Your Directors have pleasure in presenting the 26lh Annual Report of yourCompany together with the Audited Financial Statements for the year ended 31 st March2020.
The Financial Performance of your Company for the year ended 31st March 2020is summarized below:
| ||Year Ended 31.03.2020 ||Year Ended 31.03.2019 |
| ||Rs.in Lakhs ||Rs.in Lakhs |
|Net sales ||4595.62 ||4743.48 |
|Other Income ||71.2 ||53.72 |
|Total (A) ||4666.83 ||4797.20 |
|Total Expenditure ||4454.31 ||4470.32 |
|Profit before interest & depreciation ||212.52 ||326.88 |
|Interest & financial charges ||46.47 ||67.96 |
|Depreciation ||87.66 ||81.81 |
|Profit before tax ||78.39 ||177.11 |
|Tax expense ||26.92 ||75.12 |
|Net profit / loss for the period ||51.47 ||101.99 |
|Other Comprehensive Income (net of tax) ||-4.80 ||-5.18 |
|Total Comprehensive Income for the period ||46.68 ||96.81 |
|Surplus brought forward ||833.06 ||736.25 |
|Balance carried to Balance sheet ||879.74 ||833.06 |
DIVIDEND AND TRANSFER TO RESERVES
Your Board of Directors have not recommended any dividend for the year ended 31stMarch 2020 (previous year dividend declared Rs.nil) keeping in view the requirements ofthe Company for enhanced working capital for the regular business as well as for theproposed new business activities to be undertaken.
Your Directors have not transferred any amount to the any Reserves out of the profitsmade during the year.
MANAGEMENT DISCUSSION AND ANALYSIS
A. Industry structure and developments
Your Company is a Small Scale industries registered under MSME category. Your Companyis having manufacturing plants for the manufacture of Arc Welding Electrodes and CopperCoated Mild Steel (CCMS) Wire used for the purpose of welding by the Engineering andFabrication industries. Your Company also trades in the entire range of welding productsand accessories required by diverse industries in the heavy engineering and capital goodssector. Your Company trades by importing rutile MIG-MAG Machine Flux Core Wire and Fluxon a regular basis. The demand for Company's products depends upon the robustness ofdemand in the engineering and capital goods industries in the Country.
During the year ended 31st March 2020 the overall turnover of the Companywas Rs.4595.62 lakhs as against Rs 4743.48 lakhs achieved during the last year resultingin an decrease in the turnover to the extent of -3.12% when compared with the previousyear. The production of welding electrodes was 1479.980 MTs as against 1699.156 MTsachieved during the previous year. The production of CCMS Wire during the year ended 31stMarch 2020 was 3041.130 MTs as against 3268.818 MTs during the previous year. Wire drawingon jobwork basis to the extent of 1536.115 MTs was also done during the year.
During the year ended 31st March 2020 the profit before tax was Rs 78.39lakhs (previous year Rs 177.11 lakhs) and after making a provision for tax amounting to Rs26.92 lakhs (previous year Rs 75.12 lakhs) (including provision for deferred tax) theprofit after tax was Rs 51.47 lacs (previous year Rs 101.99 lakhs). The Profit after taxhas decreased by 49.53% during the year ended 31st March 2020 when compared tothe previous year. The Financial Statements of the Company has been prepared in accordancewith the requirements of Companies (Indian Accounting Standards) Rules 2015.
The performance of the Company is synchronous with the prevailing trends in theengineering and fabrication industries where declining trends in output was observed allthrough the financial year due to falling industrial production and GDP growth.
The Company continues to comply with the certification requirements of Det NorkseVeritas Management System conforming to Quality Management System Standard ISO 9001:2015for its manufacturing facility at Redhills Chennai. Your Company was able to obtain theprestigious Research Designs & Standards Organisation (RDSO) approval for its productsRasi Co2 MigMag Filler Wire and Rasi SS 308L Filler Wire. This will enable the Company toparticipate in the tenders of Railway Department.
C. Segmentwise performance
Your company operates in the single segment i.e. manufacture and marketing of weldingelectrodes and as such the discussion of segment-wise performance is not applicable.
Your Company was considerably impacted during the year ended 31st March 2020due to overall subdued growth in the capital goods and infrastructure sector and otheruser industries. The COVID19 related lockdown ordered by the Government during the lastweek of March 2020 and the first quarter of current financial year 2020-21 has brought theoperations of the Company to a standstill. The company's factory commenced production on alimited basis during the second quarter of current financial year 2020-21. Howevercapacity utilization is very much low due to subdued demand. Labour availability for therequired factory operations is also posing challenge due to return of labourers to theirnative place on account of COVID-19. The performance of the Company could be severelyimpacted during the current financial year 2020-21 due to these unavoidable reasons.
E. Prospects and Outlook
As per the trends prevailing in the past several years the demand for Arc weldingelectrodes is continuously declining and as such the Company is producing only limitedquantities of Arc welding Electrodes as per market demand. The Company has diversified itsproduction for manufacture of new generation CCMs wire products for welding which is everincreasing. Your Company has augmented the capacity of CCMS welding wire products to caterto the changed market requirements.
Your Company consolidated its brand image in the market and was able to gain marketshare. The CCMS Wire product produced by your Company has also received good responseamong the user industries. With a strong brand image your company's product enjoys loyalpatronage in the user market.
F. Internal control systems
Your company has a proper and adequate system of internal controls to ensure that allassets are safeguarded and protected against loss from un-authorised use or disposition.
G. Human resources and industrial relations
Your Company has well qualified and experienced technical financial and administrativestaff to cater to its business requirements. The relations with the employees of thecompany remained cordial throughout the year.
VENTURING INTO RETAIL TRADE BUSINESS
Your Company has been constantly on the lookout for business diversification andexpansion in the industry in which it operates or in the other industries in order to takeadvantage of emerging opportunities for enhancing shareholder value. In such a pursuitthe Board of directors of your Company has based on the recommendation made by themanagement found it feasible to commence the business of retail trading in consumerproducts in view of profitable opportunities in the proposed business. The proposedbusiness will enable the company to establish direct connect with the customers bysupplying daily essential goods and services on a day-to-day basis thereby creating nichecustomer base which could be proactively utilized for further business expansion. Besidesretail trading is an emerging business segment which holds immense potential forentrenchment and scaling up also. The proposed business will be initially funded out ofinternal accruals. Shareholders' approval is being sought at the ensuing 26thAGM for amending the objects clause of the existing Memorandum of Association to enablecommencement of the retail trade business.
The Company has been rated by CRISIL for the outstanding for debt instruments /facilities. The ratings accorded by CRISIL is as follows:
|Total Bank Loan Facilities Rated ||Rs.9 Crore |
|Long-term Rating ||CRISIL BB+/Stable |
|Short_term Rating ||CRISIL A4+ |
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
Your Company does not have any subsidiary joint venture or associate companies.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors state that:
i. in the preparation of the annual accounts for the year ended March 312020 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
ii. the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 312020 and of the profit ofthe Company for the year ended on that date;
iii. the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the 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; and
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.
Your Company has complied with all the material requirements of Corporate Governanceprescribed under Securities & Exchange Board of India (Listing Obligation andDisclosure Requirements) Regulations 2015. A report on Corpo-rate Governance as requiredunder regulation 34(3) read along with Schedule V of the said regulation is annexed and itforms part of this report.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
The Related Party T ransactions which was considered material as per the policy adoptedby the Company and for which the Company has already obtained the members approval at theprevious AGM is disclosed in the Form AOC2 annexed to this report. Other than this theCompany had not entered into any contract arrangement or transaction with related partieswhich could be considered material in accordance with the policy of the Company onmateriality of related party transactions.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board was put up on the website of the Company atwww.rasielectrodes.com and it is also furnished in the Corporate Governance Report.
Your Directors also draw attention of the members to Note 26.4 to the financialstatement which sets out related party disclosures.
Your Company has adequate risk management infrastructure in place capable of addressingrisks faced by the company both internal and external. Your Company is not required toconstitute a separate Risk Management Committee.
INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year no reportable material weakness have surfaced withregard to those internal controls in place.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company is duly constituted as per the requirements ofsection 149 of the Companies Act 2013 and SEBI (LODR) Regulations 2015.
The Independent Directors Mr Hitesh M Dharamshi and Mr Ajay Goyal have beenre-appointed by the shareholders for a 2nd Term of 5 years from 1.4.2019 to31.3.2024 by passing a special resolution at their 24th AGM held on 26.09.2018.The shareholders have at their 25th AGM held on 26th September2019 appointed Ms.AASHIKA KUMARI [Din: 08455410] as an Independent Director and sheshall be holding such office for an initial period of five years up to 29th May2024. There were no other changes during the year in the overall composition of the Boardof Directors of the Company.
Your Director Mrs PAYAL JAIN retires by rotation at the ensuing Annual General meetingand being eligible is offering herself for re-appointment.
The Company has in place all the KMPs required to be appointed u/s 203 of the CompaniesAct 2013. Mr B Popatlal Kothari is the Managing Director & Chief Executive OfficerMr Kashyap Kothari is the Chief Financial Officer and Mrs Jagruti J Jain is the CompanySecretary.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theCompanies Act 2013 and SEBI (LODR) Regulations 2015.
A familiarisation program was conducted on 12th February 2020 for theIndependent Directors wherein the roles rights responsibilities of the IndependentDirectors the business model of the company and the industry related developments wasapprised and presented to them. All the Directors attended the Familiarisation programme.The details of the familiarization program conducted for Independent Directors has alsobeen uploaded at the website of the Company at www.rasielectrodes.com
The Company has formulated Policy for selection of Directors and determining Directorsindependence Remuneration Policy for Directors Key Managerial Personnel and otheremployees which has been put up on the website of the Company at www.rasielectrodes.com.
EMPLOYEES STOCK OPTION SCHEME
The Company has not formulated any Employees Stock Option scheme.
AUDITORS & AUDITORS REPORT Statutory Auditor
The report of the Statutory Auditors M/s SURESHKUMAR & Co. Chartered AccountantsChennai is annexed to this report. The Auditors have issued an un-modified opinion on theFinancial Statements audited by them for the year ended 31st March 2020.
The Board has appointed Mr Gopikrishnan Madanagopal Practicing Company Secretary toconduct Secretarial Audit for the financial year 2019-20. The Secretarial Audit Report forthe financial year ended March 312020 is annexed to this report. The Secretarial Auditorhas issued an un-modified opinion in his report for the year ended 31st March 2020.
Mr G Mahavirchand Kochar Independent Practicing Chartered Accountant is the InternalAuditor of the Company as required under section 138 of the Companies Act 2013. TheInternal Auditor reports to the Audit Committee and the periodical reports submitted byhim are reviewed by the Audit Committee and the Board. No adverse findings were reportedby the Internal Auditor during the year.
Corporate Social Responsibility
Your Company is not falling within the financial criteria laid down under section135(1) of the Companies Act 2013 and as such is not under obligation constituteCorporate Social Responsibility committee and undertake CSR activities.
The Audit Committee comprises of two Independent Director and one Non-IndependentDirector and as such the composition requirements prescribed under section 177 of theCompanies Act 2013 and the SEBI (LODR) Regulations is satisfied. All the recommendationsmade by the Audit Committee during the year have been accepted by the Board.
The Company has put in place a vigil mechanism in order to facilitate Directors andEmployees to report on genuine concerns. The Whistle Blower policy adopted by the Companyand the Vigil Mechanism as a part of the said policy has been put up on the website of theCompany at www.rasielectrodes.com.
Meetings of Board
During the year FIVE meetings of the Board of Directors were held. The dates on whichthe Board meetings were held and the attendance of the Directors therein is furnished inthe Corporate Governance Report.
Particulars of Loans given Investments made Guarantees given and securities provided.
The Company has duly complied with the requirements of Companies Act 2013 withrespect to loans given and investments made during the financial year.
The particulars of Loans given investments made and the purpose for which the loangiven is proposed to be utilized by the recipient is furnished in Note:26.6 to thefinancial statements.
The Company has not given any guarantees and has not provided any security during theyear.
Conservation of energy technology absorption foreign exchange earnings and outgo.
As required under the Provisions of Sec. 134(3)(m) of the Companies Act 2013information relating to Conservation of energy technology absorption and foreignexchange earnings and outgo is annexed to this report.
Extract of Annual Return
The extract of Annual Return as on 31st March 2020 in the prescribed FormMGT9 is annexed to this report.
Particulars of Employees and related disclosures
In terms of the requirements of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 your Directors wish to state that none of the employees aredrawing remuneration in excess of the limits set out in the said rules.
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed to this report.
Employees Stock Option Scheme
The Company has not formulated any Employees Stock Option scheme.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013.
The Company has in place Anti Sexual Harassment Policy in line with the requirements ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. All employees (permanent contractual temporary trainees) are covered under thispolicy. The Company has not received any complaints under the said Act during the year.
Your Directors do not have anything to report or disclose on the following items sincethere were no transaction relating to them during the year:
i. No deposits were accepted attracting the provisions of section 73 - 76 of theCompanies Act 2013.
ii. The Company has not issued any equity shares during the year with differentialrights as to dividend voting or otherwise.
iii. The Company has not issued any shares (including sweat equity shares) to any ofits employees during the year.
iv. The Company does not have any subsidiary Joint venture or associate companies andas such the Managing Director / Whole time Directors receiving any remuneration from suchcompanies does not arise.
v. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.
vi. There were no material changes and commitments affecting the financial position ofthe company which have occurred between 3131 March 2020 and the date of thisreport
Your Directors take this opportunity to thank the various Governmental authorities theCompany's Bankers M/s. Bank of Baroda (formerly Dena Bank) and Citi Bank.N.A. thecustomers and Suppliers. Your Directors also wish to place on record the dedicatedServices rendered by the employees of the Company at all levels.
By Order of the Board
For & on behalf of the Board of Directors
B RANJIT KUMAR KOTHARI
DIN:01560805 CHENNAI DATED: 30th JUNE 2020