The Board of Directors of your Company have pleasure in presenting 36th Annual Reporton the Company's business and operations together with the audited financial statementsfor the Financial Year 2019-20.
1. Company Overview
The Company is a Public Limited Company incorporated in India and its shares are listedat BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company has 8state of art' manufacturing facilities at Bahadurgarh Bhiwadi and Haridwar. Duringthe year your
Board had approved the capacity addition by setting up- "New State of Art Plant atBhiwadi (Rajasthan)" which will take 3 years to be completely operational.
Relaxo Footwears Limited is the largest footwear manufacturing company in India.Products include rubber/EVA slippers canvas shoes sport shoes sandals school shoes andother types of footwear. It has a portfolio of renowned brands like Relaxo Sparx Fliteand Bahamas. The company sells its products through retailers served through distributorsretail outlets exports and e-commerce / modern trade. The company's business process ismanaged through SAP & SAP HANA.
2. Financial Results
In compliance with the provisions of the Companies Act 2013 (Act') and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations') the Company has prepared its financial statements as per the IndianAccounting Standards (IND AS) for the Financial Year 2019-20. The financial highlights ofthe Company's operations are as follows:
|Particulars ||2019-20 ||2018-19 |
|Revenue from Operations ||2410.48 ||2292.08 |
|EBITDA ||408.95 ||324.31 |
|Other Income ||9.05 ||12.98 |
|Less: Finance Costs ||16.87 ||6.90 |
|Less: Depreciation and Amortisation Expense ||109.42 ||62.41 |
|Profit before Tax ||291.71 ||267.98 |
|Less: Tax Expense ||65.46 ||92.54 |
|Profit after Tax ||226.25 ||175.44 |
|Other Comprehensive Income ||(0.69) ||0.06 |
|Balance brought forward from Previous year ||41.30 ||34.02 |
|Retained earnings under Scheme of Amalgamation ||- ||3.54 |
|Amount available for Appropriation ||266.86 ||213.06 |
|Appropriation: || || |
| Final & Interim Dividend* ||53.36 ||18.05 |
| Tax on Final & Interim Dividend* ||10.96 ||3.71 |
| Transfer to General Reserve ||150.00 ||150.00 |
|Balance carried to Balance Sheet ||52.54 ||41.30 |
|EPS-Basic (in C) ||9.12 ||7.07 |
|EPS-Diluted (in C) ||9.10 ||7.06 |
* Final & Interim Dividend Distributed during the year
3. Business Performance
The key highlights of the Company's financial
performance during the Financial Year 2019-20 are
Revenue from operations increased by 5.17% to C 2410.48 Crore from C 2292.08Crore in the last Financial Year.
EBITDA increased by 26.10% to C 408.95 Crore from C 324.31 Crore in lastFinancial Year.
Net profit increased by 28.96% to C 226.25 Crore from C 175.44 Crore in the lastFinancial Year.
Net profit margins is 9.39 %.
Total retail outlets increased from 343 to 390 during the Financial Year.
Your Company has shown growth on the key financial metrics for the year despite themarket scenario being uncertain and increasing competition in the year. Managementbelieves that your Company will continue its journey of profitable growth driven by thestrong fundamentals of operating model continued focus on long term business plan and anoverwhelming desire to serve customers. Due to COVID-19 pandemic outbreak in March-2020there was impact on the revenues and profitability of the Company. Despite adversesituation your Company managed to achieve reasonable growth in value and impressive profitgrowth during the year.
| || Sharp focus on consumer needs and quality. |
|Revenue E 2410.48 Cr. Growth 5.17% || Getting capable channel partners with volume growth in specific segments. |
| Increased presence in new / emerging channels (modern trade e-commerce). |
| || Aggressive expansion in new/ under penetrated geographies. |
|EBITDA E 408.95 Cr. ||~i |
|Growth 26.10% || Robust cost control initiatives. |
|Margin 16.97% || Manufacturing excellence and quality improvement. |
| || Regular disposal of aged inventory. |
|PAT E 226.25 Cr. || Control over administrative and operative expenses. |
|Growth 28.96% || Advantage due to lowest tax rate opted by Company. |
|Margin 9.39% ||1 |
Sales & Marketing
During the year your Company continued to strengthen its distribution networkexpansion in under penetrated markets while empowering its sales force and channelpartners with innovative digitized solutions for seamless efficiency. Today through thestrategic initiatives carried out during the year our distributors directly service over85% of the large districts in India yielding significant gains in our priority markets inWest and East India. Use of sales force automation tools has enabled our team to service~25000 outlets directly and engage with our valued retail partners.
More than 50 training sessions were conducted for the sales force to enhance theirskill-set and reinforce best practices in vogue. Comprehensive measures undertaken to givebest-in-class rewards and recognition to the sales force have arrested attrition andreinforced our value proposition to our employees.
With its philosophy of Customer First' your Company regularly refreshed itsproduct portfolio in line with consumer expectations and launched a slew of new productsthis year.
With a view to strengthen its trade connect your Company conducted multiple retailmeets countrywide and also launched a Key Outlet Program with aggressive branding to drivevisibility in the markets. Further your Company also participated in numerous consumerinterface initiatives for its brands.
In a strategic move to come closer to the new age consumer your Company chose toharness the digital space and established a strong brand presence on social media withcurated content and digital campaigns. Your Company also set up an online reputationmanagement (ORM) system for real time customer sentiment analysis and management.
Targeted multi media campaigns with top Bollywood celebrities - Salman Khan AkshayKumar and Ranveer Singh - were launched by your Company through the year to maintainleadership position for its brands Bahamas Sparx and Flite.
These efforts were notably highlighted in the media through various PR initiatives.
E-commerce is the fastest growing channel for your Company. With all our brands presentin leading e-commerce portals and more than 70% of portfolio listed online your Companycontinued its sustained investments on these platforms and is well positioned to drivegrowth in the future.
Improving sales while keeping a focus on business profitability both in COCO and FOFOstore network operations has been the strategic focus during the year.
Despite external pressures your Company demonstrated growth in the retail network byexpanding its store footprint to 390 stores and shifting the store assortment to higherASP articles.
In parallel several cost rationalization measures were initiated including closing nonprofitable locations staff rightsizing rent negotiations inventory management and amore efficient reordering mechanism.
All this while your Company has kept a firm focus on improving the in store customerexperience with range availability and regular staff training.
During the year your Company consolidated growth in existing priority export marketswhile continuing to expand its global footprint.
Your Company's efforts in maintaining a focus on promoting own brands ensuring timelyproduct availability to our international partners has further led to your Company beingrecognized as one of the top non-leather exporters from India.
Your Company continued its efforts towards cost reduction and quality improvement byoptimising material specifications backward integration and enhancing vendor capabilitiesand resource pool through regular audits and technical support.
Footwear category is gradually evolving to be a style statement of one's personalitynecessitating constant product innovation both in functionality and design. Through arobust market sensing & research process feedback from our channel partners andaccess to renowned national & international design studios your Company constantlystrives to offer products that exceed consumer expectations.
With an eye on quality and speed each brand is now supported by a separate team forfocussed product design and development enabling your Company to launch more than 200products this year. We continue to focus on products that excite our consumers and haveaggressively cut down on portfolio complexity while building greater synergies in ourretail wholesale and ecommerce portfolios.
Manufacturing and Quality
Recognising the need to embrace technology and innovation as one of the key factors forcompetitive advantage during the year your Company adopted various low cost automationprocesses.
Committed to provide Best- in- Class footwear to its customers your Company hasestablished a Central Technical Lab at Bahadurgarh Haryana to ensure better qualitytesting of materials.
Relaxo has been successfully certified for Quality Management System (ISO 9001:2015)Environmental Management System (ISO 14001:2015) Occupational Health & SafetyManagement System (ISO 45001:2018) and Information Security Management System (ISO27001:2013) by the British Standards Institute a royal-charter certification body ofglobal repute.
Efficiency enhancement in business processes across all our offices warehouses retailstores and channel partners pan-India has been at the core of all technology initiativesby your Company.
Using robust SFA and DMS solutions your Company focussed on providing better serviceto its channel partners and encouraged Smart Decision-Making through Data Visualizationusing BI tool. Your Company formally adopted a broad set of security best practices andretained ISO 27001:2013 certification confirming its commitment to IT securityconfidentiality and quality services. Going forward your Company has planned to implementrobust security solution like DLP (Data Leak Protection) and CASB (Cloud Access SecurityBroker) to provide data protection and secure IT environment which has become moreimportant than ever with the emerging concept of work from home and remote locations.
During the year your Company has conducted regular class room trainings workshops andcapability & competency development programs to upgrade its workforce.
Your Company pioneered an en gagem ent survey through 360-degree feedback for the keymanagement personnel. A pulse check survey for its sales employees to benchmark withglobal best practices in right compensation and career progression was also undertaken.
4. Management Discussion and Analysis Report
Pursuant to Regulation 34(2)(e) of the Listing Regulations a detailed ManagementDiscussion and Analysis Report for the year under review is presented in a separatesection forming part of this Annual Report.
Your Directors in its meeting held on February 27 2020 have declared an InterimDividend of C 1.25/- per equity share of the face value of C 1/- each fully paid up (i.e.125%) for the Financial Year 2019-20. The dividend was paid to those members whose nameappeared in the Register of members / list of beneficiaries as on March 12 2020 i.e. therecord date. The total dividend payout was C 31.03 Crore excluding tax on dividend of C6.37 Crore. The dividend was paid to all the eligible shareholders of the Company beforeMarch 27 2020. The dividend payout is in accordance with Company's dividend distributionpolicy.
Due to uncertainties caused by COVID-19 pandemic your management has decided not torecommend any final dividend for the Financial Year 2019-20.
6. Dividend Distribution Policy
As per Regulation 43A of the Listing Regulations top 500 listed companies are requiredto formulate a dividend distribution policy. Accordingly the Company has adopted thedividend distribution policy which sets out the parameters and circumstances to beconsidered by the Board in determining the distribution of dividend to its shareholdersand / or retaining profits earned by the Company. The said policy is enclosed asAnnexure-A to this Report and is also available on the website of the Company at the linkwww.relaxofootwear.com/pdf/ Dividend-Distribution-Policv.pdf.
7. Transfer to Reserves
We propose to transfer C 150.00 Crore to the general reserve from net profits and C0.21 Crore from share based payment reserve pertaining to cancellation of vested options.An amount of C 52.54 Crore is proposed to be retained in the Statement of Profit &Loss of the Company.
8. Public Deposits
The Company has not invited or accepted any deposits within the meaning of Sections 73and 74 of the Act read with the Companies (Acceptance of Deposits) Rules 2014 (includingany statutory modification(s) or re-enactment(s) thereof for the time being in force)from public during the year under review. Therefore no amount of principal or interestwas outstanding as on the balance sheet closure date.
9. Compliance with Secretarial Standards
During the year under review the Directors state that applicable Secretarial Standardsissued by the Institute of Company Secretaries of India i.e. Secretarial Standard-1(SS-1') and Secretarial Standard-2 (SS-2') relating to Meetings of theBoard of Directors' and General Meetings' respectively have been duly complied bythe Company.
10. Subsidiary/ Joint Venture/ Associate Company
Your company does not have any subsidiaries joint ventures or associate companiesduring the year under review.
11. Changes in Nature of Business
There was no change in the nature of business of the Company during the year underreview.
12. Share Capital
Authorised Share Capital:
During the Financial Year 2019-20 the Authorized
share capital of the Company was increased from C207500000/- (Rupees Twenty CroresSeventy-Five Lacs only) divided into 207500000 (Twenty Crores Seventy Five Lacs) equityshares of C 1/- (Rupee One) each to C 510000000/- (Rupees Fifty One Crores Only)divided into 510000000 (Fifty One Crores Only) Equity Shares of C 1/- (Rupees One) eachpursuant to a resolution passed by the shareholders on June 14 2019 by postal ballot.
Issued Subscribed and Paid-up Share Capital:
During the Financial Year 2019-20 the following corporate actions were taken which ledto the change in the share capital of the Company:
The Board of Directors at their meeting held on May 10 2019 recommended issueof bonus shares in the ratio of 1:1 (one bonus equity share for one equity share held) tothe members who held the shares of the Company on June 27 2019 (i.e. Record Date). OnJune 28 2019 124050873 equity shares of C 1/- each fully paid up were allotted to themembers of the Company holding shares as on record date.
The Board of Directors at their meeting held on November 2 2019 issued andallotted 144690 equity shares of C 1/- each fully paid up on exercise of stock optionsby the eligible employees under the Employee Stock Option Plan 2014 (RFL ESOP PLAN-2014).
On March 31 2020 the issued subscribed and paid-up share capital of the Company wasC248246436/- divided into 248246436 equity shares of C 1/- each.
13. Disclosure Relating to Remuneration of Directors and Key Managerial Personnel (KMP)
The Company believes that building a diverse and inclusive culture is integral to itssuccess. A diverse Board will be able to leverage different skills qualificationsprofessional experiences perspectives and backgrounds which is necessary for achievingsustainable and balanced development. The Nomination and Remuneration Policy adopted bythe Board sets out the criteria for determining qualifications positive attributes andindependence while evaluating a person for appointment / reappointment as Director or asKMP with no discrimination on the grounds of gender race or ethnicity nationality orcountry of origin and to also determine the framework for remuneration of Directors KMPSenior Management Personnel and other employees. The detailed Nomination and RemunerationPolicy is available on the website of the Company at the link www.relaxofootwear.com/pdf/Nomination--and--remuneration--policv.pdf.
14. Particulars of Employees
The information and disclosure required under Section 197(12) of the Act read with Rule5(1) 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 (including any statutory modification(s) or re-enactment(s) thereof for thetime being in force) in respect of Directors and Employees of your Company is set out inAnnexure - B to this report.
15. Directors and Key Managerial Personnel
Pursuant to the section 152(6) of the Act read with the Articles of Association of theCompany Mr. Deval Ganguly Whole Time Director (DIN: 00152585) will retire by rotation atthe ensuing AGM and being eligible offered himself for re-appointment. The Boardrecommends his re-appointment.
The Board of Directors in its Meeting held on June 6 2020 on the recommendation ofNomination and Remuneration Committee approved the re-appointment of Mr. Nikhil Dua (DIN:00157919) as a Whole Time Director of the Company (liable to retire by rotation) for aperiod of three years with effect from October 1 2020 on such remuneration and terms andconditions as provided in the Notice convening the AGM. The Board recommends hisre-appointment.
A brief resume of the Directors proposed to be reappointed the nature of theirexpertise in specific functional areas names of companies in which they holdDirectorships committee membership/s / chairmanship/s shareholding etc. as stipulatedunder Secretarial Standard-2 and Regulation 36(3) of the Listing Regulations is appendedas an Annexure to the Notice of the ensuing AGM.
The Shareholders in its 35th AGM held on September 26 2019 has approved the followingappointment / reappointment:
a) Ms. Deepa Verma (DIN-06944281) was re-appointed as a Non-Executive and IndependentDirector of the Company for the second term w.e.f. September 18 2019 for a period of 5(five) consecutive years.
b) Mr. Rajeev Rupendra Bhadauria (DIN-00376562) was appointed as a Non-Executive andIndependent Director of the company for a first term w.e.f. August 23 2019 for a periodof 5 (five) consecutive years.
As on March 31 2020 Mr. Ramesh Kumar Dua (DIN- 00157872) Managing Director Mr.Mukand Lal Dua (DIN-00157898) Whole Time Director Mr. Nikhil Dua
(DIN-00157919) Whole Time Director Mr. Deval Ganguly (DIN-00152585) Whole TimeDirector Mr. Sushil Batra Chief Financial Officer and Mr. Vikas Kumar Tak CompanySecretary are the Key Managerial Personnel (KMP) of your Company.
16. Declaration by Independent Directors
The Company has received necessary declarations from all the Independent Directors ofthe Company confirming that they meet the criteria of Independence as prescribed underSection 149(6) of the Act Regulation 25 (8) of Listing Regulations and they haveregistered themselves with the Independent Directors' databank as required under sub-rule(1) and sub-rule (2) of Rule 6 of Companies (Appointment and Qualification of Directors)Rules 2014. The Independent Directors have also confirmed that they have complied withthe Company's code of conduct for Independent Directors prescribed in Schedule IV to theAct.
17. Statement regarding opinion of the Board with regard to integrity expertise andexperience (including the proficiency) of the Independent Directors appointed during theyear
This is the new disclosure introduced by the Ministry of Corporate Affairs effectivefrom December 1 2019. The Company has not appointed any Independent Director betweenDecember 1 2019 to March 31 2020. However the Board of Directors reviewed thedeclarations as mentioned in the point no 16 and have positive outlook towards theintegrity and expertise of the Independent Directors. The Independent Directors are yet toappear for the online proficiency self-assessment test and hence the opinion on theaforesaid would be provided in the next year's annual report.
18. Annual Evaluation
In terms of the provisions of the Act read with Rules issued thereunder and ListingRegulations the Board of Directors on recommendation of the Nomination and RemunerationCommittee have evaluated the effectiveness of the Board / Director(s) for the FinancialYear 2019-20. Directors were evaluated on their contribution at Board / Committee meetingsand guidance & support to the management outside Board / Committee meetings. TheDirectors had used the parameters recommended by the renowned consultants for theperformance evaluation of Board Individual Directors and Committees of Board.
The Board's functioning was evaluated on various aspects including inter alia degreeof fulfillment of
key responsibilities Board structure and composition role and accountabilitymanagement oversight risk management culture and communication frequency andeffectiveness of meetings.
The Committees of the Board were assessed on the basis of degree of fulfillment of keyresponsibilities adequacy of committee composition and effectiveness of meetings. TheCompany does not have a regular Chairman however the Chairman appointed for the Boardmeetings was also evaluated by all the Directors on the basis of managing relationsleadership competence and diligence.
The performance evaluation of Independent Directors was carried out by the entireBoard excluding the Director being evaluated. The performance evaluation of the Chairmanappointed for the Board meeting and the NonIndependent Directors was carried out by theIndependent Directors who also reviewed the performance of the Board as a whole. The Boardof Directors expressed their satisfaction with the evaluation process.
19. Familiarization Programme
In terms of Regulation 25(7) of the Listing Regulations the Company familiarizes itsDirectors about their role and responsibilities at the time of their appointment through aformal letter of appointment. The format of the letter of appointment / re-appointment isavailable on our website at the link www.relaxofootwear.com/ terms-conditions.aspx.
Presentations are regularly made at the meetings of the Board and its variousCommittees on the relevant subjects such as strategy operations plants productsorganization structure finance human resource capital expenditure CSR Compliancesetc. All efforts are made to keep Independent Directors aware of major developments takingplace in the industry the Company's business model and relevant changes in the lawgoverning the subject matter. The details of the programs conducted for familiarization ofIndependent Directors can be accessed on the Company website at the linkwww.relaxofootwear.com/other-disclosure.aspx
20. Number of Meetings of the Board
During the Financial Year 2019-20 the Board of Directors met six (6) times on May 102019 June 28 2019 August 3 2019 November 2 2019 February 1 2020 and February 272020 the details of which are provided in the Report on Corporate Governance which formspart of this Annual Report. The intervening period between any two consecutive boardmeetings were within the maximum
time gap prescribed under the Act Regulation 17 of the Listing Regulations and SS-1.
21. Committees of the Board
During the Financial Year 2019-2020 the Board had five (5) committees namely theAudit Committee the Nomination and Remuneration Committee the Stakeholders' RelationshipCommittee the Risk Management Committee and the Corporate Social ResponsibilityCommittee.
All the recommendations made by the Committee of the Board including the AuditCommittee were accepted by the Board. A detailed update on the Board its compositiondetailed charter including terms and reference of various Board Committees number ofBoard and Committee meetings held during the Financial Year 2019-20 and attendance of theDirectors at each meeting is provided in the report on Corporate Governance which formspart of this Report.
22. Director's Responsibility Statement
Pursuant to Section 134(3)(c) and 134(5) of the Act the Directors to the best of theirknowledge and belief confirm that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with the proper explanation relating to material departures;
b) they had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the Financial Year and of theprofit of the Company for that period;
c) they had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
d) they had prepared the annual accounts on a going concern basis;
e) they had laid down Internal Financial Controls to be followed by the Company andthat such Internal Financial Controls are adequate and were operating effectively; and
f) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
23. Statutory Auditors
M/s B R Maheswari & Co. LLP Chartered Accountants (ICAI Firm Registration No.-001035N/N500050) were appointed as the Statutory Auditors of the Company for a period offive (5) years from the conclusion of 33 rd AGM till the conclusion of 38 th AGM.
24. Auditors' Report
The Board has duly examined the Statutory Auditors' Report to the accounts which isself-explanatory. The Auditor's Report for the Financial Year ended March 31 2020 doesnot contain any qualification reservation or adverse remarks. The observation of theAuditors on the financial statements have been suitably explained in the Notes to Accountsand do not require any further clarification.
25. Details in respect of frauds reported by auditors under section 143(12) other thanthose which are reportable to the Central Government
During the Financial Year under review no fraud is reported by the auditors of theCompany under Section 143(12) of the Act.
26. Maintenance of Cost Records and Cost Audit
The Company is not falling under the category prescribed under sub-section (1) ofSection 148 of the Act and Rules 3 4 of the Companies (Cost Records and Audit) Rules2014 (as amended from time to time) to whom the requirements of maintenance of CostRecords and the requirement of Cost Audit is applicable.
27. Internal Auditor
Pursuant to the provisions of Section 138 of the Act the Company has re-appointedDeloitte Haskins & Sells LLP as an Internal Auditor of the company for FY 2020-21 inco-sourcing model along with in-house internal auditor.
28. Secretarial Auditor
Pursuant to the provisions of Section 204(1) of the Act read with Rule 9 of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 (including anystatutory modification(s) or re- enactment(s) thereof for the time being in force) andRegulation 24A of the Listing Regulations the Board had appointed M/s Vivek AroraPracticing Company Secretaries (Membership No. A12222 C.P No. 8255) to conduct theSecretarial Audit of the Company for the Financial Year 2019-20. The Secretarial Auditorshave submitted their report confirming compliance by the Company of all the provisions ofapplicable corporate
laws except delay in appointment of Independent Director within time frame. TheSecretarial Audit Report for the Financial Year 2019-20 is annexed as Annexure-C whichforms part of this report.
The management confirmed that the position of Independent Director is of immense valuefor the Company and delay was due to finding a suitable and appropriate candidate for suchposition which was also communicated to the stock exchanges after paying due amount forthe delay in appointment.
29. Annual Return
Pursuant to Section 134 and Section 92 of the Act read with Rule 12 (1) of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return ason March 31 2020 in Form No. MGT-9 is attached herewith as Annexure-D which forms part ofthis Report and is also made available at the website of the Company at the linkhttps://www.relaxofootwear. com/other-disclosure.aspx
30. Contracts and Arrangements with Related Parties
During the Financial Year 2019-20 the Company has entered into various transactionswith related parties. All the Contracts / arrangements / transactions entered into by theCompany with its related parties during the Financial Year were in the ordinary course ofthe business and on the arm's length basis and were undertaken in compliance with theapplicable provisions of the Act and the Listing Regulations.
During the year the Company had not entered into any contract / arrangement /transaction with related parties which could be considered material in accordance with thepolicy of the Company on materiality of Related Party Transactions that would haverequired Shareholders' approval under Regulation 23 of the Listing Regulations.
The policy on materiality of Related Party Transactions is available on the website ofthe Company at the link - www.relaxofootwear.com/pdf/Policv-on-materialitv-of-Related-Partv-Transactions.pdf.
The particulars of the material related party transactions are provided in Form AOC-2as Annexure-E which forms part of this Report. Further the name of related parties anddetails of transactions with them have been included in note 40 of the financialstatements for the year ended March 31 2020.
31. Details of Loans Guarantees & Investments
The details of loans guarantees and investments under Section 186 of the Act read withCompanies (Meeting of Board and its Powers) Rules 2014 (including any statutorymodification(s) or re-enactment(s) thereof for the time being in force) are as follows:-
a) Details of investments made by the Company as on March 31 2020 (includinginvestments made in previous years)
(i) Investment in equity shares : C 20.00 Lacs
(ii) Investment in debt instruments : Nil
b) Details of loans given by the Company : Nil
c) There are no guarantees issued by your Company in accordance with Section 186 of theAct read with the Rules issued thereunder.
The details of Investments made under Section 186 of the Act are also provided in theNote 4 forming part of the financial statements of FY 2019-20.
32. Risk Management
Your Company recognizes that risk is an integral part of business and is committed tomanaging the risks in a proactive and efficient manner. Your Company has set up a RiskManagement Committee. The Risk Management Committee shall evaluate significant riskexposures including risks related to cyber security of the Company and assess management'sactions to mitigate the exposures in a timely manner. During the year under review yourCompany has also constituted Steering Committee to monitor the risks pertaining to theCompany and structure the risk management activities of the Company on regular basis. TheBoard of Directors on recommendations of Risk Management Committee has adopted a RiskManagement Policy for the Company to lay down the procedure to inform the Board membersabout the risk assessment and mitigation of risks. The policy ensures effective riskmanagement systems to carry out risk assessment and also to document risk mitigationplans. In addition all the key risks get continuously deliberated and discussed duringbusiness review meetings. Your Company has taken many initiatives to further strengthenthe Governance Risk & Compliance (GRC) framework at Relaxo which includes automationof compliance monitoring litigation management and documentation of Delegation ofAuthority (Operational / Financial).
The Company has been taking necessary steps to mitigate foreseeable business risks. TheCompany has laid down procedures to inform the Risk Management Committee Audit Committeeand Board of Directors about risk assessment & management procedures and status.Business risk evaluation and management is an ongoing and continuous process within theCompany.
The impact of nationwide lockdown due to COVID 19 Pandemic and actions taken by Companyhave been explained in the Management Discussion and Analysis Report.
The details pertaining to the composition meetings and terms of reference of thecommittee are included in the Report on Corporate Governance which forms part of thisAnnual Report.
33. Corporate Social Responsibility (CSR) and its Committee
Your Company has firm belief and commitment towards the collective development of allthe stakeholders especially people at bottom of the pyramid and consider it asprerequisite for the sustainability of the business. Thus CSR is not just compliance forthe Company but is an opportunity to contribute towards nation building throughwell-defined professional approach.
In compliance with the provisions prescribed under Section 135 of the Act your Companyconstituted a CSR Committee. The Board of Directors laid down the CSR Policy covering theobjectives focus areas governance structure and monitoring & reporting frameworkamong others. The policy is available on the website of the Company at the linkwww.relaxofootwear.com/pdf/ Corporate--Social--Responsibilitv--Policv.pdf.
Your Company has formed a special purpose vehicle Relaxo Foundation a Society underSocieties Registration Act 1860 to carry out its social initiatives.
Your Company has decided to work under two thrust areas Education & Skilldevelopment' and Health & Hygiene primarily with the underprivilegedcommunities living in the vicinity of Relaxo manufacturing unit locations. However beingone of the most popular household brand Relaxo' has presence across Indiatherefore your Company intends to work beyond these geographical boundaries.
During the Financial Year 2019-20 the Company has implemented total eight (8) CSRprojects in five (5)
geographical locations of four (4) States viz. Delhi Haryana Rajasthan andUttarakhand impacting lives of ~ 100000 people.
The details pertaining to the composition meetings and terms of reference of the CSRCommittee are included in the Report on Corporate Governance which forms part of thisAnnual Report.
Key initiatives under each thematic area and the report on CSR under section 135 of theAct is annexed as Annexure-F to this Report.
34. Composition of Audit Committee
In compliance with the provisions of Section 177 of the Act and Regulation 18 of theListing Regulations the Board of Directors of the Company had constituted the AuditCommittee. The details pertaining to the composition meetings and terms of reference ofthe Committee are included in the Report on Corporate Governance which forms part of thisAnnual Report.
35. Vigil Mechanism
The Company as required under Section 177 (9) of the Act and Regulation 22 of theListing Regulations has established Vigil Mechanism/ Whistle Blower Policy for Directorsand the employees of the Company.
This Policy has been established with a view to provide a tool to Directors andemployees of the Company to report to the management on the genuine concerns includingunethical behavior actual or suspected fraud or violation of the Code or the Policy. ThisPolicy outlines the procedures for reporting handling investigating and deciding on thecourse of action to be taken in case inappropriate conduct is noticed or suspected.
This Policy also provides for adequate safeguards against victimization ofdirector(s)/employee(s) who avail the mechanism and also provides for direct access to theChairman of the Audit Committee in exceptional cases. The Audit Committee is authorized tooversee the Vigil Mechanism/ Whistle Blower Policy in the Company. The Company hasreceived two complaints during the year and one complaint is pending at the end of theyear which could not be resolved mainly due to nationwide lockdown. Your Company herebyaffirms that no person of the Company has been denied access to the Audit Committee.
The policy is available on the website of the Company at the linkhttp://www.relaxofootwear.com/pdf/Vigil--- Mechanism---Policy.pd .
36. Business Responsibility Report
As stipulated under Regulation 34(2)(f) of the Listing Regulations the BusinessResponsibility Report describing the initiatives taken by the Company for environmentalsocial and governance perspective forms an integral part of this Annual Report.
37. Disclosure Under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 (SHWWP Act)
The Company is an equal employment opportunity employer and is committed to provide asafe and conducive work environment that enables women employees to work without fear ofprejudice gender bias and sexual harassment.
The Company believes that all women employees of the Company have the right to betreated with dignity and as per the Company's compliance framework. Harassment of any kindincluding sexual harassment is forbidden. The Company has Zero Tolerance' approachtowards any act of sexual harassment.
As required under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 the Company has a Policy on Prevention of sexual harassment ofwomen at workplace and matters connected therewith and has also complied with theprovisions relating to the Constitution of Internal Complaint Committee (ICC).
An Internal Complaint Committee (ICC) is available at each of the units and offices ofthe Company as per the requirements of the law. The ICC is responsible for redressal ofcomplaints related to sexual harassment as well as to create a preventive environmentacross the organization. The Company also conducts sensitization/ awareness sessions andquarterly meetings on a regular basis so as to create a free and fair working environment.
No complaint was received during FY 2019-20. However Internal Committee had receivedone complaint during FY 2018-19 which was pending on March 31 2019 and was disposed offeffectively as per provisions of the SHWWP Act during FY 2019-20.
It is our constant endeavor to ensure that we provide harassment free safe and secureworking environment to all employees especially women.
38. Significant and Material Litigations / Orders
During the year under review there were no significant and material orders passed bythe regulators or courts or tribunals impacting the going concern status and Company'soperations in future.
39. Capital Market Ratings
During the Financial Year 2019-20 ICRA has reaffirmed long term rating of the Companyat [ICRA] AA (pronounced as ICRA Double A) with Stable outlook.
Additionally ICRA has reaffirmed short term rating of the Company at [ICRA] A1+(pronounced as ICRA A one plus) which is the highest rating for the category. ICRA hasalso reaffirmed [ICRA] A1+ (pronounced as ICRA A one plus) top notch rating to the Companyfor Commercial Paper of C 50.00 Crore.
40. Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
The details relating to conservation of energy technology absorption foreign exchangeearnings and outgo as required under Section 134(3) of the Act read with Rule 8 of theCompanies (Accounts) Rules 2014 is annexed as Annexure-G which forms part of thisReport.
41. Employees Stock Option Plan
Presently the Company has one Employee Stock Option Plan 2014 ("RFL ESOPPLAN-2014"). This plan helps to attract and retain talented employees in the Companyand boost their morale. The Nomination and Remuneration Committee administers and monitorsthe Company's ESOP Plan.
During the Financial Year 2019-20 144690 options were exercised by the employees ofthe Company. Accordingly the Company has on November 2 2019 made allotment of 144690equity shares against the options exercised by the employees.
Your Company during the year had issued Bonus shares in the ratio of 1:1 pursuant tothe resolution passed by the members through Postal Ballot on June 14 2019. Accordingly1379760 additional options were adjusted due to bonus issue and the total optionsavailable under the scheme are 3179940. The grant price of various grants made under thescheme was also adjusted accordingly. Further it is confirmed that the ESOP Scheme of theCompany is in compliance with SEBI (Share Based Employee Benefits) Regulations 2014.
Pursuant to the provisions of SEBI (Share Based Employee Benefits) Regulations 2014(the ESOP Regulations) a disclosure with respect to ESOP Scheme of the Company as onMarch 31 2020 is available on the website of the Company at the linkwww.relaxofootwear.com/other- disclosure.aspx.
A certificate from M/s B R Maheswari & Co. LLP Chartered Accountants StatutoryAuditors of the Company with respect to the implementation of the Company's ESOP Planwould be made available to the members at the ensuing AGM. A copy of the same will also beavailable for inspection at the registered office of the Company.
The details as per the requirements of SEBI Guidelines are annexed as Annexure-H whichforms part of this Report.
42. Material Changes and Commitments
There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the Financial Year ended on March 31 2020of the Company and as on the date of this Report.
However in the wake of the Coronavirus (COVID-19) pandemic outbreak across the globeyour Company has been taking various precautionary measures to ensure safety and health ofall our employees. In view of the lockdown across the country the operations of almostall our locations manufacturing locations etc. were disrupted in the lockdown period inMarch 2020. The exact financial impact of the above is not ascertainable. The Companywill continue to closely monitor the situation and take appropriate action as perregulatory guidance.
43. Internal Financial Controls
The Company has in place well defined and adequate Internal Financial Control frameworkwhich is independently evaluated by external agency apart from periodic evaluation byin-house Internal Audit function for necessary improvement wherever required. The Companydeploys a robust system of internal controls that facilitates the accurate and timelycompilation of financial statements and management reports ensures regulatory andstatutory compliance and safeguards investor interest by ensuring the highest level ofgovernance. The control system ensures that all assets are safeguarded and protected andthat the transactions are authorized recorded & reported correctly and timely. Properand sufficient care have been taken for preventing and detecting fraud and otherirregularities. The Managing Director and CFO Certificate included in the CorporateGovernance Report confirms the existence
of effective internal control systems and procedures in the Company. The AuditCommittee reviews the effectiveness of the internal financial control framework in theCompany.
44. Managing Director and CFO Certification
The Certificate required under Regulation 17(8) of the Listing Regulations duly signedby the Managing Director and CFO was placed before the Board. The same is annexed withCorporate Governance Report which forms part of this Annual Report.
Declaration by Managing Director under Regulation 34(3) read with Schedule V of theListing Regulations in respect of compliance with the Company's Code of Conduct isenclosed with this Annual Report.
45. Transfer of Unclaimed Shares / Dividend
As per the provisions of Regulation 39(4) of the Listing Regulations the unclaimedshares lying in the possession of the Company are required to be dematerialized andtransferred into a special demat account held by the Company. Accordingly unclaimedshares lying with the Company have been transferred and dematerialized in anUnclaimed Suspense Account' of the Company. This account is being held by theCompany purely on behalf of the shareholders entitled for these equity shares.
The summary of Unclaimed Suspense Account' during the year is given hereunder:
|S. No. ||Particulars ||No. of Shareholders ||No. of equity shares held |
|1 ||Aggregate number of shareholders and the outstanding shares lying in the suspense account as on April 1 2019 ||26 ||38085 |
|2 ||Number of shareholders along with shares transferred to suspense account during the year due to Bonus issue on June 28 2019 ||26* ||38085* |
|3 ||Number of shareholders who approached the Company for shares and to whom shares were transferred from the suspense account during the year || || |
|4. ||Transfer of shares to IEPF Account ||12** ||12045 |
|5. ||Aggregate number of shareholders and the outstanding shares lying in the suspense account as on March 31 2020 ||26 ||64125 |
*Due to the bonus issue in the ratio 1:1 during the year the shares of eachshareholder holding shares in suspense account were doubled. Thus the total number ofshareholders remained unchanged and holding in the unclaimed suspense account increased by38085 equity shares.
**Only 12045 equity shares (part of the holding) for 12 shareholders for whomdividend was unpaid for more than seven years were transferred to IEPF account from theunclaimed suspense account.
The voting rights on the equity share(s) in the suspense account shall remain frozentill the rightful owners of such equity share(s) claim the equity share(s). Any corporatebenefits in terms of securities accruing on such equity shares viz. bonus shares splitetc. shall also be credited to such demat suspense account or unclaimed suspense accountas applicable in accordance with existing provisions.
During the year the Company transferred unclaimed dividend amounting to C 89068/-from the Final Dividend for the year 2011-12 to the Investor's Education and ProtectionFund (IEPF). The Company has also uploaded the details of unpaid and unclaimed amountslying with the Company as on September 26 2019 (date of last Annual General Meeting) onthe website of the Company at the link www.relaxofootwear.com/unpaid- dividend-data.aspx.
Pursuant to the provisions of Section 124 and 125 of the Act read with the InvestorEducation and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules2016 as amended the shares on which dividend remains unpaid / unclaimed for sevenconsecutive years or more shall be transferred to the Investor's Education and ProtectionFund (IEPF). Accordingly during the FY 2019-20 the Company transferred 12675 equityshares to demat account with IEPF for which dividend was unpaid / unclaimed for sevenconsecutive years as per the Investor Education and Protection Fund Authority (AccountingAudit Transfer and Refund) Rules 2016. Also pursuant to bonus equity shares issued onJune 28 2019 152475 equity shares were transferred directly to demat account with IEPFfor those shareholders whose shares were already transferred to IEPF authority.
The shareholders whose unpaid dividend / shares are transferred to the IEPF can requestthe Company / Registrar and Transfer Agent as per the applicable provisions in theprescribed form for claiming the unpaid dividend / shares from IEPF. The rules and onlineapplication form (Form IEPF - 5) as prescribed by the Ministry for claiming back theshares/ dividends are available on the website of MCA at www.iepf.gov.in. Mr. Vikas KumarTak Company Secretary and Compliance Officer has been appointed as the Nodal Officer and
Ms. Jyoti Upadhyay Assistant Company Secretary is appointed as Deputy Nodal officer ofthe Company under the provisions of IEPF. The contact details of nodal officer isavailable on the website of the Company at the linkwww.relaxofootwear.com/Investor-Support.aspx.
46. Corporate Governance
The Company is committed to maintain the highest standard of Corporate Governance andadhere to the Corporate Governance requirements set out by SEBI. A detailed report onCorporate Governance pursuant to the requirements of Regulation 34 of the ListingRegulations forms part of this Annual Report.
A certificate from M/s B R Maheswari & Co. LLP Chartered Accountants (ICAI FirmRegistration No. -001035N / N500050) Statutory Auditors of the Company confirming thecompliance of the Company with the conditions of Corporate Governance as stipulated underthe Listing Regulations is attached to the Report of Corporate Governance as Annexure-I.
47. Details of Non-Compliance with Regard to Capital Markets During the Last ThreeYears
There have been no instances of non-compliances by the Company with regard to CapitalMarkets during the last three years.
The Company affirms that the annual listing fees for the Financial Year 2020-21 toNational Stock Exchange of India Ltd. and BSE Ltd. is duly paid.
We take this opportunity to thank the employees for their dedicated service andcontribution to the Company.
We would like to thank all our clients partners vendors investors bankers and otherbusiness associates for their continued support and encouragement during the year.
For and on behalf of the Board of Directors
| ||Ramesh Kumar Dua ||Mukand Lal Dua |
|Delhi ||Managing Director ||Whole Time Director |
|June 6 2020 ||DIN: 00157872 ||DIN: 00157898 |