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Royal Cushion Vinyl Products Ltd.

BSE: 526193 Sector: Industrials
NSE: ROYALCUSHN ISIN Code: INE618A01011
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VOLUME 700
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Royal Cushion Vinyl Products Ltd. (ROYALCUSHN) - Director Report

Company director report

To

The Members of Royal Cushion Vinyl Products Limited

Your Directors have pleasure in presenting the 33rd Annual Report together with AuditedAccounts of the Company for the year ended 31st March 2017.

1) Financial Results

(Rs. In Lakhs)

Particulars Current year ended 31.03.2017 Previous year Ended 31.03.2016
Revenue from operations (Net) 6621.45 7475.34
Other Income 1197.80 17.76
Total Income 7819.24 7493.10
Total Expenditure 7525.36 7577.50
Profit / (loss) before interest and depreciation 293.88 (84.40)
Finance Cost 454.08 417.04
Depreciation 132.45 138.31
Prior year's expenses 3.74 1.16
Profit/(Loss) before Exceptional item (296.37) (640.91)
Exceptional item Nil Nil
Profit/(Loss) for the year (296.37) (640.91)

2) Performance of operations and the state of Company's Affairs

The Company has achieved turnover of Rs. 6621.45 Lakhs as against Rs.7475.34 Lakhs inthe previous year. The Company incurred a Net Loss of Rs.296.37Lakhs as compared toprevious year's Net Loss of Rs.640.91 Lakhs. The performance for the current year isimpacted due to demonetization during the month of November2017 and December 2017.

3) Dividend

In view of losses the Board of Directors is unable to declare any dividend for theyear 2016-2017.

4) Status With BIFR/NCLT

The Company was registered as a sick company under the provisions of the SickIndustrial Companies (Special Provisions) Act 1985. The Company had submitted the revisedDraft Rehabilitation Scheme ("DRS") containing proposals for revival of theCompany with the erstwhile Hon'ble Board for Industrial and Financial Reconstruction("BIFR"). The Hon'ble BIFR had circulated the revised DRS for consideration ofthe concerned parties and other related proceedings were pending before the Hon'ble BIFRat an advanced stage of final approval. However in the meantime the Government of Indianotified certain provisions of the Insolvency and Bankruptcy Code 2016 ("IBC")w.e.f. December 1 2016 which had the effect of abatement of the pending proceedings ofthe Company before the Hon'ble BIFR. Now the said proceedings will be governed by theprovisions of the newly notified IBC laws. The Company has filed an application beforeNCLT Mumbai under IBC law on 29.05.2017.

5) Management Discussion and Analysis Report

Management Discussion and Analysis Report as required under Listing Agreement and LODRRegulations is disclosed separately in the current Annual Report.

6) Fixed Deposits :

During the year under review your Company has not accepted any deposits within themeaning of provisions of Chapter V - Acceptance of Deposits by Companies of the CompaniesAct 2013 read with the Companies (Acceptance of Deposits) Rules 2014 as amended fromtime to time.

7) Corporate Social Responsibility

The Companies Act 2013 mandates that every Company who meet certain eligibilitycriteria needs to spend atleast 2% of its average net profit for the immediately precedingthree financial years on Corporate Social Responsibility activities. In view of lossesstatutorily no amount is required to be spent by the Company.

8) Energy Technology & Foreign Exchange

Pursuant to Section 134(3)(m) of the Companies Act 2013 read with the Companies(Accounts) Rules 2014 information on conservation of energy technology absorptionforeign exchange earnings and outgo is given in the Annexure - 'A' to this report.

9) Personnel

Employee relations remained harmonious and satisfactory during the year and your Boardwould like to place on record their sincere appreciation for sustained efforts and valuedcontribution made by all the employees of the Company.

10) Particulars of Loans Guarantees and Investments under section 186

Details of Loans Guarantees and Investments are given in the Notes to FinancialStatements.

11) Related Party Transactions

All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the company at large.

12) Disclosure under Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014

The information required pursuant to section 197 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company and Directors is attached as Annexure "B".

13) Particulars of Employees

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.

14) Directors

Mr. Arvind V. Motasha (DIN No. - 00228368) and Mr. Mukesh A. Motasha (DIN No. -00059929) Directors of the Company retire by rotation at the ensuing Annual GeneralMeeting and being eligible offer themselves for reappointment. Your Directors recommendtheir reappointment. (Details are furnished under Notice).

The Company was registered as a sick company under the provisions of the SickIndustrial Companies (Special Provisions) Act 1985. The Government of India notifiedcertain provisions of the Insolvency and Bankruptcy Code 2016 ("IBC") w.e.f.December 1 2016 which had the effect of abatement of the pending proceedings of theCompany before the Hon'ble BIFR. Now the said proceedings will be governed by theprovisions of the newly notified IBC laws. The Company has filed an application beforeNCLT Mumbai under IBC law on 29.05.2017. Due to this the management was unable to attractand induct any Independent Director. Hence no statement on declaration of independence wasreceived by the Company.

15) Key Managerial Personnel

The Company has Mr. Mahesh Shah Chairman & Managing Director and Mr. JayeshMotasha Director and Chief Financial Officer (CFO) as Key Managerial Personnel and theCompany has published advertisement for appointing Company Secretary to comply with theprovision of Section 203 of the Companies Act 2013however the Company unable to get theright candidate for the post of Company Secretary.

16) Directors' Responsibility Statement

Pursuant to the requirement under Section 134 (3) c of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed:

a) that in the preparation of the Annual Accounts for the financial year ended 31stMarch 2017 the applicable accounting standards/practices had been followed along withproper explanation relating to material departures; if any

b) that 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 loss of the Company for that period;

c) that the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;

d) The annual financial statements have been prepared on a going concern basis.

e) that 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) that the Directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

17) Material changes and commitments affecting the financial position of the Companywhich have occurred between March 31 2017 and August 22 2017 (date of this Report).

During the period between the end of financial year (March 31 2017) and the date ofthis report (August 22 2017) the Manufacturing and Supply Agreement between the Companyand Natroyal Industries Private Limited ("Natroyal") was terminated w.e.f. 10thJuly 2017. Subsequent to which the Company has to repay the outstanding amount ofNatroyal within 5 days from the date of termination of Agreement. The Company was not in aposition to repay the outstanding amount within the stipulated period as per Agreementhence the Company need to create security for the amount payable in favour of Natroyal byway of creating a second charge on the assets of the Company for which necessaryresolution proposed in the Notice for ensuing Annual General meeting. The said securityshall subsist till the entire amount payable to Natroyal has been paid along with interestthereon at 18% per annum.

18) Details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.

The Company was registered as a sick company under the provisions of the SickIndustrial Companies (Special Provisions) Act 1985 and the proceedings were pendingbefore the Hon'ble Board for Industrial and Financial Reconstruction ("BIFR").The Last hearing at BIFR was held on November 22 2016. Thereafter the Government ofIndia has notified certain provisions of the Insolvency and Bankruptcy Code 2016("IBC") w.e.f. December 1 2016 which had the effect of abatement of the pendingproceedings of the Company before the Hon'ble BIFR. Now the said proceedings will begoverned by the provisions of the newly notified IBC laws. The Company has filed anapplication before NCLT Mumbai under IBC law on 29.05.2017. However there are nomaterial orders passed by the regulators or courts or tribunals impacting the goingconcern status and Company's operations in future.

19) Details of Subsidiaries/Joint venture/Associate Company;

The Company has no subsidiaries/Joint venture/Associate Company incorporated or ceasedin the year 201617.

20) Internal financial control

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year such controls were tested and no reportablematerial weakness in the design or operation were observed.

21) Auditors' Remarks & Appointment

As per the provisions of section 139 of the Companies Act 2013 M/s. Chandrakant& Sevantilal & J. K. Shah & Co. Chartered Accountants Vadodara (FirmRegistration no. 101676W) the Statutory Auditors of the Company will retireat the ensuing Annual General Meeting.

The Board of Directors places on record its appreciation for the services rendered by M/s.Chandrakant & Sevantilal & J. K. Shah & Co. Chartered Accountants as theStatutory Auditors of the Company.

The Board of Directors of the Company on the recommendation of the Audit Committee hasrecommended the appointment of M/s. Bipin & Co Chartered Accountants Vadodara (FirmRegistration no. 101509W) of the Company w.e.f. the date of the 33rdAGM upto the AnnualGeneral Meeting to be held in the year 2022. The Company has received letter from them tothe effect that their appointment if made would be within prescribed limits underSection 141(3)(g) of the Companies Act 2013 and that they are not disqualified forappointment. The members are requested to appoint the auditors and authorize the Board tofix their remuneration.

Auditors Report:

The notes forming parts of the accounts referred in the Auditors Report are selfexplanatory and give complete information.

22) Cost Auditors

In terms of the Companies (Cost Records and Audit) Rules 2014 read with the Companies(Cost Records and Audit) Amendment Rules 2014 the Company has maintained cost recordsfor financial year 2016-17 in respect of its polymers products. However in terms of thesaid Rules the requirement of cost audit is not applicable to the Company for thefinancial year 2016-17 as the turnover of the Company from these services is below thethreshold limit prescribed in the said Rules for cost audit.

23) Secretarial Auditor and Auditor Remarks:

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Board hasappointed Mr. Gaurang Shah of M/s. GMS and Co. Practicing Company Secretaries(Membershipno. 32581 Certificate of Practice No. 11953 ) to conduct Secretarial Audit of the Companyfor the financial year 2016-2017.

The Secretarial Auditors has following remarks:-

It is observed that as per Section 203 of Companies Act 2013 read with Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 necessitated thatevery listed company should have a mandatorily Company Secretary in whole time employmentbut company has not complied till date and Company is in process of appointing a CompanySecretary.

As Company has given advertisement in the newspapers for the post of Company Secretarybut could not able to find a suitable candidate for the post of Company Secretary.

It is observed that as per section 149 (5) of the Companies Act2013 & as perRegulation 36 (3) of SEBI LODR necessitated that every listed company has to mandatorilyhave appoint on board independent director but company has not complied till date.

As the Company was under BIFR (Sick Company) As the Company was under BIFR (SickCompany) and the Government of India notified certain provisions of the Insolvency andBankruptcy Code 2016 ("IBC") w.e.f. December 1 2016 which had the effect ofabatement of the pending proceedings of the Company before the Hon'ble BIFR. Now the saidproceedings will be governed by the provisions of the newly notified IBC laws. The Companyhas filed an application before NCLT Mumbai under IBC law on 29.05.2017. Due to this themanagement was unable to attract and induct any Independent Director. the management wasunable to attract and induct Professional and Independent Directors to meet therequirements of Regulation 36(3) of SEBI LODR. This fact has been reported to the BombayStock Exchange from time to time.

It is observed that as per the management representation letter given by the companythat they have already submitted delisting application to Ahmedabad stock exchange andVadodara stock exchange in the year 2006 & the same matter is pending with both theexchanges.The Secretarial Audit Report for the financial year 20162017 is annexed herewithas Annexure "C" which forms part of the Board's report.

24) Listing with Stock Exchange:

The Company confirms that it has paid the Annual Listing Fees for the year 2016-2017 toBSE Limited (BSE) where the Company's Shares are listed.

25) Share Capital:

During the financial year there was no change in the Share Capital of the Company.

26) 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 "D".

27) Remuneration Policy:

The Board of Directors has on recommendations of the Nomination & RemunerationCommittee outlined policy for selection & appointment of Directors Key ManagerialPersonnel & Senior Management and also to decide their remuneration along with theperks. The Nomination & Remuneration Committee revises the remuneration from time totime depending upon the performance of the Company and the Individual Director's/KeyManagerial Personnel and other Senior Management Personnel. The detailed policy isavailable on the website of the Company www.rcvp.in.

28) Board of Directors Meeting:

During the financial year ended 31st March 2017 the Company held four (04) BoardMeetings and the gap between the two meetings of the Board not more than 120 daysas perCompanies Act 2013. The meetings were held on 27th May 2016 10th August 2016 14thNovember 2016 and 06th February 2017. The details of the Board Meetings are provided inthe Corporate Governance Report.

29) Committees of Board

Following are the various Committees formed by Board:

• Audit Committee

• Nomination & Remuneration Committee

• Stakeholders Relationship Committee

The details of the composition of committees its roles and responsibility along withnumber of meetings held are given in the Report of Corporate Governance.

30) Vigil Mechanism

The Company has established a vigil mechanism for its Directors and Employees to reportgenuine concerns relating any violations legal or regulatory requirements or misconduct inthe Company through its Whistle Blower Policy. And also to report concerns of unethicalbehavior actual or suspected fraud or violation of the Company's code of conduct andethics policy incorrect or misrepresentation of any financial statements and reportsthereon.

The protected disclosures will be dealt by the Chairman of the Audit Committee and theChairman should address the same carry out the investigation and take needful action.

The policy on Whistle Blower as approved by the Board of Directors is uploaded oncompany's website i.e. www.rcvp.in.

31) Risk Management Policy:

The Company has laid down procedures to inform the members of the Board about the riskassessment and minimization procedures and the same is reviewed by the Board periodically.

32) 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.

33) Corporate Governance Certificate:

Your Company believes that Corporate Governance is the basis of stakeholdersatisfaction. The Company is committed to maintain the highest standards of CorporateGovernance and adhere to the Governance Requirements as set out by SEBI. Your Company hasobtained a certificate from M/s. Chandrakant & Sevantilal & J. K. Shah & Co..Chartered Accountants Statutory Auditors on compliance with Regulation 34 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 read with Schedule Vof the listing Regulation. The report of Corporate Governance along with certificate fromthe auditors of the Company regarding compliance of conditions of corporate governance isenclosed o this report.

34) Performance Evaluation of Board and Independent Directors.

Pursuant to the applicable provisions of the Companies Act 2013 Listing Agreement andLODR Regulations the Board has carried out the annual performance evaluation. The Boardhas evaluated performance of all the Directors and expressed its satisfaction. Evaluationprocedure covered Board's functioning such as adequacy of the size and composition of theBoard and its Committees to ensure diversity and adequate skills in the best interest ofthe Company as a whole. The Company was registered as a sick company under the provisionsof the Sick Industrial Companies (Special Provisions) Act 1985. The Government of Indianotified certain provisions of the Insolvency and Bankruptcy Code 2016 ("IBC")w.e.f. December 1 2016 which had the effect of abatement of the pending proceedings ofthe Company before the Hon'ble BIFR. Now the said proceedings will be governed by theprovisions of the newly notified IBC laws. The Company has filed an application beforeNCLT Mumbai under IBC law on 29.05.2017. Due to this the management was unable to attractand induct any Independent Director. the management was unable to attract and inductProfessional and Independent Directors to meet the requirements of the Listing agreementand LODR Regulations. So there is only evaluation of Board and not Independent Directors.

35) Familiarisation Programme for Directors

A well informed familiarised Board member can contribute significantly to effectivelydischarge its role of trusteeship in a manner that fulfils stakeholders' aspirations andsocietal expectations. In pursuit of this the Directors are updated on a continuing basison changes / developments in the domestic / global corporate and industry scenarioincluding those pertaining to statutes / legislations and economic environment to enablethem to take well informed and timely decisions.

36) Acknowledgement

The Directors wish to place on record their appreciation for the co-operation andsupport received from Financial Institutions Banks BIFR NCLT Customers and otherGovernment agencies. Your Directors place on record their appreciation for the servicesrendered by Employees during the critical period of the Company.

On Behalf of the Board of Directors

For Royal Cushion Vinyl Products Limited

Sd/- Sd/-
Vinod Shah Jayesh A. Motasha
Place: Mumbai Whole Time Director Director& CFO
Date: 22nd August 2017 (DIN 00054667) (DIN 00054236)

ANNEXURE: "A"

PARTICULARS OF ENERGY CONSERVATION TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING ANDOUT GO:

1) CONSERVATION OF ENERGY

a. Energy Conservation Measure Taken:

1. During peak hour to peak off hour some motors switch off.(saving 20-25thousand/month)

2. Installed vfd for boiler ID and FD fan.(saving 10000/month)

3. Some capacitor added to maintain PF 0.99.(saving 5000/month)

4. Some street light and plant tube light replaced by LEDS.(saving approx.2500/month)

2) TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENT: -

R & D Was specially carried out in designing & developed in products thedetails are as below -

A) New Product: -

• Ecoplus as per ECE R 118 for Volvo.

• Mirakle as per GB 18586 (Toxic free product).

• Suprema Aqua Range R 11.

• Royal Tiger

B) Specific areas in which R & D has been carried out by the Company: Various newproducts to meet the international quality standards.

C) Benefits derived as a result of R & D: These products are developed in variousdesigns and colurs.

D) Future Plans

To develop more products for local export market as well as industry.

3) FOREIGN EXCHANGE EARNING AND OUTGO:

Sr. No. Particulars Current year ended on 31.03.2017 Current year ended on 31.03.2016
1 Fob Value of Export Nil Nil
2 Foreign exchange outgo:
Import of Raw material 1531.41 1350.71
Stores & Spares 72.10 19.09
Foreign Travels 15.15 4.31

ANNEXURE: "B"

Details of Ratio of Remuneration of Director

[Section 197(12) read with Rule 5 of Companies (Appointment and Remuneration ofManagerial Personnel)

Rules 2014]

Disclosure under Rule 5(1) of the Companies (Appointment and Remuneration) Rules 2014

I) The ratio of the remuneration of each director to the median remuneration of theemployees of the company and percentage increase in remuneration of Director CFO and CSfor the financial year;

Sr. No Name Designation Remuneration paid for FY 2016-17 Remuneration paid for FY 2015-16 % increase in remuneration in the FY 2016-17 Ratio/ Times per median of employee remuneration
1. Mahesh Shah Chairman & Managing Director 450000 450000 Nil 2.41:1
2. Vinod Shah Whole Time Director 444000 444000 Nil 2.38:1
3. Kavita Bachwani Director 797076 493983 (for 9 months) 21.01% 4.27:1

ii) Percentage increase in median remuneration

Median remuneration of employees in FY 2016-17 in Rs. Median remuneration of employees in F-Y 2015-16 in Rs. Percentage increase/(decrease)
186540 169494 10.06

iii) No. of permanent employees as on 31.03.2017 : 191

iv) Comparision between average percentile increase in salaries of employees (excludingmanagerial personnel) and percentile increase in managerial remuneration.

Average percentile increase in salaries of employees other than managerial personnel in FY 2016-17 Percentile increase in managerial personnel remuneration in FY 2016-17 Justification
4.72% 5.86% -

v) This is to affirm that the above remuneration is paid as per the Remuneration Policyof the Company: - YES

However Rule 5(2) and 5(3) of the section 197 of the Companies Act 2013 is notapplicable.