Raj Rayon Industries Ltd Directors Report.


The Members,


Your Directors have pleasure in presenting 25th Annual Report of the Company together with the Audited Financial Statements of the Company for the year ended 31st March 2018.


Particular For the financial year 2017-18 For the financial year 2016-17
(Amount in Rs. ) (Amount in Rs. )
Revenue from Operations 762704364.71 2742972968
Other Income 4116590 18071405.11
Total Income 766820954.71 2761044373.11
Less: Expenses 924165257.56 2946741253.12
Less: Depreciation & Amortization 369550630 476858908.91
Profit/ (Loss) before tax (526894932.85) (662555788.92)
Tax Expenses
Tax adjustment for earlier years 30133 46648.93
Profit/(Loss) after Tax (526925065.85) (662602437.85)


During the financial year under review the Company has earned a total revenue of Rs. 766820954.71/- as compared to the previous years revenue of Rs. 2761044373.11/-. The Company has earned a Loss of Rs. 526925065.85/- as compared to the previous years Net Loss of Rs. 662602437.85/-. Your Directors are continuously looking for avenues for future growth of the company.


In absence of profits for the year ended 31st March, 2018 and past accumulated losses, your directors do not recommend payment of any dividend for the year ended 31st March, 2018.


In absence of profits for the year ended 31st March, 2018 and past accumulated losses, your directors does not recommend for transfer of any amount to reserves for the year ended 31st March, 2018


Management Discussion and Analysis Report for the year under review, which also deals with the opportunities, challenges and the future outlook for the Company, as stipulated under Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 Agreement with the Stock Exchange of India, is presented in a separate section forming part of the Annual Report.


The detailed key features of the CDR Proposal are given in under Notes forming part of Notes to Accounts given in this Annual Report.

Material changes and commitment affecting financial position between the end of the financial year and date of the report:

There have been no such material changes or commitments affecting the financial position from the end of the Financial Year 2017-2018 till date of this report, as may be deemed to be material enough to affect the financial position of the Company, otherwise than in the normal course of business.


One of the Creditor M/s Khanna & Khanna Limited has filed petition to Honble National Company Law Tribunal (NCLT) under section 9 of the Insolvency and Bankruptcy Code, 2016 at Ahmedabad Branch The petition filed by Creditor was listed before NCLT on 04.01.2019 and the hearing has admission on 11.02.2019


The Board has adopted the policies and procedures for ensuring orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of financial disclosures.

The Companys Internal Audit department evaluates the efficiency and adequacy of internal control system and gives its report and recommendations to the Chairman of Audit Committee and based on Internal Audit Report the corrective actions are taken.


Your Company does not have any subsidiary company or joint ventures Companies, and associate Company.


During the year under review, the Company has not accepted any deposits within the meaning of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. Hence there are no details to be disclosed under Rule 8(5) (v) of the Companies (Accounts) Rules, 2014.


M/s. K.M. Garg & Co., Chartered Accountants (Registration No. 120712W), had expressed their inability to continue as the Statutory Auditors of the Company, in view of their unforeseen circumstances and resigned as Auditors of the Company during the financial year under review.

The Company in terms of Section 139(8) of the Companies Act, 2013 took the consent of the members via postal ballot on 02/07/2018 and appointed M/s. Agarwal Desai & Shah, Chartered Accountants (Firm Registration No.124850W) as the Auditors of the Company for the financial year 2017-2018 to fill up the casual vacancy.

Pursuant to the provisions of section 139 and all other applicable provisions, if any of the Companies Act, 2013, and the rules framed thereunder, as amended from time to time, M/s. Agarwal Desai & Shah, Chartered Accountants (Firm Registration No.124850W) Membership No.: 126656 are to be appointed for the period of 5 years at the ensuing Annual General Meeting. Accordingly, the appointment of M/s. Agarwal Desai & Shah, Chartered Accountants (Firm Registration No.124850W), as the Statutory Auditors of the Company to hold office from the conclusion of ensuing Annual General Meeting until the conclusion of the FY 2022-2023 of the Company.

The Notes on financial statements referred to in the Auditors Report are self explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservation or adverse remark.


Due to defaults in payments of Bank loans, the companys accounts have been classified as Non- Performing Assets (NPA) by the bankers under Consortium. The banks (except South Indian Bank which has charged Interest for April 2016) have not charged interest on the companys borrowings I loans or reversed the interest charged. Therefore, no provision has been made for such Interest in the books of accounts of the company and to that extent, finance cost and total Comprehensive income (Loss) is estimated to be understated by Rs.10,645 .94 Lakhs for the year ended 31st March 2018 and the Surplus in statement of profit and loss and Total Other Equity under "Note No. 16 other Equity" is estimated to be understated by 20,049.51 Lakhs.

The Companys account stands exited from CDR Mechanism. However, in view of classification of Companys account as Non-Performing Asset (NPA), contingency related to compensation payable in lieu of bank sacrifice cannot be determined currently.

The Net worth of the Company is fully eroded. However the management has prepared the financial statements on going concern basis. The appropriateness of the Going Concern concept based on which the accounts have been prepared is interalia dependent on the Companys ability to infuse requisite funds for meeting its obligations to lenders I rescheduling of debt and resuming normal operations.

Term Loan, Working Capital Term Loan (WCTL) , Funded Interest Term Loan and Working Capital loans availed by the Company from various banks under consortium advance including the loans of South Indian Bank taken over by Asset Reconstruction Company remained unpaid and overdue since 2015 16.

In our opinion the securities provided to Banks are not adequate to cover the amounts outstanding as on the date of Balance Sheet

The Company has been served with Summon/ Notice from the Debt Recovery Tribunal at the instance of State Bank of India and the Phoenix A RC Pvt Ltd., the lenders, calling upon, inter- alia, to pass an order and issue Recovery Certificate for recovery of Rs.1008,08.99 Lakhs and Rs. 6548.21 Lakhs respectively along with interest

It is clarified that management is continuously implementing various long term measures to improve its cash flows and revival of the operation of the company and accordingly the companiess financial statement have been prepared on a going concern basis.


The Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements as stipulated by SEBI. The report on Corporate Governance as prescribed in Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance along with a declaration signed by the Chairman and Managing Director stating that Members of the Board and Senior Management Personnel have affirmed the compliance vide Code of Conduct of the Board and Senior Management is attached to the report on Corporate Governance.

As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 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 Central Government had approved appointment of M/s S S Sawant & Co, Cost Accountant, Mumbai as Cost Auditor to conduct Cost Audit relating to the products manufactured by your Company for the financial year 2017-2018, the E-Form CRA-2 for his appointment was filed on time. Further the Company has also appointed M/s S S Sawant & Co as Cost Auditor to conduct the Cost Audit for the financial year 2018- 2019, as per Section 148 of Companies Act, 2013 and there remuneration has to be ratified at the ensuing Annual General Meeting.



The Company had appointed Ms. Pooja Malkan, Practicing Company Secretaries, Mumbai to undertake Secretarial Audit of the Company, pursuant to Section 204 of Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 to conduct Secretarial Audit for the financial year 2017-2018.

The Secretarial Audit Report for the financial year 2017-2018 forms part of the Annual Report as Annexure II to the Boards Report.

Secretarial Auditors observation and Managements response to Auditors observation:

It was observed that as per the provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, M/s. Fine Fashion Private Limited falls into Promoter or Promoter Group but the same has been inadvertently missed out to reclassify in promoter or promoter group.

Due to resignation of the Board of directors the Board was not as per the Companies Act, 2013 and Securities And Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 (LODR)

The management has appointed the Board members at the Board meeting 28/01/2019 due to which the AGM was not scheduled and conducted within the time limit of Companies Act, 2013 and the Company didnt received any extension for the same.

The Company was not able to conduct Board meeting as per the Companies Act 2013 and Securities And Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015 and Exchange compliance for the quarter ended 30th September, 2018 and 31st December, 2018 was not as per the time line of LODR and company has received the notice for suspension of trading form exchanges on January 2019.

The Company has paid the penalty and completed the compliances with exchanges for the quarter ended 30th September, 2018 and 31st December, 2018 and pursuant to which the suspension of trading was revoked.

The Company secretary of the Company put her resignation on July 19, 2017 and management are looking forward to appoint Company secretary.

The creditors of the Company has filed the petition against the company with NCLT under insolvency and bankruptcy code.


The Board of directors has discussed the appointment of Internal Auditor for the financial year 2017-2019, but after a detailed discussion at a board of directors meeting held on January 28, 2019, it was decided that since the company is not in a position to meet the remuneration of internal auditors due to huge losses, the company has postponed the appointment of the internal auditors.


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

Further the net worth of the Company has Decreased to (Loss of Rs. 48,864.29Lakhs) as compared to (Loss of Rs. 43,599.42Lakhs) in previous year. Since the net worth of the Company had fully eroded.


Pursuant to Section 134 (3) (a) of the Companies Act, 2013 an extract of the Annual Return in Form No. MGT 9 is annexed herewith as Annexure I.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows

A) Conservation of energy:

Use of LED LIGHTS for saving electrical consumption

We have taken a forward steps towards the conservation of energy in terms of electrical power saving by using the LED LIGHTS . In this year we have replaced the plant lighting bulbs by the energy saving LED LIGHTS. Step by step we will try to replace the whole lighting bulbs by these LED .

Less use of Pta charging electrical host for saving electrical consumption .

Pta is the key raw material for CP plant. Now we brings the Pta in tankers to our plant. which save the electrical energy consume during the PTA bag lifting up & down movement of electrical hoist .

Demand Based Use of Cooling tower Fan & Air Cooler Fan.

Due to the day & night atmosphere temp.difference. In day we require the 2 fans of both type of cooler to be run. In night we stopped the one electrical fan of both cooler.

Demand Based Reduction of load on chiller & cooling tower.

By optimizing the plant process parameter & process activity we reduce the load on cooling tower & chiller.

Use of turbo vent in place of electrical operated exhaust fan

B) Technology absorption

Installed HT Capacitor Bank for increasing power factor

We have taken our steps towards the modern days technology absorption by installing the H.T. Power capacitor bank which will increase the power factor so thus it will be save the power consumption directly

Installing direct polymer melt (DPM) to poy

We have installed the direct melt line to poy which will save the energy consumption along with convenient source for supplying the polymer to poy.

Installing new POY plant

We have installed the new poy plant which will decrease the power consumption ratio of per ton of production. New poy plant all machinery equipment efficiency is higher as compared to the old one .

Saving of power cost (Power Purchase from IEX)

We have taken a forward steps by purchase power from (Shot Term Open Access) Power Exchange & its per unit power rate is too less compared to the DNHPCL power rate.

(C) Foreign exchange earnings and Outgo:

The particulars regarding foreign exchange earnings and outgo are given in Note No. 42 to 45 of Financial statement.


The Company has constituted a Corporate Social Responsibility (CSR) Committee as per provisions of Section 135 of Companies Act, 2013 to spend in various CSR initiatives as provided under schedule VII of the Companies Act, 2013 and rules made thereunder.

However due to losses suffered and your company been into Corporate Debt Restructuring (CDR), the company has not spent on any CSR activities/projects. However your Company is enthusiastic to serve the society at large, which it will do in the coming years.


The Equity Shares of the Company are listed on the BSE Limited & NSE Limited. Shareholders are requested to convert their holdings to dematerialized form to derive its benefits by availing the demat facility provided by NSDL and CDSL.

The Details of Directors and Key Managerial Personnel Who Were Appointed or Resigned During the year:

During the year under review following directors were resigned

Name of Directors Designation Date of resignation
Mr. Prahlad Rai Jajodia Independent Director 11-06-2018
Mr. Naval Babulal Kanodia Whole Time Director 12-03-2018
Mr. Bibhuti Bhusan das Nominee Director 14-11-2017
Mr. Jugal Parikh Independent Director 04-08-2018
Mr. Raju Chowkidar Independent Director 27-06-2018

Post above resignation the Board were not constituted as per the Companies Act, 2013 and as per LODR

After efforts by Management the following members were appointed as directors.

Name of Directors Designation Date of appointment
Rajendraprasad Rampratap Sharma Independent Director 28/01/2019
Banti Parasar Independent Director 28/01/2019
Mayadhar Ravindar Mahakud Additional Director 28/01/2019

Post above appointment the Board were constituted properly.


The Company has received necessary declarations from each Independent Director under Section 149(7) of the Companies Act, 2013, that he/she meets the criteria for Independence as laid down in Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2016.


Pursuant to the provisions of Section 178 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out annual performance evaluation of its own performance, the directors individually as well as evaluation of working of committees of Board of Directors.

Executive Directors were evaluated on the basis of targets / criteria given to them by the board from time to time as well as per their terms of appointment. Independent Directors, being evaluated by entire board except of Director being evaluated ,on meeting their obligations connected with their independence criteria as well as adherence with the requirements of professional conduct, roles, functions and duties specifically applicable to Independent Directors as contained in Schedule IV of the Companies Act, 2013. Chairman and other Non-Independent Directors were being evaluated by Independent Directors, who also reviewed the performance of secretarial department. Performance evaluation of the Committees and that of its members in effectively discharging their duties, were also being carried out by board.

The overall performance of Chairman, Executive Directors and Non-Executive Directors of the Company is satisfactory. The review of performance was based on criteria of performance, knowledge, analysis, quality of decision making etc.


The Current policy is to have an appropriate proportion of executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. On March 31, 2018, the Board consists of six members, including a, whole-time director and three are independent directors. The Company has framed a Nomination, Remuneration and one Nominee Director and Evaluation Policy.

Board of Directors Meeting:

Committees of Board

Following are the various Committees formed by Board:

• Audit Committee

• Nomination & Remuneration Committee

• Stakeholders Relationship Committee

• Allotment Committee

• Risk Management Committee

• Corporate Social Responsibility Committee

The details of the composition of committees, its roles and responsibility along with no. of meetings held are given in the Report of Corporate Governance and is also placed on the Companys website at (http://rajrayonindustries.com/Pdf/ COMMITTEE.pdf).


Pursuant to the requirement of the Companies Act 2013 and provisions of Listing Agreement applicable to the Company, your Company has adopted Vigil mechanism (Whistle Blower Policy) for complying with the Companys Code of Conduct and Ethics, and particularly to assuring that business is conducted with integrity and that the Companys financial information is accurate. The reportable matters may be disclosed by the employees to the Management / Managing Director / Chairman of the Audit Committee. No complaint was received during the Financial Year 2017-18. During the year under review, no employee was denied access to the Audit Committee.


Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.


All the related party transactions which were entered by the Company during the financial year were done on arms length basis and were in the ordinary course of business of the Company.

Also there are no materially significant related party transactions made by the company with Directors, Key Managerial Personnel, Promoter or any other designated persons which may conflict with the interest of the Company at large. Details of AOC-2 are given under Annexure- IV The policy on Materiality of Related Party Transactions as approved by the Board of  Directors is uploaded on companys website.


Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report as Annexure III.

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, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are required to be provided in the Annual Report. However there were no employees who were in receipt of remuneration for which details need to be disclosed.


The Directors Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and 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 at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


Although the company has long been following the principle of risk minimization as is the norm in every industry, it has now become a compulsion.

Therefore, in accordance with Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Board members were informed about risk assessment and minimization procedures after which the Board formally adopted steps for framing, implementing and monitoring the risk management plan for the company.

The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues. In todays challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks inter alia are: Regulations, Competition, Business risk, Technology obsolescence, Investments, Retention of talent and Expansion of facilities.

Risk Management framework shall primarily focus on the elements such as Risk to Company Assets and Property, Employees Related Risks, Foreign Currency Risks, Risks associated with Non-Compliance of Statutory enactments, Competition Risks, Operational Risks and various other types of risks which may affect the business or organization. Business risk, inter-alia, further includes financial risk, Political risk, Fidelity risk, Legal risk. As a matter of policy, these risks are assessed and steps as appropriate are taken to mitigate the same.

Pursuant the provision of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with respect to the formation of the Risk Management Committee is not applicable to your Company. Detailed policy framework is disclosed on the website of the Company at http://rajrayonindustries.com/admin/Pdf/risk-management- policy.pdf.


There are no significant material orders passed by the Regulators / Courts / Tribunal which would impact the going concern status of the Company and its future operations. Hence, disclosure pursuant to Rule 8 (5) (vii) of Companies (Accounts) Rules, 2014 is not required.


The Company has adopted Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the workplace, to provide protection to employees at the workplace. The Company has constituted Internal Complaints Committee as per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 to consider and redress complaints of sexual harassment. The Committee has not received any complaints of sexual harassment during the year.


Your Company would like to bring to the notice of the shareholders that the unpaid dividend transfer to transferred to Investor Education & Protection Fund as per Section 125 of the Companies Act, 2013.

Other Disclosures / Reporting:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a) Issue of equity shares with differential rights as to dividend, voting or otherwise,

b) Issue of shares (including sweat equity shares) to employees of the Company under any scheme,

Voting rights which are not directly exercised by the employees in respect of shares for the subscription/purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3)(c) of the Companies Act, 2013).


Your Directors would like to express their grateful appreciation for assistance and co-operation received from the Banks, Government Authorities, Customers, Vendors and Members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services of the Executives, Staff members and Workers of the Company.

For and on behalf of the Board of the Directors
Place: Mumbai Non Executive Chairperson & Director
Dated: 28/01/2019 Rajkumari Kanodia