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Rasi Electrodes Ltd.

BSE: 531233 Sector: Engineering
NSE: N.A. ISIN Code: INE822D01021
BSE 00:00 | 20 Feb 2.61 0.22
(9.21%)
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2.77

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2.79

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2.36

NSE 05:30 | 01 Jan Rasi Electrodes Ltd
OPEN 2.77
PREVIOUS CLOSE 2.39
VOLUME 11451
52-Week high 5.00
52-Week low 2.12
P/E 8.70
Mkt Cap.(Rs cr) 8
Buy Price 2.37
Buy Qty 190.00
Sell Price 2.65
Sell Qty 338.00
OPEN 2.77
CLOSE 2.39
VOLUME 11451
52-Week high 5.00
52-Week low 2.12
P/E 8.70
Mkt Cap.(Rs cr) 8
Buy Price 2.37
Buy Qty 190.00
Sell Price 2.65
Sell Qty 338.00

Rasi Electrodes Ltd. (RASIELECTRODES) - Director Report

Company director report

Dear Shareholder

Your Directors have pleasure in presenting the 25th Annual Report ofyour Company together with theAudited Financial Statements for the year ended 31st March2019.

FINANCIAL RESULTS

The Financial Performance of your Company for the year ended 31st March2019 is summarized below:

Year Ended 31. 03. 2019 Rs. in Lakhs Year Ended 31. 03. 2018
Net sales 4743. 48 3423. 58
Other Income 53. 72 61. 84
Total(A) 4797. 20 3485. 42
Total Expenditure 4470. 32 3262. 74
Profit Before Interest & depreciation 326. 88 222. 68
Interest & financial charges 67. 96 71. 15
Depreciation 81. 81 67. 66
Profit Before tax 177. 11 83. 87
Tax expense 75. 12 -0. 80
Net profit / loss for the period 101. 99 84. 67
Other Comprehensive Income(net of tax) Total Comprehensive Income for the period -5. 18 96. 81 -3. 17 81. 50
Surplus brought forward 736. 25 654. 75
Balance carried to Balance sheet 833. 06 736. 25

DIVIDEND AND TRANSFER TO RESERVES

In order to conserve resources for meeting the increasing workingcapital requirements for the expanded business capacity of the Company your Directorshave not recommended any dividend for the year ended 31st March 2019 (previous yeardividend declared Rs. nil). Your Directors have not transferred any amount to the anyReserves out of the profits made during the year.

MANAGEMENT DISCUSSION AND ANALYSIS

A. Industry structure and developments

Your Company is a Medium Scale industries registered under MSMEcategory. Your Company is having manufacturing plants for the manufacture of Arc WeldingElectrodes Copper Coated Mild Steel (CCMS) Wire and Drawn wire used for the purpose ofwelding by the Engineering and Fabrication industries. Your Company also trades in theentire range of welding products and accessories required by diverse industries in theheavy engineering and capital goods sector. Your Company trades by importing rutileAbbrasives Flux Core Wire and Flux on a regular basis. The demand for Company'sproducts depends upon the robustness of demand in the engineering and capital goodsindustries in the Country.

B. Performance

During the year ended 31st March 2019 the overall turnover of theCompany was Rs. 4743. 48 lakhs as against Rs 3423. 58 lakhs achieved during the last yearresulting in an increase in the turnover to the extent of 38. 55% when compared with theprevious year. The production of welding electrodes was 1699. 156 MTs as against 1404. 153MTs achieved during the previous year. The production of CCMS Wire during the year ended31st March 2019 was 3268. 818 MTs as against 2419. 564 MTs during the previous year.

During the year ended 31st March 2019 the profit before tax was Rs 177.11 lakhs (previous year Rs 83. 87 lakhs) and after making a provision for tax amounting toRs 75. 12 lakhs (previous year Rs -0. 80 lakhs) (including provision for deferred tax)the profit after tax was Rs 101. 99 lacs (previous year Rs 84. 67 lakhs). The Profit aftertax has increased by 20. 46% during the year ended 31st March 2019 when compared to theprevious year. The Financial Statements of the Company has been prepared in accordancewith the requirements of Companies (Indian Accounting Standards) Rules 2015.

The Company continues to comply with the certification requirements ofDet Norkse Veritas Management System conforming to Quality Management System Standard ISO9001:2015 for its manufacturing facility at Redhills Chennai.

C. Segmentwise performance

Your company operates in the single segment i. e. manufacture andmarketing of welding electrodes and as such the discussion of segment-wise performance isnot applicable.

D. Concerns

Your Company had an substantially improved turnover during the yearended 31st March 2019 due to overall robustness in the capital goods and infrastructuresector and other user industries. The momentum has some what tapered off during thecurrent year on account of decling trenad in the overall industrial production.

E. Prospects and Outlook

The welding electrodes industry is undergoing a structural changewhereby the demand for Arc welding electrodes is continuously declining and the demand forthe new generation CCMs wire products for welding is ever increasing. Anticipating thestructural change your Company has augmented the capacity of CCMS welding wire productsto cater to the changed market requirements.

Your Company consolidated its brand image in the market and was able togain market share. The CCMS Wire product produced by your Company has also received goodresponse among the user industries. With a strong brand image your company's productenjoys loyal patronage in the user market.

F. Internal control systems

Your company has a proper and adequate system of internal controls toensure that all assets are safeguarded and protected against loss from un-authorised useor disposition.

G. Human resources and industrial relations

Your Company has well qualified and experienced technical financialand administrative staff to cater to its business requirements. The relations with theemployees of the company remained cordial throughout the year.

CREDIT RATING

Your Directors take pleasure in informing that your Company has beenrated by CRISIL and they have assigned a ‘CRISIL MSE 2' rating to your Company.This rating indicates High Credit Worthiness in relation to other MSE ‘s adjudged inrelation to other Micro and Small Enterprises.

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

Your Company does not have any subsidiary joint venture or associatecompanies.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors state that:

  1. in the preparation of the annual accounts for the year ended March 31 2019 the applicable accounting standards read with requirements set out under Schedule III to the Act have been followed and there are no material departures from the same;
  2. the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31 2019 and of the profit of the Company for the year ended on that date;
  3. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
  4. the Directors have prepared the annual accounts on a ‘going concern' basis;
  5. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
  6. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
  7. CORPORATE GOVERNANCE

    Your Company has complied with all the material requirements of Corporate Governance prescribed under Securities & Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations 2015. Areport on Corpo-rate Governance as required under regulation 34(3) read along with Schedule V of the said regulation is annexed and it forms part of this report.

    CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

    During the year the Company had not entered into any contract arrangement or transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

    The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board was put up on the website of the Company at www. rasielectrodes. com and it is also furnished in the Corporate Governance Report.

    Your Directors draw attention of the members to Note 26. 4 to the financial statement which sets out related party disclosures.

    RISK MANAGEMENT

    Your Company has adequate risk management infrastructure in place capable of addressing risks faced by the company both internal and external. Your Company is not required to constitute a separate Risk Management Committee.

    INTERNAL FINANCIAL CONTROLS

    The Company has in place adequate internal financial controls with reference to financial statements. During the year no reportable material weakness have surfaced with regard 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 of section 149 of the Companies Act 2013 and SEBI (LODR) Regulations 2015.

    The first term of office as approved by shareholders at their 20th AGM held on 29. 09. 2014 of the Independent Director Mr N Prakash Kumar has ceased on 31st March 2019. Mr N Prakash Kumar has not sought extension and hence has ceased to be an Independent Director and Director on the Board of the Company with effect from 31. 3. 2019. The other Independent Directors namely Mr Hitesh M Dharamshi and Mr Ajay Goyal whose 1st Term of office has also similarly ceased on 31. 3. 2019 shall be continuing as Independent Directors on the Board of the Company since the shareholders have approved their re-appointment as Independent Directors for 2nd Term of 5 years from 1. 4. 2019 to 31. 3. 2024 by passing a special resolution at their 24th AGM held on 26. 09. 2018. There were no other changes in the in the overall composition of the Board of Directors of the Company.

    Your Director Mr Ranjit Kumar Kothari retires by rotation at the ensuing Annual General meeting and being eligible is offering himself for re-appointment.

    The Company has in place all the KMPs required to be appointed u/s 203 of the Companies Act 2013. Mr B Popatlal Kothari is the Managing Director & Chief Executive Officer Mr Kashyap Kothari is the Chief Financial Officer and Mrs Jagruti J Jain is the Company Secretary.

    The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act 2013 and SEBI (LODR) Regulations 2015.

    A familiarisation program was conducted on 14th February 2019 for the Independent Directors wherein the roles rights responsibilities of the Independent Directors the business model of the company and the industry related developments was apprised and presented to them. All the Directors attended the Familiarisation programme. The details of the familiarization program conducted for Independent Directors has also been uploaded at the website of the Company at www. rasielectrodes. com

    The Company has formulated Policy for selection of Directors and determining Directors independence Remuneration Policy for Directors Key Managerial Personnel and other employees 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 Accountants Chennai is annexed to this report. The Auditors have issued an un-modified opinion on the Financial Statements audited by them for the year ended 31st March 2019.

    Secretarial Auditor

    The Board has appointed Mr Gopikrishnan Madanagopal Practicing Company Secretary to conduct Secretarial Audit for the financial year 2018-19. The Secretarial Audit Report for the financial year ended March 31 2019 is annexed to this report.

    Internal Auditor

    Mr G Mahavirchand Kochar Independent Practicing Chartered Accountant is the Internal Auditor of the Company as required under section 138 of the Companies Act 2013. The Internal Auditor reports to the Audit Committee and the periodical reports submitted by him are reviewed by the Audit Committee and the Board. No adverse findings were reported by the Internal Auditor during the year.

    DISCLOSURES

    Corporate Social Responsibility

    Your Company is not falling within the financial criteria laid down under section 135(1) of the Companies Act 2013 and as such is not under obligation constitute Corporate Social Responsibility committee and undertake CSR activities.

    Audit committee

    The Audit Committee comprises of two Independent Director and one Non-Independent Director and as such the composition requirements prescribed under section 177 of the Companies Act 2013 and the SEBI (LODR) Regulations is satisfied. All the recommendations made by the Audit Committee during the year have been accepted by the Board.

    Vigil Mechanism

    The Company has put in place a vigil mechanism in order to facilitate Directors and Employees to report on genuine concerns. The Whistle Blower policy adopted by the Company and the Vigil Mechanism as a part of the said policy has been put up on the website of the Company at www. rasielectrodes. com.

    Meetings of Board

    During the year SEVEN meetings of the Board of Directors were held. The dates on which the Board meetings were held and the attendance of the Directors therein is furnished in the 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 with respect to loans given and investments made during the financial year.

    The particulars of Loans given investments made and the purpose for which the loan given is proposed to be utilized by the recipient is furnished in Note:26. 6 to the financial statements.

    The Company has not given any guarantees and has not provided any security during the year.

    Conservation of energy technology absorption foreign exchange earnings and outgo.

    As required under the Provisions of Sec. 134(3)(m) of the Companies Act 2013 information relating to Conservation of energy technology absorption and foreign exchange earnings and outgo is annexed to this report.

    Extract of Annual Return

    The extract of Annual Return as on 31st March 2019 in the prescribed Form MGT9 is annexed to this report.

    Particulars of Employees and related disclosures

    In terms of the requirements of Section 197(12) of the CompaniesAct 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 your Directors wish to state that none of the employees are drawing 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 of Managerial 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 Prohibition and Redressal) Act 2013.

    The Company has in place Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013. All employees (permanent contractual temporary trainees) are covered under this policy. The Company has not received any complaints under the said Act during the year.

    General

    Your Directors do not have anything to report or disclose on the following items since there were no transaction relating to them during the year:

    1. No deposits were accepted attracting the provisions of section 73 – 76 of the Companies Act 2013.
    2. The Company has not issued any equity shares during the year with differential rights as to dividend voting or otherwise.
    3. The Company has not issued any shares (including sweat equity shares) to any of its employees during the year.
    4. The Company does not have any subsidiary Joint venture or associate companies andas such the Managing Director / Whole time Directors receiving any remuneration from such companies does not arise.
    5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.
    6. There were no material changes and commitments affecting the financial position of the company which have occurred between 31st March 2019 and the date of this report

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the various Governmentalauthorities the Company's Bankers M/s. Dena Bank the customers and Suppliers. YourDirectors also wish to place on record the dedicated Services rendered by the employees ofthe Company at all levels.

By Order of the Board

For & on behalf of the Board of Directors

B RANJIT KUMAR KOTHARI CHAIRMAN

DIN:01560805

CHENNAI th

DATED: 14 August 2019

ANNEXURES FORMING PART OF BOARDS' REPORT:

Annexure I: Disclosure under Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.

Annexure II: Disclosures pertaining to conservation of energytechnology absorption and foreign exchange earnings and outgo as required u/s 134(3)(m) ofthe Companies Act 2013 read along with rule 8(3) of Companies (Accounts) Rules 2014.

Annexure III: Corporate Governance Report (including AuditorCertificate & other certificates annexed to CG Report). Annexure IV: Extract of Annualreturn – Form MGT9.

Annexure V: Secretarial Audit Report.

Annexure VI: Independent Auditors' Report on Financial Statements.

Annexure VII: Financial Statements as on and for the year ended 31stMarch 2019 together with notes thereto.

Directors'Report – Annexure I:

Disclosure under Rule 5 of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 I. EMPLOYEES DRAWING REMUNERATION OF MORE THAN Rs 102lakhs PER ANNUM:

None of the Employees (including KMPs) are drawing remunerationexceeding Rs 102 lakhs per annum.

  1. DETAILS OF REMUNERATION EACH DIRECTOR IN 2018-19:
  2. Name Designation % increase over previous year Ratio to median remuneration
    Mr B Popatlal Kothari Chairman & Managing Director Nil 13.92:1
    Mr B Ranjit Kumar Kothari Director Nil Na
    Mr Hitesh N Dharamshi Independent Director Nil Na
    Mr Ajay Goyal Independent Director Nil Na
    Mr N Prakash Kumar Independent Director Nil Na
    Mrs Payal Jain Director Nil Na
    Mr Kashyap Kothari Chief Financial Officer Nil 8.92:1
    Mrs Jagruti Jain Company secretary Nil 2.01:1

    Note: Sitting fees paid has not been considered as remuneration.

  3. NUMBER OF PERMANENT EMPLOYEES ON THE ROLLS OF THE COMPANY:
  4. As on 31. 03. 2019: 91

    As on 31. 03. 2018: 91

  5. PERCENTAGE INCREASE IN MEDIAN REMUNERATION OF EMPLOYEES IN THE FINANCIAL YEAR 2018-19: 3. 98% V. RELATIONSHIP BETWEEN AVERAGE INCREASE IN REMUERATION AND THE COMPANY PERFORMANCE:

Average remuneration per employee per annum increased from 2. 69 lakhsas at the end of 2017-18 to 2. 85 lakhs as at the end of 2018-19 i. e. increased by 5.71%. Total Turnover in this period increased by 38. 55%.

  1. REMUNERATION OF KEY MANAGERIAL PERSONNEL AND COMPARISON OF THEIR REMUNERATION TO THE PERFORMANCE OF THE COMPANY.
  2. The total remuneration of Key Managerial Personnel during the year ended 31st March 2019 is Rs 53. 57 lakhs as against Rs 49. 09 lakhs paid during the previous year. The total payments to KMPs' increased during the year by 9. 13% in absolute terms. As against this the total turnover of the Company increased from Rs 3423. 58 lakhs to Rs 4743. 48 lakhs resulting in an increase of 38. 55% during the year.

  3. MARKET PRICE AND PRICE EARNING RATIO:
  4. As on 31st March 2019 the closing Market price per equity share of Rs 2 each is Rs 4. 20 and PE Ratio is 13. 55.

  5. COMPARISON OF MARKET PRICE WITH THE ISSUE PRICE AT THE LAST PUBLIC OFFER:
  6. The last public offer was made during the year ended 31st March 1996 at par at Rs 10/- per Equity share. The Company issued bonus shares in the ratio of 2:5 during the year ended 31. 03. 2008. The closing Market Price per Equity share of Rs 2/- each (post split) of the Company as on 31st March 2019 is Rs.

    4. 20 (Source: BSE Ltd) resulting in a increase @ 194. 00% when compared to public offer price (adjusted for bonus shares and adjusted for stock split). The Company has issued and allotted equity shares at Rs 10. 80 per Rs 2/- equity shares during the year ended 31. 3. 2015 and 31. 3. 2016 compared to closing price of Rs 4. 20 per Rs 2 equity shares as on 31. 3. 2019 resulting in decrease to the extent of 61. 11%.

  7. AVERAGE PERCENTAGE INCREASE IN SALARIES OF EMPLOYEES OTHER THAN WHOLETIME DIRECTORS: 6. 51% X. KEY PARAMETERS OF ANY VARIABLE COMPONENT OF REMUNERATION AVAILED BY DIRECTORS:

Not applicable since Directors have not been paid any variablecomponent of remuneration.

  1. THE RATIO OF THE REMUNERATION OF THE HIGHEST PAID DIRECTOR TO THAT OF THE EMPLOYEES WHO ARE NOT DIRECTORS BUT RECEIVED REMUNERATION IN EXCESS OF THE HIGHEST PAID DIRECTOR DURING THE YEAR:
  2. No Employee received remuneration higher than the Managing Director.

  3. AFFIRMATION THAT THE REMUNERATION IS AS PER THE REMUNERATION POLICY OF THE COMPANY:
  4. The remuneration paid during the year ended 31st March 2019 is as per the remuneration policy of the Company.

    Directors' Report – Annexure II:

    Disclosures pertaining to conservation of energy technology absorption and foreign exchange earnings and outgo as required u/s 134(3)(m)

    Required Particulars Details
    A Conservation Of energy
    i. The steps taken or impact on conservation of energy; The Company regularly conducts energy conservation program at the factory

    to sensitize the workmen for using energy conservation practices throughout

    the factory. Energy Conservation measures have been adopted right

    from the initial Stages of manufacture to achieve the optimum energy

    consumption per unit of production.

    ii. The steps taken by the company for utilising alternate sources

    of energy;

    The Company has not taken any steps to use alternate sources of energy
    iii. The capital investment on energy conservation equipments; Nil
    B. Technology absorbtion :
    i. The efforts made towards technology absorption; The Company uses technology developed in house
    ii. The benefits derived like product improvement cost reduction product development or import substitution; The Company has developed CCMS Wire product without copper coating which was developed out of the Company's own initiative. The avoidance of copper coating has resulted in cost reduction and power saving.
    iii. In case of imported technology (imported during the last three years reckoned from the beginning of the financial year): The Company has not imported any technology
    (a) the details of technology imported; Not applicable
    (b) the year of import; Not applicable
    (c) whether the technology been fully absorbed; Not applicable
    (d) if not fully absorbed areas where absorption has not taken place and thereasons thereof; and Not applicable
    iv. The expenditure incurred on Research and Development. Nil
    C. Foreign exchange earningsand outgo:(a) Foreign exchange Earnings; Rs.2160945
    (b) Foreign exchange outgo; Rs.399.93549