappoint M/s Khandelwal & Mehta LLP as the auditors of the Company for a period offive years up to the conclusion of the 24 th Annual General Meeting. The AuditCommittee has recommended the appointment of M/s Khandelwal & Mehta LLP as theAuditors of the Company. The Company has received a certificate from M/s Khandelwalcertifying that their appointment if made would be in compliance with all the applicableprovisions of the Companies Act 2013.
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.
Your Directors refer to the observations made by the Auditors in their Report and wishto state that the Company is taking steps to appoint key managerial personnel at theearliest.
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.
The Company has appointed M/s. Pawan & Associates qualified Cost Auditors forconducting the Audit of cost records for the financial year 2018-19. The Company hasreceived Certificate from Cost Auditors certifying their independence and arm'slength relationship with the Company.
The Cost Audit Compliance Report for the financial year ended 31st March 2017 wasfiled on August 23 2017 with Ministry of Corporate Affairs the financial year ended 31stMarch 2018 will be filed within the stipulated time.
The Company has appointed M/s. S. S. Kothari Mehta & Co. as the Internal Auditorsand their scope of work includes review of processes operational efficiency andeffectiveness of of adequacy of internal controls and safeguards apart from specificoperational areas as per the directions of the Audit Committee. The findings of theInternal Auditor are reviewed by the Audit Committee at each meeting and correctivemeasures are taken from time to time as per the directions of the Audit Committee.
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.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICHHAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIALSTATEMENTS RELATE AND THE DATE OF THE REPORT:
No material changes or commitments affecting the financial position of the Company haveoccurred between the end of the financial year to which the financial statements relateand upto the date of this report.
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.
The Industrial Relations remained cordial during the year under review.
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.
| ||For and on behalf of the Board |
| ||H.D. RAMSINGHANI |
|Place : Mumbai ||CHAIRMAN |
|Date : July 20 2018 ||DIN 00035416 |
ANNEXURE A TO DIRECTORS REPORT
PARTICULARS PURSUANT TO SECTION 134(3) OF THE COMPANIES ACT 2013 READ WITH COMPANIES(DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES 1988 AND FORMING APART OF THE DIRECTORS REPORT FOR THE YEAR ENDED MARCH 31 2018 A) CONSERVATION OF ENERGY :a) Energy conservation measures taken :
The conservation of energy resources is an ongoing process at the Plant and the Companyis constantly striving to improve the production process so as to reduce energyconsumption. Some of the energy conservation measures taken are :
1. Replacement of Halogens on Lighting poles with New LED/small tube which reduces theEnergy consumption.
2. Replacement of old conventional tube light with new electronic blast which reducesthe unit consumption.
3. Replaced aluminum fans with energy efficient FRP fans in Humidification Plants.
4. Roof Extractors are installed in production hall where processing machines areworking.
5. The Conversion of heating system from electricity to steam of Yarn conditioningmachine is carried out.
6. Energy efficient pump is installed at cooling tower for same flow to save b)Additional investment proposals if any being implemented for reduction of consumption ofenergy:
1. Humidification plant need changes with high forced pump with less power consumption.
2. Need to plan the supply and return fans to be run with VFD.
3. Over all power factor of plant is increased up to 0.98 to save energy.
4. Air end of IR compressor has to be changed to save electricity.
c) Impact of measures at (a) and (b) above for reduction of Energy Consumption andconsequent impact on the cost of production of goods :
As a result of the continuous efforts the Company has been able to achieve substantialsaving in energy costs.
d) Particulars with respect to conservation of energy :
| ||2017-18 ||2016-17 |
|A. POWER AND FUEL CONSUMPTION: || || |
|1. ELECTRICITY: || || |
|a. Purchased (PSEB) : || || |
|Units (in thousand) ||22667 ||24073 |
|Total cost (Rs. in Lacs) ||1525.31 ||1682.28 |
|Rate per Unit (Rs.) ||6.73 ||6.99 |
|b. Own Generation: || || |
|Through Diesel Generation: || || |
|Units (in thousand) ||10 ||8 |
|Units per Liter of Diesel ||3.20 ||3.20 |
|Cost per Unit (Rs.) ||18.30 ||16.70 |
| ||2017-18 ||2016-17 |
|Through Steam Turbine/Generator: || || |
|Units (in thousand) ||Nil ||Nil |
|Units per Liter of Fuel Oil Gas ||NA ||NA |
|Cost per unit ||NA ||NA |
|2 FURNACE OIL : || || |
|Quantity (in Kiloliters) ||Nil ||42 |
|Total Amount (Rs. in Lacs) ||Nil ||10.83 |
|Average Rate ||NA ||25.92 |
|3 OTHER INTERNAL GENERATION ||Nil ||Nil |
|B. CONSUMPTION PER UNIT OF PRODUCTION : || || |
|Production of Denim Fabric (in Lacs Meters) ||107.05 ||117.18 |
|Electricity (kwh per Meter) ||2.12 ||2.06 |
|Furnace Oil ||Nil ||Nil |
|Coal ||Nil ||Nil |
B) PARTICULARS WITH RESPECT TO ABSORPTION ADAPTATION AND INNOVATION :
I. RESEARCH AND DEVELOPMENT (R & D) :
1. Specific areas in which R & D is carried out by the Company :
The Specific areas in which R & D activities are carried out by the Company arerelating to improvement in quality of the existing products and development of newproducts to meet market demands.
2. Benefits derived as a result of R & D :
As a result of the R & D activities the Company has been able to develop severalnew products to meet the ever changing demands of the domestic and international markets.
3. Future Plan of Action :
The Company lays a great emphasis on R & D activities and proposes to carry out R& D work in various areas so as to achieve cost reduction and increased productivity.
4. Expenditure on R & D :
Expenditure on R & D has been shown under the respective heads of expenditure inthe Statement of
Profit and Loss as no separate Account is maintained.
II. TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION :
1. Efforts in brief made towards technology absorption adaptation and innovation :
Plant and Machinery of latest technology have been installed and the Company is makingcontinuous efforts to carry out innovation wherever possible.
2. Benefits derived as a result of above efforts :
As a result of the above efforts the Company has been able to achieve cost reductionand production levels have improved.
3. Information of Imported Technology :
C) FOREIGN EXCHANGE EARNINGS AND OUTGO :
| ||(Rs. in Lacs) |
|Foreign Exchange used ||504.66 |
|Foreign Exchange earned ||1167.03 |
ANNEXURE B' TO DIRECTORS REPORT
DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIESACT 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIALPERSONNEL) RULES 2014
|(i) The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year. ||Ratio of the remuneration of the Whole Time Director to the median remuneration of the employees of the company for the financial year was 14.92. |
|(ii) The percentage increase in remuneration of each director Chief Financial Officer Chief Executive Officer Company Secretary or Manager if any in the financial year. ||N A |
|(iii) The percentage increase in the median remuneration of employees in the financial year. ||8.01 |
|(iv) The number of permanent employees on the rolls of company; ||707 |
|(v) Average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentage increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. ||The average percentage increase already made in the salaries of employees other than the managerial personnel in the last financial year was in line with industry standards. |
|(vi) Affirmation remuneration policy of the company. ||The remuneration is as per the remuneration policy of the company. |
ANNEXURE C' TO DIRECTORS REPORT
PARTICULARS OF REMUNERATION AS REQUIRED UNDER RULE 5(2) OF THE COMPANIES (APPOINTMENTAND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014
A. Employed for the entire year under review and were in receipt of Remuneration of notless than Rs. 10200000/-
B. Employed for a part of the year under review and were in receipt of Remuneration ofnot less than Rs. 850000/- p m.
C. Details of Top 10 employees in terms of remuneration drawn as on 31.03.2018 will beprovided on request.
| ||For and on behalf of the Board |
| ||(Annexure A to C) |
| ||H.D. RAMSINGHANI |
|Place : Mumbai ||CHAIRMAN |
|Date : July 20 2018 ||DIN 00035416 |