Your Director's have pleasure in presenting their Twenty - Fourth Annual Report andAudited
Annual Accounts of the Company for the year ended on 31st March 2019.
|FINANCIAL RESULTS: ||(Figures in Rs. Lakhs) |
| ||For the year ||Previous Year |
| ||2018-2019 ||2017-2018 |
|Total Income ||12809.66 ||8632.04 |
|Profit / (Loss) before Depreciation & Tax ||121.30 ||286.65 |
|Less: Depreciation ||11.09 ||12.44 |
|Profit / (Loss) before tax ||110.21 ||274.21 |
|Tax Expenses / (Savings) ||26.67 ||55.91 |
|Profit / (Loss) after tax ||83.54 ||218.30 |
REVIEW OF OPERATIONS
The Company has recorded income from operations of Rs. 12802.43 Lakhs in current yearas compared to Rs. 8626.62 Lakhs achieved during the corresponding period representing agrowth of 67.38 % over the previous year. After offsetting the expenses the Company hasachieved Net Profit (after tax) of Rs. 83.54 Lakhs during the year as against Profit aftertax of Rs. 218.30 Lakhs earned in the previous year.
The year under review was tough due to lower margins which contributed to lowerprofitability. However it is of comfort to note that ultimately the bottom line waspositive.
In order to meet the gap in working capital requirements your Company convertedwarrants issued to the promoters into equity shares on preferential basis pursuant towhich 810000 warrants of Rs. 10/- each where converted into 810000 equity shares ofRs. 10/- each respectively. The paid-up equity share capital of the company was increasedby Rs. 8100000 and consequently the paid-up equity share capital of the company standsat Rs. 69850000.
The directors are confident that the company will be able to achieve higher sales andprofitability in the times to come as investments are made in the new businesses andvarious plans for expansion are gradually getting crystallized.
Considering the need to conserve resources for future expansion and growth and alsolower profits for the year under review no dividend is recommended by the Board.
During the year Mr. Jitendra Shah was appointed as Independent Director w.e.f 12April 2018 and further was resigned w.e.f 25 June 2018.
Subsequent to the year end Mrs. Kalpana Kulkarni was re-designated as the Executive
Director and was appointed as the CFO of the Company w.e.f 1 April 2019.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under section 149(6) of the Act and the Listing Regulations.Based on Disclosures provided by Directors none of them are disqualified from beingappointed as Directors under section 164 of the companies Act 2013.
Mr. Navin Madhavji Mehta retires by rotation and being eligible offers himself forreappointment. The directors recommend his re-appointment.
Pursuant to the provisions of the Companies Act 2013 the Board has carried out anevaluation of its own performance the directors individually as well as the evaluation ofthe working of its Audit and Nomination & Remuneration Committees. The manner in whichthe evaluation has been carried out has been explained in the Corporate Governance Report.
Nomination & Remuneration Policy
The Board has constituted a Nomination and Remuneration Committee and has framed policyfor selection and appointment of Directors Senior Management and there remuneration. TheNomination & remuneration Policy is stated in the Corporate Governance Report.
During the year under review fourteen (14) Board Meetings were convened and heldi.e.12.04.2018 15.05.2018 28.05.2018 11.06.2018 25.06.2018 25.07.2018 14.08.201826.10.2018 12.11.2018 24.11.2018 15.01.2019 11.02.2019 21.02.2019 22.03.2019. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to provisions of Section 134(5) of the Companies Act 1956 the Directorswould like to state that:
1. In preparation of the Annual Accounts the applicable Accounting Standards had beenfollowed along with proper explanation relating to material departures
2. They had selected such accounting standards policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period.
3. They had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the relevant acts for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities.
4. That the accounts are prepared on a going concern basis.
5. They had laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and were operating effectively.
6. They had devised proper system to ensure compliance with the provisions of allapplicable laws and that such system were adequate and operating effectively.
CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe company. The Company believes in "Zero Tolerance" against briberycorruption and unethical dealings / behaviours of any form and the Board has laid down thedirectives to counter such acts.
The Code lays down the standard procedure of business conduct which is expected to befollowed by the Directors and the designated employees in their business dealings and inparticular on matters relating to integrity in the work place in business practices andin dealing with stakeholders.
All the Board Members and the Senior Management personnel have confirmed compliancewith the Code.
PARTICULARS OF EMPLOYEES
During the year under review there was no employee employed who was in receipt ofremuneration in excess of the limits prescribed under section 197 read with Schedule V ofthe Companies Act 2013.
Since there were only 5 employees during the year under review the particularsrequired to be disclosed under Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 cannot be meaningfully given. The remuneration paid tothe Key Managerial Personnel and the Whole Time Director is disclosed in the CorporateGovernance Report annexed herewith.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO.
Your Company has not carried out any manufacturing activities during the year. Hence noseparate details of the energy consumption and conservation is provided in the report.However the company has taken all possible steps for conservation of the energy in thecompany.
The company has not adopted any foreign technology during the year.
The details of the foreign exchange is provided in the notes to the accounts formingpart of the Balance sheet.
M/s M.A Chavan and Co. Chartered Accountants statutory auditors of the Company wereappointed by the members at 22 Annual General Meeting of the members to hold office for aperiod of 5 years i.e. until the conclusion of 27 Annual General Meeting. They haveconfirmed that their appointment is within the limits provided under Section 139 of theCompanies Act 2013 and they are otherwise eligible to continue as the Statutory Auditors.
The observations made by the auditors in their report are self explanatory when readwith the notes to accounts and need no further elaboration.
Pursuant to provisions of section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hadappointed Mrs. Shailashri Bhaskar Practising Company Secretary to undertake theSecretarial Audit of the Company. The Secretarial Audit report furnished by her is annexedherewith as "Annexure I"
OBSERVATIONS IN THE SECRETARIAL AUDIT REPORT
The Secretarial Auditor have observed in their report that the Company did not havea Chief Financial Officer (CFO) as required under Section 203 of the Companies Act 2013read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 during the year under review though the position has been filled upsubsequent to the end of the year under review.
It is stated that though the company had made its best efforts to appoint a CFO itcould not succeed to do so in the year under review. CFO has however been appointedimmediately after the end of the year under review.
The company has not accepted and/or renewed deposits from public during the year withinthe meaning of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013 except to its wholly owned subsidiary namely RRLifecare Pvt. Ltd.
The details of the investments made by the company are given in the notes to thefinancial statements.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has an Internal Control System commensurate with the size and the natureof its business with regard to purchase of inventory and fixed assets and the sale ofgoods and services. The scope and authority of the Internal Audit function is defined inthe Internal Audit Manual. To maintain its objectivity and independence the InternalAudit function reports to the Chairman of the Audit Committee and of the Board.
The Internal Auditor monitors and evaluates the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies.
In order to further strengthen the operations of the company and also to address therequirements of internal controls the company has installed integrated ERP system. Thesystem has been fully implemented.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onarm's length basis and were at prevailing market price. There are no materiallysignificant related party transactions made by the company with Directors Key ManagerialPersonnel or other designated persons which may have potential conflict with interest ofthe company at large.
Details of Related Party Transactions are annexed vide Form No. AOC 2
The company is diversifying its activity which is being implemented through a whollyowned subsidiary namely RR Lifecare Private Limited which is in course to set up aproject for manufacturing pharmaceutical formulations. This will be a greenfieldmanufacturing facility in Wada a northern suburb of Mumbai. The Company will bemanufacturing dental cartridge prefilled syringe vial ampule & eye drops. Themanufacturing facility will be of international standard and fully compliant with U.S. FDArules.
MATERIAL CHANGES AND COMMITMENTS
Subsequent to year end the Company has acquired the business of a partnership firmnamely M/s. Alaknanda Tubes thereby entering into manufacturing activity having itsfactory located at Survey. No. 36 Nr. Navavas Village Dehgam -Dhansura Road Tal: TalodDist.: Sabarkantha and which is in the production of ERW Pipes with all its assets andliabilities on a slump sale basis and as a going concern.
The Wholly Owned Subsidiary RR Lifecare Pvt. Ltd. is setting up a project formanufacturing pharmaceuticals formulations at Wada District - Palghar. The project isexpected to go on stream shortly.
With investment in the new line of business your Company is expecting to earn higherprofits which in turn will help in expansion of the business and higher returns to theinvestors.
UTILISATION OF FUNDS RAISED ON CONVERSION OF WARRANTS ISSUED THROUGH PREFERENTIALALLOTMENT
During the year under review your Company has received Rs. 6075000 (75% of the issueprice) from the warrant holders namely Mr. Virat Shah and Mr. Alok Shah for issue andallotment of 810000 Equity Shares on conversion of warrants issued on preferential basiswith the approval of shareholders through postal ballot exercise result of which wasdeclared on 26 December 2016.
The funds raised by the said conversion has contributed to shore up the financialposition of the Company and were utilised to reduce the existing debt for financing theexpansion plans and also to meet the working capital requirements of the Company.
STATEMENT OF DEVIATION OR VARIATION
The Company has received Rs. 6075000 (75% of the issue price) as aforesaid onconversion of warrants issued on preferential basis with the approval of shareholders.
Accordingly on the basis of the statement received by the Company from the StatutoryAuditors and pursuant to Regulation 32 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 your Directors hereby submit that: i) there is nodeviation in the use of the proceeds / funds from the objects stated in the explanatorystatement of the notice of the Postal Ballot Meeting dated 15 November 2016 ii) there hasbeen no variation between projected utilization of funds made by the Company as stated inthe Explanatory statement of notice dated 15 November 2016 of the Postal Ballot Meetingand the actual utilization of funds.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism / Whistle Blower Policy to deal with instance offraud and mismanagement if any.
A Vigil (Whistle Blower) mechanism provides a channel to the employees and Directors toreport to the management concerns about unethical behavior actual or suspected fraud orviolation of the Codes of conduct or policy.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.
All Board Directors and the designated employees have confirmed compliance with theCode.
RISK MANAGEMENT POLICY
Pursuant to section 134(3) (n) of the Companies Act 2013 the company has adopted aRisk Management Policy. The details of the policy and its terms of reference are set outin the corporate governance report forming part of the Board's report.
At present the company has not identified any element of risk which may threaten theexistence of the company.
CORPORATE COMPLIANCE POLICY
Pursuant to section 134(5)(f) of the Companies Act 2013 the Company has constitutedCorporate Compliance Policy to ensure compliance with the provisions of all applicablelaws and to report that such systems were adequate and operating effectively.
ANTI SEXUAL HARRASMENT POLICY
The Company has in place an Anti Sexual harassment Policy in line with the requirementsof The Sexual Harassment of Women at the workplace (Prevention Prohibition and Redressal)Act 2013. However the Company does not have more than ten employees and as such has notconstituted Internal Complaints Committee.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required by Schedule V of SEBI (Listing Obligations and Disclosure Requirements)2015 the Management Discussion and Analysis Report which form an integral part of thisReport is set out as a separate Annexure.
The requirement to report on Corporate Governance is applicable to Companies havingpaid up capital of Rs. 10 crores. Since the paid up capital of the company is only Rs.69850000 there is no requirement to report on Corporate Governance as per Reg. 15(2) ofSEBI (Listing Obligations and Disclosure Requirements) 2015.
However Corporate Governance Report is attached as a separate annexure dealing withvarious governance aspects which are emanating from the provisions of the Companies Act2013.
Your Directors take the opportunity to thank all staff members for their Co-operationand contribution to the Company's operation during the year. Your Directors also wish toplace on record their appreciation for the support and co-operation by the Banks BusinessAssociates and Financial Institutions during the period under review.
For and on behalf of Board of Directors
RR Metalmakers India Limited
Dated:31 May 2019
Office No.501 Neel Kamal Complex
Nr. Havmor Ice Cream Parlour Navrangpura