Rainbow Denim Ltd Directors Report

BACKGROUND

Pursuant to the Order dated December 9, 2019 of the Honble National Company Law Tribunal - Chandigarh Bench ("NCLT Order"), Corporate Insolvency Resolution Process ("CIR Process") has been initiated for the Company in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016, ("Code") and related Rules and Regulations issued thereunder. Mr. Dharmendra Kumar Bhasin (Registration No. IBBI/ IPA-002/IP-N00816/ 2019-2020/12564) was appointed as the Interim Resolution Professional ("IRP") in terms of the NCLT Order. Subsequently Mr Dharmendra Kumar Bhasin was confirmed as the Resolution Professional (RP) by the Committee of Creditors in its meeting held on 07-01-2020. On appointment of IRP/RP the powers of Board of Directors of the Company stand suspended and such powers along with the management of affairs of the Company are vested with the RP.

In the light of the above developments, Your Directors present the 22nd Annual Report and the Audited Financial Statements for the financial year ended March 31, 2021.

FINANCIAL RESULTS (? in Lakhs)

PARTICULARS	YEAR ENDED 31.03.2021	YEAR ENDED 31.03.2020
Profit/(Loss) before Depreciation	(630.58)	(1426.60)
Depreciation	115.27	189.18
Profit/(Loss) for the Year	(745.85)	(1615.78)
Other comprehensive Income/(Expense)	(7.20)	74.31
Total Comprehensive Profit/(Loss) for the Year.	(753.05)	(1541.47)

BRIEF DESCRIPTION OF THE COMPANYS WORKING DURING THE YEAR AND THE STATE OF COMPANYS AFFAIRS:

There was no production of Denim fabric during the year under review as compared to 54.69 lakh meters during the previous year. The Company has achieved a sales turnover of 45.74 lakh during the year under review as compared to a turnover of 402 lakh during the previous year.

DIVIDEND

In view of loss no Dividend was considered. No appropriation has been made to any specific reserve during the year under review.

SHARE CAPITAL

There was no change in the Equity share capital structure of the Company during the year under review. The Company does not have an Employee Stock Option Scheme nor are there any shares which are held in trust for the benefit of employees of the Company.

The Company does not have outstanding Warrants or Debt instruments as on the date of the Report and hence Credit Rating provisions are not applicable.

FUTURE PROSPECTS

The future prospects of the Company depend on the outcome of the ongoing CIR Process During the year under review, the manufacturing activities at the Lalru Plant situated in the state of Punjab continued to remain suspended. CORPORATE GOVERNANCE

A Report on Corporate Governance along with the Auditors Certificate regarding Compliance of the conditions of Corporate Governance pursuant to Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed hereto.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act, 2013 the Directors confirm that :

1. In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

2. Appropriate policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2021 and the loss of the Company for the year ended March 31, 2021;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 and for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. The annual accounts have been prepared on a going concern basis;

5. Internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and

6. Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

AUDIT COMMITTEE

The Company has constituted an Audit Committee which presently comprises of the following Directors viz. Mr. D.N. Singh - Chairman, Mr. H.D. Ramsinghani and Mr. R.G. Kulkarni. All the members of the Audit Committee are financially literate and have experience in financial management. The Audit Committee acts in accordance with the terms of reference specified from time to time by the Board.

OTHER COMMITTEES

The Stakeholders Relationship Committee which presently consists of Mr. D.N. Singh (Chairman), Mr. H.D. Ramsinghani and Mr. S. S. Arora. The Nomination and Remuneration Committee comprising of Mr. D.N. Singh (Chairman), Mr. H.D. Ramsinghani and Mr. R. G. Kulkarni.The Company has not constituted a Corporate Social Responsibility Committee as the Company does not fulfill the prescribed criteria.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company does not have any Subsidiary/Joint Venture/Associate Company as on the date of this Report.

DISCLOSURES

Information relating to the conservation of energy, technology absorption, foreign exchange earnings and outgo to the extent applicable, is annexed hereto as Annexure A and forms a part of this Report.

The Whole Time Director was not paid any remuneration during the year under review. No remuneration was paid to non-executive Directors. There were no employees drawing remuneration in excess of the limits prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the year under review or part thereof. The Details pertaining to remuneration of top ten employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed hereto as Annexure B and Annexure C and forms a part of the Report. Details of loans, guarantees and investments, if any, are given under the Notes to Financial Statements.

There were no transactions with Related Parties during the year under review. There were no material related party transactions with the Promoters, Directors or the Key Managerial Personnel or their relatives during the year under review.

Pursuant to the Order dated December 9, 2019 of the Honble National Company Law Tribunal - Chandigarh Bench ("NCLT Order"), Corporate Insolvency Resolution Process ("CIR Process") has been initiated for the Company in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016, ("Code") and related Rules and Regulations issued thereunder.

There is no change in the nature of business of the Company during the year.

The Company has formulated a Whistle Blower Policy under which all personnel have access to the Audit Committee to report genuine concerns or grievances relating to the business activities of the Company in general.

There were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 during the year under review.

DIRECTORS

As the powers of the Directors are suspended, no meetings of the Board of Directors were held during the year under review.

Mr. H D Ramsinghani (DIN 00035416) retires from the Board of Directors by rotation and is eligible for reappointment.

All Independent directors have given declarations that they meet the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16 of SEBI (LODR) Regulations, 2015.

None of the Directors are disqualified from being appointed / reappointed as Directors of the Company as per the disclosures filed by the Directors with the Company.

The Board of Directors have framed a policy in relation to remuneration of directors, Key Managerial Personnel and senior Management and it lays down criteria for selection and appointment of Board Members. The details of the policy are available on the website of the Company www.rainbowdenim.com.

The independent Directors of the Company are informed about their roles, rights and responsibilities in the Company and also about the nature of the industry in which company operates and other related matters. The details of the familiarization program are available on the website of the Company www.rainbowdenim.com

STATUTORY AUDITORS

M/s. Khandelwal & Mehta LLP, (Membership No W100084) were appointed as Statutory Auditors of the Company at the 19^th Annual General Meeting held on September 18, 2018, to hold office till the conclusion of the 24^th Annual General Meeting. M/s. Khandelwal & Mehta LLP have confirmed that they are not disqualified from continuing as Auditors of the Company.

STATUTORY AUDITORS REPORT

Your Directors refer to the observations made by the Auditors in their Report and wish to state that the management is hopeful that, subject to the outcome of the CIR process, the Company would be able to continue its operations in the foreseeable future in the normal course of business and hence, the accounts have been prepared on a going concern basis and the value of impairment, if any, has not been ascertained. In view of the above the impact of the observations on the financial statements for the year under review is not ascertainable.

INTERNAL AUDIT

The Company has appointed M/s S.S Kothari Mehta & Co., Chartered Accountants as the Internal Auditors and their scope of work includes review of processes, operational efficiency and effectiveness of systems and processes and assessment of adequacy of internal controls and safeguards apart from specific operational areas as per the directions of the Audit Committee.

CORPORATE SOCIAL RESPONSIBILITY

The provisions relating to Corporate Social Responsibility do not apply to the Company as the Company does not meet the criteria laid down in Section 135 of the Companies Act, 2013.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has adequate system of internal controls that are commensurate with its size and nature of business to safeguard and protect the Company from losses and unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and ensuring timely reporting of financial statements. There were no frauds reported by the Auditors of the Company as on the date of this Report. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made there under, the Company has appointed A. Arora & Co to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed hereto as Annexure D and forms a part of this Report. The Directors refer to the observations made by the Secretarial Auditor and wish to state that the non-appointment of Executive Director, Women Director and Company Secretary and non-holding of Board and Committee meetings and non- publication of financial results and nonmaintenance of Structured digital data base for UPSI was due to the fact that the Company is under CIR Process and the powers of the Board are suspended.

COST AUDIT

The Cost Audit Report for the financial year ended 31st March 2020 was filed on September 25, 2020 with Ministry of Corporate Affairs.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return in Form MGT 9 pursuant to the provisions of Section 92 of the Companies Act, 2013 is annexed hereto as Annexure E and forms a part of this Report.

WEBADDRESS

The Annual Return referred to in Section 92(3) of the Companies Act, 2013 and other details about the Company are available on the website of the Company www.rainbowdenim.com.

FIXED DEPOSITS

The Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

SAFETY, ENVIRONMENTAL CONTROL & PROTECTION

The Company has taken all the necessary steps for Safety and Environmental Control and Protection at its plant at Lalru.

INDUSTRIAL RELATIONS

The Industrial Relations were affected during the year under review due to labour unrest at the Lalru Plant. ACKNOWLEDGEMENT

Your Directors sincerely record their appreciation with gratitude for the continued support and assistance extended to the Company by the Banks and various Government Departments and Agencies.

	FOR RAINBOW DENIM LIMITED (By the order of the Resolution Professional)
Place : Mumbai	H D. RAMSINGHANI CHAIRMAN
Dated : August 12, 2021	DIN : 00035416