R&B Denims Ltd Directors Report.
To The Members of
R & B Denims Limited
The Directors take pleasure in presenting the Seventh Annual Report together with the audited financial statements for the year ended March 31, 2017. The Management Discussion and Analysis has also been incorporated into this report.
1. FINANCIAL RESULTS
(Rs. In thousands except per share data)
|Sales/ Business Income||2,025,603.29||1,590,024.32|
|Share of Loss in Partnership Firm||(27,822.80)||-|
|Less: Expenses (Excluding Depreciation)||1,969,063.09||1,516,160.71|
|Profit before depreciation, exceptional||86,265.83||110,301.42|
|items and taxes|
|Profit before exceptional items and taxes||4,400.51||21,057.89|
|Less: Exceptional Items||-||-|
|Profit before Taxation||4,400.51||21,057.89|
|Less: Income Tax||18,574.47||8,981.19|
|MAT Credit Provision||-||-|
|Profit after Taxation||(4,794.31)||13,924.59|
|Balance Brought Forward||20,785.38||6,860.79|
|Balance Carried Down||15,991.08||20,785.38|
|Earnings per share (Rs.) :Basic||(0.34)||0.99|
2. HIGHLIGHTS OF PERFORMANCE
Standalone total income for the current financial year was increased to Rs. 2,055,328.92 (in thousands) as compared to Rs. 1,626,462.13 (in thousands) in 2016, increased by 26.37%;
Standalone net sales for the year was Rs. 2,025,603.29 (in thousands) as compared to Rs. 1,590,024.32 (in thousands) in 2016, a growth of 27.39%;
Standalone profit before tax for the year was Rs. 4400.51 (in thousands) as compared to Rs. 21,057.89 (in thousands) in 2016;
Standalone Profit after tax for the year was Rs. 4,794.31 (in thousands) as compared to Rs. 13,924.59 (in thousands) in 2016.
3. STATE OF COMPANYS AFFAIRS
Your directors report that during the year under review your company has posted higher income of Rs. 2,055,328.92 (in thousands) in the current year as compared to Rs. 1,626,462.13 (in thousands) in the corresponding previous year. During the current year your company has shown a negative trend in profit of Rs. 4,794.31 (in thousands) as against to the net Profit of Rs. 13,924.59 (in thousands) in the corresponding previous year. This is mainly because of share in loss of newly constituted partnership firm to the extent of Rs. 27,822.80 (Rs. in thousands) (because of depreciation).
4. TRANSFER TO RESERVES IN TERMS OF SECTION 134(3)(J) OF THE COMPANIES ACT, 2013
For the financial year ended on March 31, 2017, the Company has proposed to carry an amount of Rs (4,794.31) (in thousands) to Balance Sheet under the head "General Reserve Account".
In view of the requirement of the profits for strengthening of the company, your directors have decided to plough back the profit into the business hence no dividend could be recommended for the year under review.
6. MATERIAL CHANGES SUBSEQUENT TO THE CLOSE OF THE YEAR:
No material changes have occurred between Balance Sheet date and the date on which the financial statement are approved by the Board of Directors.
7. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:
During the year under review the company has received an order vide dated 29/12/2016 issued by DCIT for addition of Rs. 18,825,700/- in income towards share application money received during the assessment year 2013-14 and the company has further make an appeal against the order passed to CIT(A)-II, Surat.
8. SUBSIDIARY COMPANY/ASSOCIATE/JOINT VENTURE:
There has been no subsidiary/Associate/Joint Venture incorporated/ceased of your company during the financial year 2016-17.
9. MANAGEMENTS DISCUSSION AND ANALYSIS REPORT
In terms of the provision of Regulation 34 of the Securities Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulation 2015, the management Discussion and Analysis is a forming part of this Annual Report.
10. CHANGE IN THE NATURE OF BUSINESS
There is no change in the nature of the business of the company during the financial year 2016-17.
11. SHARE CAPITAL
The paid up Equity Share Capital as on March 31, 2017 was Rs. 139,946.88 (in thousands). The Company has not issued/allotted any during the financial year 2016-17.
Cash and cash equivalent as at March 31, 2017 was Rs. 18,171.00 (in thousands). The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.
12.1 ACCEPTANCE OF DEPOSITS
The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014 and any modification thereof.
12.2 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the Notes to the financial statements provided in this Annual Report.
Denim fabric production in India is concentrated in the western and a northern part of the country with more than 45 percent contribution coming from Gujarat is the production hub.
13. CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors of the Company hereby confirms that the provisions of Section 135(1) of the Companies Act, 2013 is not applicable to our company.
14. BUSINESS RESPONSIBILITY REPORT (BRR)
The Board of Directors of the Company hereby confirms that, according to the provisions of Regulation 34(2)(f) of the Securities Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulation 2015 and amended thereof, the report on Business Responsibility Report (BRR) is not mandatorily applicable to our company, hence not annexed with Annual Report.
15. ANNUAL EVALUATION OF BOARD PERFORMANCE AND PERFORMANCE OF ITS
COMMITTEES AND OF DIRECTORS
Pursuant to the applicable provisions of the Act and the Listing Regulations, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees.
The Nomination and Remuneration Committee has defined evaluation criteria, procedure and time schedule for Performance Evaluation process for the Board, its Committees and Directors.
The Boards functioning was evaluated on various aspects, including inter alia degree of fulfilment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning.
Directors were evaluated on aspects such as attendance and contribution at Board/ Committee Meetings and guidance/ support to the management outside Board/ Committee Meetings. In addition, the Chairman was also evaluated on key aspects of his role, including setting the strategic agenda of the Board, encouraging active engagement by all Board members and motivating and providing guidance to the Managing Director.
Areas on which the Committees of the Board were assessed included degree of fulfilment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.
The performance evaluation of Independent Directors was carried out by entire Board, excluding Director being evaluated. The performance evaluation of the Chairman and the Non Independent Directors was carried out by Independent Directors who also reviewed performance of the Board as a whole. The Nomination and Remuneration Committee also reviewed performance of the Board, its Committees and of Directors.
The Chairman of the Board provided feedback to the Directors on an individual basis, as appropriate. Significant highlights, learning and action points with respect to the evaluation were presented to the Board.
Details of the Remuneration Policy are given in the Corporate Governance Report.
16. VIGIL MECHANISM / WHISTLE BLOWER POLICY
Fraud free and corruption free work culture has been core of your Company. In view of the potential risk of fraud and corruption due to rapid growth, your Company has put an even greater emphasis to address this risk. To meet this objective your Company has adopted a Whistle Blower Policy establishing Vigil Mechanism to provide a formal mechanism to the Directors and employees to report their concern about unethical behaviour, actual or suspect fraud or violation of the Companys Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employee who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.
The Policy on vigil mechanism and whistle blower policy may be accessed on the Companys website at the link: http://www.rnbdenims.com/investor/VIGIL%20MECHANISM%20FOR%20DIRECTORS%20AND%2 0EMPLOYEES.pdf?
17. POLICY FOR DETERMINATION OF MATERIALITY OF EVENTS
The Policy for Determining Materiality of Information / Events for reporting to the Stock Exchanges is framed pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015 which enables the investors to make well-informed investment decisions and take a view on the Materiality of an event that qualifies for disclosure.
The Policy for Determining Materiality of Information / Events may be accessed on the Companys website at the link: http://www.rnbdenims.com/investor/POLICY%20FOR%20DETERMINIMG%20MATRIALITY%20OF% 20INFORMATION.pdf?
18. POLICY FOR PRESERVATION & ARCHIVAL OF DOCUMENTS
The Policy for Preservation & Archival of documents is framed pursuant to Regulation 9 & 30(8) of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, investors and concerned authority accessed preservation of documents and records of the Company through companys website, which is required to be maintained under the Companies Act, 2013 and Listing Regulation. Any disclosure of events or information which has been submitted by the Company to the Stock Exchanges will be available on the website of the Company for a period of 5 years from the date of its disclosure and shall thereafter be archived from the website of the Company for a period of 3 years. This policy basically deals with the retention and archival of corporate records.
The Policy for Preservation & Archival of documents may be accessed on the Companys website at the link: http://www.rnbdenims.com/investor/PRESERVATION%20OF%20DOCUMENTS%20&%20ARCHIVAL %20POLICY.pdf?
19. COMPLIANCE WITH THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Your Company has zero tolerance for Sexual Harassment at workplace. Your Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
There were no complaints reported for sexual harassment during the financial year 2016-17.
20. DECLARATION BY INDEPENDENT DIRECTORS
The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013, that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
21. DIRECTORS AND KEY MANAGERIAL PERSONNEL
There has not been any appointment and resignation of any directors or Key Managerial Personnel in the company in the financial year.2016-17. Hence there was no change took place among the signatories of the company.
In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Mr. Ankur Mangilal Borana (holding DIN: 01091164) retires by rotation and is eligible for re-appointment.
21.1 Policy on directors appointment and remuneration
The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.
During the year, Board Meetings and Committee Meetings were convened and held. The details of which are given herein below and also in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
DETAILS OF MEETINGS HELD DURING THE F.Y. 2016-17
|Sr. No.||Date of Meeting||Class of Meeting||Board Strength||
No. of Directors Present
|1||11/04/2016||Stakeholders Relationship Committee||3||3|
|2||20/05/2016||Board of Director Meeting||8||8|
|4||27/07/2016||Stakeholders Relationship Committee||3||3|
|5||02/08/2016||Nomination & Remuneration Committee||4||4|
|7||22/09/2016||Board of Director Meeting||8||8|
|9||14/11/2016||Board of Director Meeting||8||8|
|10||12/12/2016||Stakeholders Relationship Committee||3||3|
|11||09/01/2017||Nomination & Remuneration Committee||4||4|
|13||06/03/2017||Stakeholders Relationship Committee||3||3|
|14||23/03/2017||Board of Director Meeting||8||8|
22. DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a. that in the preparation of the annual financial statements for the year ended March 31,
2017, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b. that the directors had selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d. that the annual financial statements have been prepared on a going concern basis;
e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.
f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.
23. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were on an arms length basis. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interest of the Company at large and the details of which is prescribed in Form AOC-2 as an "Annexure-A" attached to this report.
24.1 Statutory Auditors
The Companys Auditors, Messrs Pradeep Singhi & Associates, Chartered Accountants, Surat hold office till the conclusion of the ensuing Annual General Meeting of the Company and are eligible for re-appointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for reappointment as Statutory Auditors of the Company. The auditors have also confirmed that they hold a valid certificate which is issued by the Peer Review Board of the Institute of Chartered Accountants of India.
24.2 Cost Auditors
Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its denim activity is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed Messrs V. M. Patel & Associates to audit the cost accounts of the Company for the financial year 2017-18 on a remuneration of Rs. 35,000/- plus Service tax, if applicable and out of pocket expenses. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Members ratification for the remuneration payable to Messrs V. M. Patel & Associates, Cost Auditors is included at Item No. 5 of the Notice convening the Annual General Meeting.
24.3 Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 The Board has appointed Messrs JAINAM N SHAH & CO, Practicing Company Secretary, Surat, to conduct Secretarial Audit for the financial year 2016-17. The Secretarial Audit Report for the financial year ended March 31, 2017 is annexed herewith marked as "Annexure-B" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
25. ENHANCING SHAREHOLDERS VALUE
Your Company believes that its Members are among its most important stakeholders.
Accordingly, your Companys operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively affect the socio-economic and environmental dimensions and contribute to sustainable growth and development.
26. CORPORATE GOVERNANCE
According to the Securities Exchange Board of India (Listing Obligation and Disclosure Requirement) Regulation 2015, a separate section on corporate governance practices followed by the Company, together with a certificate from the Companys Auditors confirming compliance forms an integral part of this Report. The Report on Corporate Governance by Auditor is forming part of Annual Report.
27. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure-C".
28. EXTRACT OF ANNUAL RETURN
In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the annual return in form MGT 9 is appended as "Annexure-D" to the Boards report.
29. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197(12) read with Rule, 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the "Annexure-E" of the Annual Report.
30. RISK MANAGEMENT
Our Enterprise Risk Management encompasses practices relating to the identification, analysis, evaluation, treatment, mitigation and monitoring of the strategic, external and operational controls risks to achieving our key business objectives. Risk Management at our company seeks to minimize the adverse impact of these risks, thus enabling the Company to leverage market opportunities effectively and enhance its long-term competitive advantage. Several risks can impact the achievement of a particular business objective. Similarly, a single risk can impact the achievement of several business objectives. The focus of risk management is to assess risks and deploy mitigation measures.
THE BOard would like to place on record its sincere appreciation to Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them and also gratefully acknowledge for the wholehearted support and contribution made by its customers, its shareholders as well as the various workers, staff, members, Distributors, Suppliers, Banks, concerned authorities and other business partners, towards the conduct of efficient and effective operations of your Company. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.
32. CAUTIONARY STATEMENT
Statements in the Boards Report and the Management Discussion & Analysis describing the Companys objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
Certain statements in this report relating to Companys objectives, projections, outlook, expectations, estimates, etc may be forward looking statements within the meaning of applicable laws and regulations. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, actual results or performance could differ materially from such expectations, projections, etc whether express or implied as a result of among other factors, changes in economic conditions affecting demand and supply, success of business and operating initiatives and restructuring objectives, change in regulatory environment, other government actions including taxation, natural phenomena such as floods and earthquakes, customer strategies, etc over which the Company does not have any direct control.
|For and on behalf of The Board Of Directors,|
|R & B DENIMS LIMITED|
|Rajkumar Mangilal Borana|
|Place: SURAT||(Chairman & Managing Director)|
|Date: 27/05/2017||DIN: 01091166|
Form No. AOC-2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)
Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto
1. Details of contracts or arrangements or transactions not at arms length basis
|(a)||Name(s) of the related party and nature of relationship|
|(b)||Nature of contracts/arrangements/transactions|
|(c)||Duration of the contracts / arrangements/transactions|
|(d)||Salient terms of the contracts or arrangements transactions including the value, if any||or|
|(e)||Justification for entering into such contracts arrangements or transactions||or|
|(f)||Date(s) of approval by the Board||NOT APPLICABLE|
|(g)||Amount paid as advances, if any:|
|(h)||Date on which the special resolution was passed in general meeting as required under first proviso to section 188|
2. Details of contracts or arrangements or transactions at arms length basis
|(a)||Details of material contracts or arrangement or transactions at arms length basis||Note: A|
|(b)||Nature of contracts/arrangements/transactions||Note: A|
|(c)||Duration of the contracts / arrangements/transactions||12 Months|
|(d)||Salient terms of the contracts or arrangements or transactions including the value, if any:||NA|
|(e)||Date(s) of approval by the Board, if any:||20/05/2016|
|(f)||Amount paid as advances, if any:||NA|
|Rajkumar Mangilal Borana|
|Place: SURAT||(Chairman & Managing Director)|
|Date: 27/05/2017||DIN: 01091166|
Related Party Transaction at Arms Length Basis
|Sr. No.||Name||Relation||Amount||PAN Number||Nature of Transactions|
|1||Rajkumar Mangilal Borana||Managing Director||750.00||ABBPB7746E||Remuneration|
|2||Amitkumar Anandbhai Dalmia||Whole-time Director||750.00||ABBPD6392C||Remuneration|
|3||Deepak A Dalmia||Whole-time Director||750.00||ABBPD6396G||Remuneration|
|4||Ankur Mangilal Borana||Whole-time Director||750.00||AFQPB5976H||Remuneration|
|5||Rajkumar Mangilal Borana||Managing Director||24.00||ABBPB7746E||Lease Rent|
|6||Amitkumar Anandbhai Dalmia||Whole-time Director||24.00||ABBPD6392C||Lease Rent|
|7||Deepak A Dalmia||Whole-time Director||24.00||ABBPD6396G||Lease Rent|
|8||Ankur Mangilal Borana||Whole-time Director||24.00||AFQPB5976H||Lease Rent|
|9||RB Industries||Sister Concern||30.00||AASFR4375D||Receipt Of Sub- Leasing Income|
|10||RB Industries||Sister Concern||80,8054.33||AASFR4375D||Purchase of Grey Fabrics|
|11||RB Industries||Sister Concern||49,511.88||AASFR4375D||Job Work Income|
|12||RB Industries||Sister Concern||27375.21||AASFR4375D||Sales of Color Chemical & Coal|