relaxo footwears ltd share price Directors report


Dear Members,

The Board of Directors ("Board") of your Company has pleasure in presenting 39th Annual Report on the Companys business and operations together with the Audited Financial Statements for the Financial Year 2022-23:

1. Company Overview

Incorporated in 1984, Relaxo is the largest footwear manufacturer in India, serving the nation since four decades, and is today ranked among the top 250 Most Valuable Companies with its shares listed at BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).

Relaxo is a Fortune 500 (India) company, synonymous with quality products at a_ordable prices, manufacturing slippers, sandals and sports & casual shoes at 8 State of the Art manufacturing facilities at Bahadurgarh (Haryana), Bhiwadi (Rajasthan) and Haridwar (Uttarakhand).

Your Companys most popular brands – Relaxo, Sparx, Flite & Bahamas are a leader in their space.

Having a pan India distribution footprint, Relaxo also operates 387 strong network of Exclusive Brand Outlets, with availability on all major e-commerce portals as well.

2. Financial Results

In compliance with the provisions of the Companies Act, 2013 ("Act") and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Company has prepared its financial statements as per the Indian Accounting Standards (Ind AS) for the Financial Year 2022-23. The financial highlights of the Companys operations are as follows:

Particulars

2022-23 2021-22
Revenue from Operations 2782.77 2653.27
EBITDA 335.78 415.75
Other Income 18.57 23.72
Less: Finance Costs 19.24 15.33
Less: Depreciation and Amortisation Expense 125.10 113.54

Profit before Tax

210.01 310.60
Less: Tax Expense 55.54 77.92

Profit after Tax

154.47 232.68
Other Comprehensive Income 1.96 0.31
Balance brought forward from Previous year 66.43 45.55
Amount available for Appropriation 222.86 278.54

Appropriation:

Final Dividend 62.23 62.11
Transfer to General Reserve 75.00 150.00
Balance carried to Balance Sheet 85.63 66.43
EPS-Basic (in C) 6.21 9.36
EPS-Diluted (in C) 6.21 9.35

a) Financial

The key highlights of the Companys financial performance during the Financial Year 2022-23 are given below:

Revenue from operations increased by 4.88% to H2782.77 Crores from H2653.27 Crores in the last Financial Year.

EBITDA is at H335.78 Crores as compared to H415.75 Crores in last Financial Year.

Net profit is at H154.47 Crores as compared to H232.68 Crores in the last Financial Year.

Net profit margins is 5.55 %.

Relaxo Exclusive Brand Outlets (EBOs) were at 387 as on March 31, 2023.

Even as the profits of your Company were subdued due to high material prices during this year, the moderate business growth in second half of FY23 helped mitigate the impact.

The year saw a tumultuous beginning with the Russia- Ukraine conflict turning into a full blown war. As it accentuated into the year, it not only had catastrophic e_ect on the warring nations, but it also started wide scale disruptions in supply chain equations leading to spiraling inflation levels unprecedented in many nations, and India too, was severely impacted by it. Raw material supplies went haywire, with prices following suit northwards. Force majeure price revisions in quick succession led to same stock being available at multiple price points, stirring trade confidence resulting in an adverse impact on sales even as the scars caused by Covid 19 were ebbing.

Despite this, in a strategic move, your Company has absorbed a part of input cost to unburden the consumer, maintaining its brand equity and topline with a marginal impact on profits in the current year.

All this while, your Company continued to strengthen territorial presence and invest in brand building and marketing initiatives. As the inflation eased towards the third quarter, the e_orts starting paying o_ and the long established, resilient infrastructure placed your Company in a position of advantage over its peers.

Revenue E2782.77 Cr.

Managed a moderate growth despite inflationary

Growth 4.88%

pressures & subdued business sentiments.

EBITDA E335.78 Cr.

Margin 12.07%

Substantial increase in raw material prices
impacted EBITDA & PAT margins

PAT E154.47 Cr.

Margin 5.55%

b) Non-Financials

Despite the challenging year, your Company is on track to achieve its long term goal.

Sales & Marketing

With unprecedented inflation and supply chain disruptions marring H1 performance, your Company also re-aligned its strategies to cope with the new paradigm and continued with its marketing initiatives with an eye on the future.

Your Company continued to upgrade technological systems to improve e_ciency of front line salesforce and ease of operations management at distributor end and also aggressively expand the distribution network with special focus on reaching hitherto uncovered districts of the country.

During FY23, as a strategic initiative, marketing campaigns across sales channels – wholesale, Exclusive Brand Outlets, exports, modern trade and e-commerce were aligned to reap synergies in communication.

To maintain top of mind recall leadership for its brands, your Company continued with its consumer and trade facing initiatives by way of high decibel media campaigns, consumer contact programs, aggressive branding & merchandising and pan India retailer meets.

To capture the digital eyeballs, your Company maintained an ‘always on presence in the online space with engaging brand campaigns during the year. Increasing penetration of internet and digitization has propelled e-commerce activities to higher levels across the nation. During the year, your Company has paid special focus on this channel and worked out strategic measures to optimize performance over leading market places with minimal impact on traditional o_ine business with resultant growth, encouraging sustained investments for the future.

Retail

During the year, your Company undertook an extensive in-store branding refresh exercise and implemented a regimented placement planogram for e_ective product showcasing. With a view to deliver

IT environment. Your Company has also Implemented managed SOC (Security Operation Centre) solution to ensure 24x7 monitoring for protection against cyber threats.

Human Resource

During the year, a slew of programs were deployed to augment the capability of your Companys human resources.

In order to enhance productivity and competency of its sales force, your Company undertook Sales Capability Programmes for its leadership as well as for the frontline, upskilling them for the future.

As a strategic measure, a cohort of critical middle management talent has been identified for leadership roles in near future even as your Company is continually sourcing fresh talent from premier business schools in order to strengthen the succession pipeline.

Continuing with the past practice of using long term incentives to retain critical talent, during the year, your Company launched the 4th (fourth) phase of RFL ESOP Plan 2014 covering 100 eligible employees and cancelled the ESOP granted under Phase III of RFL ESOP Plan 2014 as Employees surrendered the ESOP voluntarily.

4. Management Discussion and Analysis Report

Pursuant to Regulation 34(2)(e) of the Listing Regulations, a detailed Management Discussion and Analysis Report for the Financial Year under review is presented in a separate section, forming part of the Annual Report.

The state of the a_airs of the business along with the financial and operational developments has been discussed in detail in the Management Discussion and Analysis Report.

5. Dividend

In line with the Dividend Distribution Policy of the Company, the Board of your Company in its meeting held on May 10, 2023 has recommended a final dividend @ 250 % equivalent to H2.50/- (Rupees Two and Fifty Paisa only) per equity share of H1/- (Rupee One Only) each for the Financial Year

2022-23 payable to those members whose name appear in the Register of members/list of beneficiaries as on August 17, 2023 i.e. the cut-o_ date. The total final dividend payout will amount to H62.23 Crore (Rupees Sixty Two Crore Twenty Three Lacs only). The payment of final dividend is subject to the approval of members in the Companys ensuing Annual General Meeting ("AGM").

The Register of Members and Share Transfer Books will remain closed from August 18, 2023 (Friday) to August 23,

2023 (Wednesday) (both days inclusive) for the purpose of payment of final dividend for the Financial Year 2022-23, if declared at the ensuing AGM.

Pursuant to the Finance Act, 2020 read with the Income-tax Act, 1961, the dividend paid or distributed by a company shall be taxable in the hands of the shareholders w.e.f. April 1, 2020. Accordingly, in compliance with the said provisions, your Company shall make the payment of dividend after deduction of tax at source at the prescribed rates. For the prescribed rates for various categories, the shareholders are requested to refer to the Finance Act, 2020 and amendments thereto.

6. Dividend Distribution Policy

As per Regulation 43A of the Listing Regulations, top 1000 listed companies are required to formulate a Dividend Distribution Policy. Accordingly, your Company has adopted the Dividend Distribution Policy which sets out the parameters and circumstances to be considered by the Board in determining the distribution of dividend to its shareholders and / or retaining profits earned by the Company. The said Policy is available on the website of the Company at the link https://www.relaxofootwear.com/ policies.

7. Transfer to Reserves

We have transferred H75.00 Crore (Rupees Seventy Five

Crore Only) to the general reserve from net profits. An amount of H85.63 Crore (Rupees Eighty Five Crore Sixty Three lac only) is proposed to be retained in the Statement of Profit & Loss of the Company.

8. Public Deposits

Your Company has not invited or accepted any deposits within the meaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force), from public during the year under review. Therefore, no amount of principal or interest was outstanding, as on the balance sheet closure date.

9. Compliance with Secretarial Standards

During the year under review, the Directors state that applicable Secretarial Standards issued by the Institute of Company Secretaries of India ("ICSI"), i.e. Secretarial Standard-1 ("SS-1") and Secretarial Standard-2 ("SS-2"), relating to ‘Meetings of the Board of Directors and ‘General Meetings, respectively, have been duly complied by the Company.

10. Subsidiary/ Joint Venture/ Associate Company

Your Company does not have any subsidiary, joint venture or associate company, during the Financial Year under review.

11. Changes in Nature of Business

There was no change in the nature of business of the Company during the Financial Year under review.

12. Share Capital

Authorised Share Capital:

The Authorized share capital of your Company as on March 31, 2023 stood at H51,00,00,000 (Rupees Fifty One Crores

Only) divided into 51,00,00,000 (Fifty One Crores) Equity Shares of H1/- (Rupee One Only) each.

Issued, Subscribed and Paid-up Share Capital:

During FY23, the Board of Directors of the Company at its meeting held on March 30, 2023, issued and allotted 12,540 (Twelve Thousand Five Hundred Forty) equity shares of H1/-

(Rupee One Only) each fully paid up on exercise of stock options by the eligible employees under the Employee Stock Option Plan, 2014 (RFL ESOP PLAN-2014).

As on March 31, 2023, the issued, subscribed and paid-up share capital of the Company was H24,89,38,586/-

(Rupees Twenty Four Crores Eighty Nine Lacs Thirty Eight Thousand Five Hundred and Eighty six Only) consisting of equity shares of face value of H1.00/- each divided into 24,89,38,586 (Twenty Four Crores Eighty Nine Lacs Thirty Eight Thousand Five Hundred and Eighty six) equity shares of H1/- (Rupee One Only) each.

13. Disclosure Relating to Remuneration of Directors and Key Managerial Personnel (KMP)

Your Company believes that building a diverse and inclusive culture is integral to its success. A diverse Board will be able to leverage di_erent skills, qualifications, professional experiences, perspectives and backgrounds, which is necessary for achieving sustainable and balanced development. The Nomination and Remuneration Committee had adopted principles for identification of Key Managerial Personnel, Senior Management including the Executive Directors. Pursuant to Section 134(3) (e) and Section 178(3) of the Act, the Nomination and Remuneration Policy adopted by the Board also sets out the criteria for determining qualifications, positive attributes and independence while evaluating a person for appointment / re-appointment as Director or as KMP with no discrimination on the grounds of gender, race or ethnicity, nationality or country of origin, and to also determine the framework for remuneration of Directors, KMP, Senior Management Personnel and other employees. The detailed Nomination and Remuneration Policy is available on the website of the Company at the link https:// www.relaxofootwear.com/policies.

14. Particulars of Employees

The information and disclosure required under Section 197(12) of the Act read with Rule 5(1), 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force), in respect of Directors and Employees of your Company is set out in Annexure - A to this report.

15. Directors and Key Managerial Personnel

Pursuant to the Section 152(6) of the Act read with the Articles of Association of the Company, Mr. Deval Ganguly, Whole Time Director (DIN: 00152585) of the Company will retire by rotation at the ensuing Annual General Meeting and being eligible, o_ered himself for re-appointment. The Board has recommended his re-appointment to shareholders.

The members in the 38th AGM held on August 25, 2022 through Video Conferencing ("VC") / Other Audio Visual Means ("OAVM") have approved the Appointment of Mr. Kuldip Singh Dhingra (DIN: 00048406) as Non-Executive Independent Director of the Company for a period of 5 (five) years and appointment of Mr. Gaurav Dua (DIN:09674786) as Whole Time Director of the Company for a period commencing from July 26, 2022 to September 30, 2023.

As on March 31, 2023, Mr. Ramesh Kumar Dua (DIN

- 00157872), Managing Director, Mr. Mukand Lal Dua (DIN - 00157898), Whole-Time Director, Mr. Nikhil Dua (DIN-00157919), Whole-Time Director, Mr. Gaurav Dua (DIN:09674786)- Whole-Time Director, Mr. Deval Ganguly (DIN - 00152585) Whole-Time Director, Mr. Sushil Batra, Chief Financial O_cer (CFO) and Mr. Ankit Jain, Company Secretary, are the Key Managerial Personnel (KMP) of your Company.

During the Financial year under review, Mr. Vikas Kumar Tak resigned from the position of Company Secretary and Compliance O_cer of the Company e_ective December 15, 2022 and Mr. Ankit Jain was appointed as the Company Secretary and Compliance O_cer of the Company w.e.f. February 4, 2023.

Additionally, Mr. Pankaj Shrimali (DIN: 00013142), being Non-executive Independent Director of the Company was designated as Chairperson of the Company with e_ect from April 1, 2022, in compliance with Part E of Schedule II of the Listing Regulations.

Therefore, your Board is maintained with optimum combination of Executive and Non-Executive/Independent Directors. As on March 31, 2023, the Company has 1 (One) Managing Director, 4 (Four) Whole Time Directors and 5 (Five) Non-Executive Independent Directors including 1 (One) Woman Independent Director. The composition of the Board represents an optimal mix of professionalism, knowledge, experience and expertise in varied fields enabling it to discharge its responsibilities and provide e_ective leadership for long term vision with highest standards of governance.

16. Declaration by Independent Directors

The Company has received necessary declarations from all the Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed under Section 149(6) of the Act and Regulation 25(8) read with Regulation 16 of Listing Regulations (as per the amendment in SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2021). The Company has also received from them declaration of compliance of Rule 6 (1) & (2) of the Companies (Appointment and Qualifications of Directors) Rules, 2014, regarding online registration with the Indian Institute of Corporate A_airs ("IICA") at Manesar, for inclusion/ renewal of name in the databank of Independent Directors. The Independent Directors have also confirmed that they have complied with the Companys Code of Conduct for Independent Directors prescribed in Schedule IV of the Act.

17. Statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the Independent Directors appointed during the year

With regard to integrity, expertise and experience (including the proficiency) of the Independent Directors appointed/reappointed during the FY23, the Board of Directors has taken on record the declarations and confirmations submitted by the Independent Directors and is of the opinion that all the Independent Directors are persons of integrity and possess relevant expertise and experience and their continued association as Directors will be of immense benefit and in the best interest of the Company. With regard to proficiency of the Independent Directors, ascertained from the online proficiency self-assessment test conducted by the Institute, as notified under Sub-Section (1) of Section 150 of the Act, the Board of Directors has taken on record the declarations submitted by Independent Directors that they are exempt from appearing in the test.

None of the Directors other than Mr. Ramesh Kumar Dua, Managing Director, Mr. Mukand Lal Dua, Mr. Nikhil Dua and Mr. Gaurav Dua, Whole time Directors of the Company are related inter-se, in terms of Section 2(77) of the Act including Rules framed there under.

18. Annual Evaluation

In terms of the provisions of section 178 of the Act read with Rules issued thereunder and Regulation 19 read with Part D of Schedule II of the Listing Regulations, the Board of Directors in consultation with Nomination and Remuneration Committee, has formulated a framework recommended by the renowned consultants containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company, its Committees and individual directors, for FY23.

During the reporting year, customized questionnaires were circulated to all the Board members in order to enhance the e_ectiveness of the Evaluation Process. The Board Evaluation process was carried out to ensure that the Board and various Committees of the Board have appropriate composition and they have been functioning collectively to achieve the business goals of the Company. Directors were evaluated on their contribution at Board/Committee meetings and guidance & support to the management outside Board/Committee meetings and other parameters as specified by the Nomination and Remuneration Committee of the Company.

The Boards functioning was evaluated on various aspects, including inter alia degree of fulfillment of key responsibilities, Board structure and composition, role and accountability, management oversight, risk management, culture and communication, frequency and e_ectiveness of meetings.

The Committees of the Board were assessed on the basis of degree of fulfillment of key responsibilities, adequacy of Committee composition and e_ectiveness of meetings.

The performance evaluation of Independent Directors was carried out by the entire Board, excluding the Director being evaluated. The performance evaluation of the Chairman of the Board and the Non-Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board as a whole.

The Board of Directors expressed their satisfaction with the evaluation process.

19. Familiarization Programme

In terms of Regulation 25(7) of the Listing Regulations, the Company familiarizes its Directors about their role and responsibilities at the time of their appointment through a formal letter of appointment. The format of the letter of appointment/re-appointment is available on our website at the link https://www.relaxofootwear.com/terms-conditions-of-independent-director.

Sessions are conducted at the meetings of the Board and its various Committees on the relevant subjects such as strategy, Company performance, financial performance, internal financial controls, risk management, plants, retail, products, finance, human resource, capital expenditure, CSR, Compliances etc. All e_orts are made to keep Independent Directors aware of major developments taking place in the industry, the Companys business model and relevant changes in the law governing the Companys business. The details of the programs/sessions conducted for familiarization of Independent Directors can be accessed on the Company website at the link www.relaxofootwear. com/other-disclosures.

20. Number of Meetings of the Board

During FY23, the Board of Directors met 5 (five) times on May 11, 2022, July 26, 2022, November 2, 2022, February 4, 2023 and March 30, 2023, the details of which are provided in the Report on Corporate Governance, which forms part of the Annual Report. The intervening period between any two consecutive Board meetings was within the maximum time gap prescribed under the Act, Regulation 17 of the Listing Regulations and SS-1 issued by ICSI.

21. Committees of the Board

During the FY23, the Board had 5 (five) Committees, namely:

- Audit Committee;

- Nomination and Remuneration Committee;

- Stakeholders Relationship Committee;

- Risk Management Committee; and

- CSR & ESG Committee.

All the recommendations made by the Committees of the Board including the Audit Committee were accepted by the Board. A detailed update on the Board, its composition, detailed charter including terms and reference of various Board Committees, number of Board and Committee meetings held during FY23 and attendance of the Directors at each meeting is provided in the report on Corporate Governance, which forms part of the Annual Report.

22. Directors Responsibility Statement

Pursuant to Section 134(3)(c) and 134(5) of the Act, the Directors to the best of their knowledge and belief, confirm that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed, along with the proper explanation relating to material departures; b) such accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of a_airs of the Company at the end of the Financial Year and of the profit of the Company for that period; c) proper and su_cient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the annual accounts have been prepared on a going concern basis; e) Internal Financial Controls have been laid down to be followed by the Company and that such Internal Financial Controls are adequate and were operating e_ectively; and f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating e_ectively.

23. Statutory Auditors

In terms of the provisions of Section 139 of the Act read with provisions of the Companies (Audit and Auditors) Rules, 2014 (as amended) M/s Gupta & Dua, Chartered Accountants, (ICAI Firm Registration No. –003849N) were appointed as the Statutory Auditors of the Company for a period of 5 (five) years from the conclusion of 38th AGM till the conclusion of 43rd AGM of the Company.

24. Auditors Report

The Board has duly examined the Statutory Auditors Report to the accounts, which is self-explanatory. The Auditors Report for FY23 does not contain any qualification, reservation or adverse remarks. The observation of the Statutory Auditors on the financial statements have been suitably explained in the Notes to Accounts and do not require any further clarification.

25. Details in respect of frauds reported by auditors under section 143(12) other than those which are reportable to the Central Government

During the Financial Year under review, no fraud is reported by the Auditors of the Company under Section 143(12) of the Act.

26. Maintenance of Cost Records and Cost Audit

The Company does not fall under the category prescribed under sub-section (1) of Section 148 of the Act and Rules 3 and 4 of the Companies (Cost Records and Audit) Rules, 2014 (as amended from time to time) to whom the requirements of maintenance of Cost Records and the requirement of Cost Audit is applicable.

27. Internal Auditor

Pursuant to the provisions of Section 138 of the Act, the Company has appointed Deloitte Touche Tohmatsu India LLP and Sahni Natarajan and Bahl as the Internal Auditors of the Company for Financial Year 2023-24 in co-sourcing model along with in-house Internal Auditor.

28. Secretarial Auditor

Pursuant to the provisions of Section 204(1) of the Act read with Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) and Regulation 24A of the Listing Regulations, the Board had appointed M/s Chandrasekaran Associates to conduct the Secretarial Audit of the Company for the Financial Year 2022-23 as recommended by Audit committee.

The Secretarial Audit Report for the Financial Year 2022-23 is annexed as Annexure-B which forms part of this report. The Secretarial Audit Report for the Financial Year ended March 31, 2023 does not contain any qualification, reservation or adverse remarks except the following:- (i) The Chairman of Audit Committee has not attended the Annual General Meeting ("AGM") of the Company held on August 25, 2022 due to some business exigencies as Chairman of Audit Committee had to urgently travel. Accordingly he couldnt attend this AGM.

(ii) During the period April 01, 2022 to April 21, 2022, the Chairman of the Company and Nomination and Remuneration Committee ("NRC") was the same Director of the Company; during the aforesaid period no meeting of Board and NRC have been held. Accordingly, the Chairman of the Board hasnt attended any meeting of NRC as Chairman of the Company and did not take any decision in the NRC as Chairman of Company during the aforesaid period.

(iii) The Company has delayed/non filing of certain forms with Registrar of Companies. As confirmed by the management of the Company that due to the technical issues on the portal of Ministry of Corporate A_airs arising on account of transition of V2 to V3, form CSR-2 could not be filed within prescribed timeline.

(iv) The audio recordings of certain earning calls of the Company have been submitted by the Company with the stock exchanges within twenty-four hours from the conclusion of such calls but not before the next trading day from the conclusion of such calls. However going forward the Company did take care to file the same in all further correspondences with stock exchange before the next trading day from the conclusion of such call or twenty-four hours whichever was earlier.

29. Annual Return

Pursuant to Section 134 and Section 92(3) of the Act read with Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, the annual return as on March 31, 2023 will be available on the website of the Company at the link https://www.relaxofootwear.com/annual-return.

30. Contracts and Arrangements with Related Parties

During FY23, the Company has entered into various transactions with related parties. All the Contracts/ arrangements/transactions entered into by the Company with its related parties during the Financial Year under review were in the ordinary course of the business, on the arms length basis and were undertaken in compliance with the applicable provisions of the Act and the Listing Regulations.

During the Financial Year under review, the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the Policy of the Company on materiality of Related Party Transactions that would have required Shareholders approval under Regulation 23 of the Listing Regulations.

The updated Policy on materiality of Related Party Transactions is available on the website of the Company at the link - https://www.relaxofootwear.com/policies.

The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

The particulars of the material related party transactions are provided in Form AOC-2 as Annexure-C which forms part of this Report. Further, disclosures as per Ind-AS 24 have been made in note 39 of the financial statements for the year ended March 31, 2023.

31. Particulars of Loans, Guarantees & Investments

In terms of Section 186 of the Act and Rules framed thereunder, details of the Loans given and Investments made by your Company have been disclosed under note 4 in Financial Statements for the financial year ended March 31, 2023, which forms part of this Annual Report. Your Company has not given any guarantee or provided any security during the year under review.

32. Risk Management

Your company has a Risk Management Policy consistent with the provisions of the Act and Listing Regulations. Risk management process has been established across the Company and is designed to identify, assess and frame a response to threats that a_ect the achievement of its objectives. Further, it is embedded across all the major functions and revolves around the goals and objectives of the organisation.

The Board of Directors has constituted its Risk Management Committee to assist the Board in fulfilling its responsibilities relating to evaluation and mitigating various risks exposures that potentially impact the Company.

The Board advised by the Risk Management Committee, wherever appropriate, regularly reviews the significant risks and decisions that could have a material impact on the company. There are no risks which, in the opinion of the Board, threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report.

As per SEBI (LODR) (Second Amendment) Regulations, 2021, the Risk Management Committee shall meet at least twice in a year. The details pertaining to the composition, meetings and terms of reference of the Risk Management Committee are included in the Report on Corporate Governance which forms part of the Annual Report.

33. Corporate Social Responsibility (CSR) and its Committee

Your Company has firm belief and commitment towards the collective development of all the stakeholders especially people at bottom of the pyramid and consider it as a prerequisite for the sustainability of the business. Thus, CSR is not just compliance for the Company but is an opportunity to contribute towards nation building through well-defined professional approach. In compliance with the provisions prescribed under Section 135 of the Act, your Company had constituted a CSR & ESG CommitteeoftheBoard.TheBoardofDirectorslaiddownthe CSR Policy, covering the objectives, focus areas, governance structure and monitoring & reporting framework among others. The Policy is available on the website of the Company at the link https://www.relaxofootwear.com/policies. During the year, your Company initiated Phase III of the ongoing Parivartan project in co-ordination with Sarva Shiksha Abhiyan, Uttarakhand, by adopting additional 32 schools of Khanpur and Laksar blocks- District Haridwar, Uttarakhand.

Currently this project is running in 3 phases, providing support to approx. 7,633 students of 77 schools in Khanpur and Laksar Blocks- District Haridwar, Uttarakhand.

In the reporting period, your Company has completed infrastructure development works in 19 Schools of Phase II & III. Out of total 77 schools, 42 schools have been renovated under Parivartan Project till now.

Being a multiyear project, your company will be supporting the Government Education Department to develop Government schools into Model Schools that will have child-friendly infrastructure, trained & motivated teachers, empowered school management committees for the benefit of students.

During the year, the Company has continued its work on the long term project undertaken in FY23, the details of activities are given in Annexure-D to this report.

The details of the composition of the CSR & ESG Committee, CSR policy, CSR initiatives and activities undertaken during the year are given in the Annual Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 and explained in detail in Annexure-D to this report.

The details pertaining to the composition, meetings and terms of reference of the CSR & ESG Committee are included in the Report on Corporate Governance which forms part of the Annual Report.

As per requirement under Section 135 of the Act read with relevant Rules made thereunder, the composition of the CSR & ESG Committee, and CSR Policy and Projects approved by the Board are available on the website of the Company at https://www.relaxofootwear.com/policies.

34. Composition of Audit Committee

In compliance with the provisions of Section 177 of the Act and Regulation 18 of the Listing Regulations, the Board of Directors of the Company had constituted the Audit Committee. The details pertaining to the composition, meetings and terms of reference of the Committee are included in the Report on Corporate Governance which forms part of the Annual Report.

35. Vigil Mechanism

Your Company, as required under Section 177 (9) of the Act and Regulation 22 of the Listing Regulations, has established Vigil Mechanism/ Whistle Blower Policy for Directors and employees of the Company. This Policy has been established with a view to provide a tool to Directors and employees of the Company to report to the management on the genuine concerns including unethical behavior, actual or suspected fraud or violation of the Code or the Policy. This Policy outlines the procedures for reporting, handling, investigating and deciding on the course of action to be taken in case inappropriate conduct is noticed or suspected. This Policy also provides for adequate safeguards against victimization of director(s)/employee(s) who avail the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. The Audit Committee is authorized to oversee the Vigil Mechanism/ Whistle Blower Policy in the Company. During the year under review, the Company received 1 (One) Complaint from a shareholder of the Company regarding non-receipt of Discount Coupon, and the same was resolved.

Your Company hereby a_rms that no person of the Company has been denied access to the Chairman of the Audit Committee.

The Policy is available on the website of the Company at the link https://www.relaxofootwear.com/policies.

36. Business Responsibility and Sustainability Report

SEBI vide its Notification no. SEBI/LAD-NRO/GN/2021/22 dated 5 May, 2021, has discontinued the requirement of submitting a business responsibility report after the Financial Year 2021-22 and thereafter, with e_ect from FY23, the top 1000 listed entities based on market capitalization shall submit a business responsibility and sustainability report in the format as specified by the SEBI. In terms of the amended Regulation 34 of the Listing Regulations, the Business Responsibility and Sustainability Report, describing the initiatives taken by the Company for environmental, social and governance perspective, forms part of this Annual Report.

37. Policy on Prevention of Insider Trading

In accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company has in place following policies/codes which are revised from time to time according to applicable laws or as per need:

Code for Prevention of Insider Trading

Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information ("UPSI")

Policy and procedures for inquiry in case of leak of UPSI/ suspected leak of UPSI

All compliances relating to Code of Conduct for Prevention of Insider Trading are being managed through a web-based portal installed by the Company. The Code, inter alia, lays down the procedures to be followed by DPs while trading/ dealing in Companys shares and sharing UPSI. The Code includes the obligations and responsibilities of DPs, obligation to maintain the digital database, mechanism for prevention of insider trading and handling of UPSI. The said code is available on the website of the Company at https:// www.relaxofootwear.com/policies.

38. Disclosure Under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("SHWWP Act")

The Company is an equal employment opportunity employer and is committed to provide a safe and conducive work environment that enables women employees to work without fear of prejudice, gender bias and sexual harassment. The Company always believes in transparency, honesty, equality, antiracism and fairness to all including women employees of the Company. They have right to be treated with dignity and as per the Companys framework. Harassment of any kind including sexual harassment is forbidden. The Company has ‘Zero Tolerance approach towards any act of sexual harassment. Article 21 of the Constitution, which relates to the right to life and personal liberty, includes the right to live with dignity, and in the case of women, it means that they must be treated with due respect, decency and dignity of workplace. As required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has a policy on Prevention of sexual harassment of women at workplace and matters connected therewith and has also complied with the provisions relating to the Constitution of Internal Committee (IC).

An Internal Committee (IC) is available at each of Units and O_ces of the Company as per the provisions of the law. The IC is responsible for redressal of complaints related to sexual harassment. The Company also conducts sensitization/awareness sessions and quarterly meetings on a regular basis so as to create a free and fair working environment.

No complaint was received by IC during FY23.

It is our constant endeavour to ensure that we provide harassment free, safe and secure working environment to all employees specially women.

39. Significant and Material Litigations / Orders

During the Financial Year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

40. Capital Market Ratings

During FY23, ICRA has retained long term rating of the Company at [ICRA] AA (pronounced as ICRA Double A). The Outlook on the long-term rating has been revised to Stable from Positive.

Additionally, ICRA has also retained short term rating of the Company at [ICRA] A1+ (pronounced as ICRA A one plus) which is the highest rating for the category.

41. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The details relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under Section 134(3) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed as Annexure-E which forms part of this Report.

42. Employees Stock Option Plan

Presently, the Company has one Employee Stock Option Plan 2014 ("RFL ESOP PLAN-2014"/ "ESOP Plan"). This Plan helps to attract and retain talented employees in the Company and boost their morale. The Nomination and Remuneration Committee administers and monitors the Companys ESOP Plan.

During FY23, 12,540 (Twelve Thousand Five Hundred Forty) options were exercised by the employees of the Company. Accordingly, the Company on March 30, 2023 made an allotment of 12,540 (Twelve Thousand Five Hundred Forty) equity shares against the options exercised by the employees. During the Financial Year under review, the Company has cancelled 4,00,300 (Four Lacs Three Hundred) options due to Resignation/ Retirement as per the Companys ESOP Plan and cancellation of RFL Phase 3rd of ESOP Scheme 2014 due to surrender of ESOPs by the employees of the Company on voluntary basis.

During the year the Company rolled out fourth phase of RFL ESOP Plan 2014 and granted 7,71,200 (Seven Lacs Seventy One Thousand Two Hundred) options to 100 employees.

Pursuant to the provisions of SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, a disclosure with respect to ESOP Plan of the Company as on March 31, 2023, is available on the website of the Company at the link https://www.relaxofootwear.com/other-disclosures.

A certificate from M/s. Chandrasekaran Associates, Company Secretaries, Secretarial Auditor of the Company with respect to the implementation of the Companys ESOP Plan would be made available to the members at the ensuing AGM. A copy of the same will also be available for inspection at the registered o_ce of the Company during business hours.

ESOP scheme of the Company is in compliance with SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.

The details as per the requirements of ESOP Regulations are annexed as Annexure-F which forms part of this Report.

43. Material Changes and Commitments

There are no material changes and commitments a_ecting the financial position of the Company, which have occurred between the end of the Financial Year ended on March 31, 2023 of the Company and as on the date of this Report.

44. Internal Financial Controls

Your company has put in place adequate internal financial controls with reference to the financial statements commensurate with the size, scale and complexity of our operations.

Internal Financial Controls ensure orderly and e_cient conduct of the business, including adherence to companys policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and the timely preparation of reliable financial information.

Internal Financial Control framework is independently evaluated by external agency apart from periodic evaluation by in-house Internal Audit function for necessary improvement, wherever required. Based on the results of such assessments, no reportable material weakness or significant deficiencies in the design or operation of Internal Financial Controls was observed.

Further, the Statutory Auditors of the Company also reviewed Internal Financial Controls over Financial Reporting of the Company as on March 31, 2023 and issued their report which forms part of the Independent Auditors report.

The Audit Committee of the Board of Directors actively reviews the adequacy and e_ectiveness of internal control systems and suggests improvement for strengthening them. The Company has a strong Management Information System, which is an integral part of the control mechanism. The Company continues to strengthen its risk management and internal control capabilities by improving its policies and procedures and introducing advanced risk management tools.

The Managing Director and CFO Certificate included in the Corporate Governance Report confirms the existence of e_ective internal control systems and procedures in the Company. The Audit Committee reviews the e_ectiveness of the Internal Financial Control framework in the Company.

45. Managing Director and CFO Certification

The Certificate required under Regulation 17(8) of the Listing Regulations, duly signed by the Managing Director and CFO was placed before the Board. The same is annexed with Corporate Governance Report which forms part of this Annual Report.

Declaration by Managing Director under Regulation 34(3) read with Schedule V of the Listing Regulations in respect of compliance with the Companys Code of Conduct is enclosed with this Annual Report.

46. Transfer of Unclaimed Shares / Dividend

As per the provisions of Regulation 39(4) read with Schedule VI of the Listing Regulations, the unclaimed shares lying in the possession of the Company, are required to be dematerialized and transferred into a special demat account held by the Company.

Accordingly, unclaimed shares lying with the Company have been transferred and dematerialized in an ‘Unclaimed Suspense Account of the Company. This account is being held by the Company purely on behalf of the shareholders entitled for these equity shares.

The summary of ‘Unclaimed Suspense Account during the year is given hereunder:

Particulars

No. of Shareholders No. of equity shares held

1 Aggregate number of shareholders and the outstanding shares lying in the suspense account as on April 1, 2022

31 82,195

2 Number of shares transferred to suspense account during the year

- -

3 Number of shareholders who approached the company for shares and to whom shares were transferred from the suspense account during the year

2 10,024

4. Transfer of shares to IEPF Account

- -

5. Aggregate number of shareholders and the outstanding shares lying in the suspense account as on March 31, 2023

29 72,171

The voting rights on the equity share(s) in the suspense account shall remain frozen till the rightful owners of such equity share(s) claim the equity share(s). Any corporate benefits in terms of securities accruing on such equity shares viz. bonus shares, split etc., shall also be credited to such demat suspense account or unclaimed suspense account, as applicable in accordance with existing provisions.

In compliance with the statutory provisions, during the Financial Year under review, the Company transferred unclaimed dividend amounting to H1,84,906/- (Rupees One

Lac Eighty Four Thousand Nine Hundred and Six Only) from the Final Dividend for the Financial Year 2014-15 to the Investors Education and Protection Fund ("IEPF"). The Company has also uploaded the details of unpaid and unclaimed amounts lying with the Company as on August 25, 2022 (date of last AGM) on the website of the Company at the link https://www.relaxofootwear.com/unpaid-dividend-data.

Pursuant to the provisions of Section 124 and 125 of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended, during FY23, the Company transferred 6,110 (Six Thousand One Hundred and Ten) equity shares to demat account with IEPF for which dividend was unpaid/ unclaimed for seven consecutive years.

The shareholders whose unpaid dividend/shares are transferred to the IEPF can request the Company/Registrar and Transfer Agent as per the applicable provisions in the prescribed form, IEPF-5, for claiming the unpaid dividend/ shares from IEPF. The process and online application form (Form IEPF – 5) as prescribed by the Ministry for claiming back the shares/dividends are available on the website of MCA at www.iepf.gov.in . Mr. Ankit Jain, Company Secretary

& Compliance O_cer acts as the Nodal O_cer of the Company as per the provisions of IEPF. The contact details of Nodal O_cer is available on the website of the Company at the link https://www.relaxofootwear.com/investor-support.

47. Corporate Governance

The Company is committed to maintain the highest standard of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. A detailed report on Corporate Governance, pursuant to the requirements of Regulation 34 of the Listing Regulations, forms part of the Annual Report. A certificate from M/s Gupta & Dua, Chartered Accountants, (ICAI Firm Registration No. –003849N) Statutory Auditors of the Company, confirming the compliance of the Company with the conditions of Corporate Governance, as stipulated under the Listing Regulations, is attached to the Report of Corporate Governance as Annexure-G.

48. Details of Non-Compliance with regard to Capital Markets During the Last Three Years

There have been no instances of non-compliances by the Company with regard to Capital Markets during the last three years.

49. Other Disclosures

The Company a_rms that the annual listing fees for the Financial Year 2023-24 to National Stock Exchange of India Ltd. and BSE Ltd. is duly paid.

There is no proceeding pending under the Insolvency and Bankruptcy Code, 2016.

There was no instance of onetime settlement with any Bank or Financial Institution.

50. Acknowledgement

We take this opportunity to thank our employees for their dedicated service and contribution to the Company.

We would like to place on record sincere thanks and appreciation to all our customers, partners, vendors, investors, bankers and other business associates for their continued support and encouragement during the year.

For and on behalf of the Board of Directors

Ramesh Kumar Dua Mukand Lal Dua
Delhi Managing Director Whole Time Director
May 10, 2023 DIN: 00157872 DIN: 00157898