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Raj Rayon Industries Ltd.

BSE: 530699 Sector: Industrials
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Raj Rayon Industries Ltd. (RAJRAYON) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting their 24thAnnual Report on thebusiness and operations of the Company and the accounts for the Financial Year ended on 31stMarch 2017.

Financial Results:

Particulars (Rs. in Lakhs)
Current Year Previous Year
2016-2017 2015-2016
Net Sales and Other Income 27610.44 45387.23
Net Profit before interest Depreciation and Tax 1690.83 14942.09
Less: Interest 169.40 8863.65
Depreciation 4768.59 4860.41
Profit/ (Loss) before Tax (6628.35) (28666.15)
Less: Provision for Current Tax 0.00 0.00
Provision for Deferred Tax 0.00 0.00
Tax Adjustment for earlier years .47 1.64
Profit/(Loss) After Tax/ Profit/(Loss) for the Period (6628.82) (28667.79)

*Previous years' figures have been regrouped wherever necessary to bring them in linewith the current year's representation of figures

Summary of Operations:

During the financial ended March 312017 year your Company recorded Net Sales andOther Income of Rs. 27610.44 Lakhs as compared to Rs. 45387.23 Lakhs ofprevious year ended 2016. The Company incurred Cash losses of Rs. 8488.58 Lakhs ascompared to Cash Losses of Rs. 23833.1 Lakhs of previous year.


In absence of profits for the year ended 31st March 2017 and past accumulated lossesyour directors do not recommend payment of any dividend for the year ended 31stMarch 2017.

Transfer to Reserves:

In absence of profits for the year ended 31st March 2017 and past accumulated lossesyour directors does not recommend for transfer of any amount to reserves for the yearended 31st March 2017.


Management Discussion and Analysis Report for the year under review which also dealswith the opportunities challenges and the future outlook for the Company as stipulatedunder Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015 Agreement with the Stock Exchange of India is presented in a separatesection forming part of the Annual Report.

Corporate Debt Restructuring (CDR):

The detailed key features of the CDR Proposal are given in under Notes No. 2 of Notesforming part of Notes to Accounts given in this Annual Report.

Material Changes And Commitment Affecting Financial Position Between The End Of TheFinancial Year And Date Of The Report:

There have been no such material changes or commitments affecting the financialposition from the end of the Financial Year 2016-2017 till date of this report as may bedeemed to be material enough to affect the financial position of the Company otherwisethan in the normal course of business.

Internal Control System and Adequacy:

The Board has adopted the policies and procedures for ensuring orderly and efficientconduct of its business including adherence to the Company's policies safeguarding ofits assets prevention and detection of frauds and errors accuracy and completeness ofthe accounting records and timely preparation of financial disclosures.

The Company's Internal Audit department evaluates the efficiency and adequacy ofinternal control system and gives its report and recommendations to the Chairman of AuditCommittee and based on Internal Audit Report the corrective actions are taken.

Subsidiarv/Joint Ventures/Associate Companies:

Your Company does not have any subsidiary company or Joint ventures Companies andassociate Company.


During the year under review the Company has not accepted any deposits within themeaning of Chapter V of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014. Hence there are no details to be disclosed under Rule 8(5) (v) ofthe Companies (Accounts) Rules 2014.

Statutory Auditors:


At the Annual General Meeting held on 30th September 2014 M/s. K.M.Garg & Co. Chartered Accountants (Registration No. 120712W) were appointed asStatutory

Auditors of the Company to hold office till the conclusion of the four consecutiveAnnual General Meetings to be held in year 2018. In terms of the first proviso to Section139 of the Companies Act 2013 the appointment of Auditors shall be placed forratification at every Annual General Meeting.

Accordingly the appointment of M/s. K.M. Garg & Co. Chartered Accountants asStatutory Auditors of the Company is placed for ratification by the shareholders. In thisregards the Company has received a letter from them to the effect that theirre-appointment if made would be within the prescribed limits under Section 139 ofCompanies Act 2013 and that they are not disqualified for such re-appointment within themeaning of Section 141 of Companies Act 2013.

Auditors' observation and Management's response to Auditors' observation:

The Directors refer to the Auditors' observation in the Auditors' Report and providetheir explanation as under:

i) In respect of Note 2 of the Financial Statement regarding amount payable towardsrecompense:

The recompense payable is contingent on various factors including improved performanceof the Company (Borrowers) and many other conditions the outcome of which currently ismaterially uncertain and cannot be determine.

ii) In respect of Auditors observation in Financial Statements regarding cash lossesincurred by the Company:

It is clarified that the cash losses were primarily attributable to the lower volumesdue to prevailing uncertain economic conditions lower sales volume coupled with increasein depreciation and interest/finance cost.

iii) In respect of Auditors observation in Finanacial Statement regarding Net worth ofthe company is fully eroded:

It is clarified that management is continuously implementing various long term measuresto improve its cash flows and revival of the operation of the company and accordingly thecompanies's financial statement have been prepared on a going concern basis.


The Company is committed to maintain the highest standards of Corporate Governance andadheres to the Corporate Governance requirements as stipulated by SEBI. The report onCorporate Governance as prescribed in Regulation 34 (3) read with Schedule V of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 forms an integral partof this Annual Report. The requisite certificate from the Auditors of the Companyconfirming compliance with the conditions of Corporate Governance along with a declarationsigned by the Chairman and Managing Director stating that Members of the Board and SeniorManagement Personnel have affirmed the compliance vide Code of Conduct of the Board andSenior Management is attached to the report on Corporate Governance.

As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on corporate governancepractices followed by the Company together with a certificate from the Company's Auditorsconfirming compliance forms an integral part of this Report.

Cost Auditor:

The Central Government had approved appointment of M/s S S Sawant & Co CostAccountant Mumbai as Cost Auditor to conduct Cost Audit relating to the productsmanufactured by your Company for the financial year 2016-2017 the E-Form CRA-2 for hisappointment was filed on time. Further the Company has also appointed M/s S S Sawant &Co as Cost Auditor to conduct the Cost Audit for the financial year 20172018 as perSection 148 of Companies Act 2013 and there remuneration has to be ratified at theensuing Annual General Meeting.

Secretarial Auditor:


The Company had appointed appointed Miss Amisha Shah Properitor of M/s. A. V. Shah& Associates Practicing Company Secretaries Mumbai to undertake Secretarial Audit ofthe Company pursuant to Section 204 of Companies Act 2013 and the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 to conduct Secretarial Audit for thefinancial year 2016-2017.

The Secretarial Audit Report for the financial year 2016-2017 forms part of the AnnualReport as Annexure I to the Board's Report.

Secretarial Auditors' observation and Management's response to Auditors' observation:

It was observed that as per the provisions of the Securities and Exchange Board ofIndia (Issue of Capital and Disclosure Requirements) Regulations 2009 M/s. Fine FashionPrivate Limited falls into Promoter or Promoter Group but the same has been inadvertentlymissed out to reclassify in promoter or promoter group.

The Company has applied to NSE and BSE for necessary procedure to be followed forshifting M/s Fine Fashion Private Limited from the category of 'Public Share Holding' to'Promoter' Holding. However the reply is awaited from the Stock Exchanges.

Internal Auditor:

The Board of directors has discussed the appointment of Internal Auditor for thefinancial year 2017-2018 but after a detailed discussion at a board of directors meetingheld on 30th May 2017 it was decided that since the company is not in aposition to meet the remuneration of internal auditors due to huge losses the company haspostponed the appointment of the internal auditors..

Share Capital and Net Worth:

During the financial year there was no change in the paid up Share Capital of theCompany.

Further the net worth of the Company has increased to (Rs. 42199.42 Lakhs) as comparedto (Rs. 35570.60Lakhs) in previous year. Since the net worth of the Company had fullyeroded.

Extract of the annual return

Pursuant to Section 134 (3) (a) of the Companies Act 2013 an extract of the AnnualReturn in Form No. MGT - 9 is annexed herewith as Annexure II.

Conservation of energy technology absorption and foreign exchange earnings and outgo

The details of conservation of energy technology absorption foreign exchange earningsand outgo are as follows:

A) Conservation of energy:

1. Use of LED LIGHTS for saving electrical consumption

We have taken a forward steps towards the conservation of energy in terms of electricalpower saving by using the LED LIGHTS. In this year we have replaced the plant lightingbulbs by the energy saving LED LIGHTS. Step by step we will try to replace the wholelighting bulbs by these LED.

2. Less use of Pta charging electrical host for saving electrical consumption.

Pta is the key raw material for CP plant. Now we brings the Pta in tankers to ourplant. which save the electrical energy consume during the PTA bag lifting up & downmovement of electrical hoist.

3. Demand Based Use of Cooling tower Fan & Air Cooler Fan.

Due to the day & night atmosphere temp.difference. In day we require the 2 fans ofboth type of cooler to be run. In night we stopped the one electrical fan of both cooler.

4. Demand Based Reduction of load on chiller & cooling tower.

By optimizing the plant process parameter & process activity we reduce the load oncooling tower & chiller.

5. Use of turbo vent in place of electrical operated exhaust fan

(B) Technology absorption

1. Installed HT Capacitor Bank for increasing power factor

We have taken our steps towards the modern days technology absorption by installing theH.T. Power capacitor bank which will increase the power factor so thus it will be save thepower consumption directly

2. Installing direct polymer melt (DPM) to poy

We have installed the direct melt line to poy which will save the energy consumptionalong with convenient source for supplying the polymer to poy.

3. Installing new POY plant

We have installed the new poy plant which will decrease the power consumption ratio ofper ton of production. New poy plant all machinery equipment efficiency is higher ascompared to the old one.

4. Saving of power cost (Power Purchase from IEX)

We have taken a forward steps by purchase power from (Shot Term Open Access) PowerExchange & it's per unit power rate is too less compared to the DNHPCL power rate.

(C) Foreign exchange earnings and Outgo:

The particulars regarding foreign exchange earnings and outgo are given in Note No. 38of Financial statement.

Corporate Social Responsibility (CSR) Initiatives:

The Company has constituted a Corporate Social Responsibility (CSR) Committee as perprovisions of Section 135 of Companies Act 2013 to spend in various CSR initiatives asprovided under schedule VII of the Companies Act 2013 and rules made thereunder.

However due to losses suffered and your company been into Corporate Debt Restructuring(CDR) the company has not spent on any CSR activities/projects. However your Company isenthusiastic to serve the society at large which it will do in the coming years.


The Equity Shares of the Company are listed on the BSE Limited & NSE Limited.Shareholders are requested to convert their holdings to dematerialized form to derive itsbenefits by availing the demat facility provided by NSDL and CDSL.

The Details Of Directors And Key Managerial Personnel Who Were Appointed Or ResignedDuring The Year:

In accordance with the provisions of the Companies Act 2013 and in terms of theArticles and Association of the Company Mr. Naval Babulal Kanodia Director of theCompanyretires by rotation at the ensuing Annual General Meeting and being eligiblehimself for re-appointment. The Board recommends the re-appointment. Board also recommendsthe regularization of Mr. babubhai Rajabhai Chokidar as an Independent Director.

During the year under review Mr. Suresh Gupta Independent Director of the companyhas resigned with effect from 31st March 2017.

Board of Directors have appointed Mr. Rajubhai Bababhai Chokidar as an AdditionalIndependent Director w.e.f. June 30 2017

During the year Miss Deepa Gehani has resigned from the post of Company Secretary &Compliance Officer effective from 19th July 2017 and Mr. Sushil Kumar KanodiaCEO & CFO of the company has been designated as Compliance Officer Of the company tillanother company secretary is appointed Compliance Officer appointed.

Declaration Given By Independent Directors:

The Company has received necessary declarations from each Independent Director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria for Independenceas laid down in Section 149(6) of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2016.

Formal Annual Evaluation:

Pursuant to the provisions of Section 178 of the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has carried outannual performance evaluation of its own performance the directors individually as wellas evaluation of working of committees of Board of Directors.

Executive Directors were evaluated on the basis of targets / criteria given to them bythe board from time to time as well as per their terms ofappointment. IndependentDirectors being evaluated by entire board except of Director being evaluatedon meetingtheir obligations connected with their independence criteria as well as adherence with therequirements of professionalconduct roles functions and duties specificallyapplicable toIndependent Directors as contained inSchedule IV of the Companies Act 2013. Chairman andother Non-Independent Directors were being evaluated by Independent Directors who alsoreviewed the performance of secretarial department. Performance evaluation of theCommittees and that of its members in effectively discharging their duties were alsobeing carried out by board.

The overall performance of Chairman Executive Directors and Non-Executive Directors ofthe Company is satisfactory. The review of performance was based on criteria ofperformance knowledge analysis quality of decision making etc.

Company's Policy On Nomination Appointment Remuneration And Evaluation:

The Current policy is to have an appropriate proportion of executive and independentdirectors to maintain the independence of the Board and separate its functions ofgovernance and management. On March 31 2017 the Board consists of six members includinga whole-time director and three are independent directors. The Company has framed aNomination Remuneration and one Nominee Director and Evaluation Policy. The informationwith respect to the Company's policy on Mr. Suresh Gupta has placed his resignation onMarch 31 2017 directors' appointment and remuneration including criteria for determiningqualifications positive attributes independence of a director and other matters providedunder sub-section (3) of section 178 and Regulation 19 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 is outlined in the Annexure-1 of this report.

Board of Directors Meeting:

The Board met Five (05) times during the financial year 201617 viz. on 05/04/201630/05/2016 12/08/2016 12/11/2016 10/02/2017. Detailed information on the meetings ofthe Board of Directors is included in the report on Corporate Governance which forms partof this Annual Report.

Committees of Board

Following are the various Committees formed by Board:

• Audit Committee

• Nomination & Remuneration Committee

• Stakeholders Relationship Committee

• Allotment Committee

• Risk Management Committee

• Corporate Social Responsibility Committee

The details of the composition of committees its roles and responsibility along withno. of meetings held are given in the Report of Corporate Governance and is also placed onthe Company's website at ( Committee.pdf)

Vigil Mechanism

Pursuant to the requirement of the Companies Act 2013 and provisions of ListingAgreement applicable to the Company your Company has adopted Vigil mechanism (WhistleBlower Policy) for complying with the Company's Code of Conduct and Ethics andparticularly to assuring that business is conducted with integrity and that the Company'sfinancial information is accurate. The reportable matters may be disclosed by theemployees to the Management / Managing Director / Chairman of the Audit Committee. Nocomplaint was received during the Financial Year 2016-17. During the year under review noemployee was denied access to the Audit Committee.

Particulars of loans guarantees or investments under section 186:

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

Related Party Transactions:

All the related party transactions which were entered by the Company during thefinancial year were done on arm's length basis and were in the ordinary course of businessof the Company. Also there are no materially significant related party transactions madeby the company with Directors Key Managerial Personnel Promoter or any other designatedpersons which may conflict with the interest of the Company at large.

Details of AOC-2 are given under Annexure-5

The policy on Materiality of Related Party Transactions as approved by the Board ofDirectors is uploaded on company's website.

Particulars of Employees and related disclosures:

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annual Report as Annexure 4.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement showing the names and other particulars of the employees drawing remuneration inexcess of the limits set out in the said rules are required to be provided in the AnnualReport. However there were no employees who were in receipt of remuneration for whichdetails need to be disclosed.

Directors' Responsibility Statement:

The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) ofSection 134 of the Companies Act 2013 shall 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) the directors had selected such accounting policies and applied themconsistently and made Judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period;

(c) the directors 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) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Risk Management Policy:

Although the company has long been following the principle of risk minimization as isthe norm in every industry it has now become a compulsion.

Therefore in accordance with Regulation 21 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board members were informed about risk assessment andminimization procedures after which the Board formally adopted steps for framingimplementing and monitoring the risk management plan for the company.

The main objective of this policy is to ensure sustainable business growth withstability and to promote a pro-active approach in reporting evaluating and resolvingrisks associated with the business. In order to achieve the key objective the policyestablishes a structured and disciplined approach to Risk Management in order to guidedecisions on risk related issues. In today's challenging and competitive environmentstrategies for mitigating inherent risks in accomplishing the growth plans of the Companyare imperative. The common risks inter alia are: Regulations Competition Business riskTechnology obsolescence Investments Retention of talent and Expansion of facilities.

Risk Management framework shall primarily focus on the elements such as Risk to CompanyAssets and Property Employees Related Risks Foreign Currency Risks Risks associatedwith Non-Compliance of Statutory enactments Competition Risks Operational Risks andvarious other types of risks which may affect the business or organization. Business riskinter-alia further includes financial risk Political risk Fidelity risk Legal risk.Asa matter of policy these risks are assessed and steps as appropriate are taken tomitigate the same.

Pursuant the provision of Regulation 21 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 with respect to the formation of the Risk ManagementCommittee is not applicable to your Company.Detailed policy framework is disclosed on thewebsite of the Company at

Details Of Significant And Material Orders Passed By The Regulators Or Courts OrTribunals Impacting The Going Concern Status And Company's Operation In Future:

There are no significant material orders passed by the Regulators / Courts / Tribunalwhich would impact the going concern status of the Company and its future operations.Hence disclosure pursuant to Rule 8 (5) (vii) of Companies (Accounts) Rules 2014 is notrequired.

Prevention of Sexual Harassment at Workplace:

The Company has adopted Policy on Prevention Prohibition and Redressal of SexualHarassment at the workplace to provide protection to employees at the workplace. TheCompany has constituted Internal Complaints Committee as per the requirement of The SexualHarassment of Women at Workplace (Prevention Prohibition & Redressal) Act 2013 toconsider and redress complaints of sexual harassment. The Committee has not received anycomplaints of sexual harassment during the year.

Unclaimed Dividend:

Your Company would like to bring to the notice of the shareholders that some of themhave not claimed the dividends as per the under mentioned detail:

Financial Year ended Date of declaration of Dividend Last Date for claiming unpaid Dividend Due date for transfer to IEPF
31-03-2010 07-08-2010 06-08-2017 06-09-2017
31-03-2011 15-09-2011 14-09-2018 14-10-2018

The Board of Directors sincerely likes to remind the concerned shareholders to claimtheir dividends. The Board also likes to inform to the shareholders that any dividendremaining unclaimed for seven years gets transferred to Investor Education &Protection Fund as per Section 125 of the Companies Act 2013.

Other Disclosures/Reporting:

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:

a) Issue of equity shares with differential rights as to dividend voting or otherwise

b) Issue of shares (including sweat equity shares) to employees of the Company underany scheme

Voting rights which are not directly exercised by the employees in respect of sharesfor the subscription/purchase of which loan was given by the Company (as there is noscheme pursuant to which such persons can beneficially hold shares as envisaged undersection 67(3)(c) of the Companies Act 2013).


Your Directors' would like to express their grateful appreciation for assistance andco-operation received from the Banks Government Authorities Customers Vendors andMembers during the year under review. Your Directors also wish to place on record theirdeep sense of appreciation for the committed services of the Executives Staff members andWorkers of the Company.

For and on behalf of the Board of the Directors
Place: Mumbai Rajkumari Kanodia
Dated: 14th August 2017 Non Executive
Chairperson & Director