Rubfila International Ltd Directors Report.

TO THE MEMBERS OF RUBFILA INTERNATIONAL LIMITED

The Directors have pleasure to present their 26 Annual Report and the audited Annual Accounts for the year ended 31 March 2019. The consolidated performance of the Company and its associates has been referred to wherever required.

1. Financial Results

Rs. in Lakhs

Standalone Consolidated
Particulars Year ended 31 March, 2019 Year ended 31 March, 2018 Year ended 31 March, 2019 Year ended 31 March, 2018
Gross Income 21799.35 22198.83 21799.35 22198.83
Profit before Interest and Depreciation 2647.56 3620.46 2716.5 3620.46
Finance Charges 8.51 11.57 8.51 11.57
Profit before Depreciation 2639.05 3608.89 2707.99 3608.89
Provision for Depreciation 313.47 356.24 313.47 356.24
Net Profit before Tax 2325.58 3252.65 2394.52 3252.65
Provision for Tax 624.41 1145.13 624.41 1145.13
Net Profit after Tax 1653.20 2091.52 1721.44 2091.52
Balance of Profit brought forward 7720.04 6108.03 7720.04 6108.03
Balance available for appropriation 9421.21 8215.55 9490.15 8215.55
Dividend on Equity Shares 452.18 324.13 452.18 324.13
Tax on proposed Dividend 92.96 66.00 92.96 66.00
Transfer to General Reserve 85.06 105.38 85.06 105.38
Surplus carried to Balance Sheet 8791.01 7720.04 8859.95 7720.04

2. Performance Review

Your company achieved a turnover of Rs 21374.21 lakhs for the year 2018- 19. The profit before depreciation and taxes is Rs 2707.99 Lakhs as compared to Rs.3608.89 lakhs posted during the previous year. The earnings per equity share (face value Rs. 5) for the year is Rs.3.73. as against Rs.4.80 for the previous year.

3. Dividend and Transfer to Reserves

Your Directors have recommended a dividend of 20% (Rs.1 per Share of face value Rs.5/-) for the year subject to the approval of shareholders at the ensuing Annual General Meeting. This will result in total payout for the year 2018-19 (including Dividend Distribution Tax) of Rs 569.25 Lakhs. (Rs.545.14 Lakhs in 2017-18). An amount of Rs. 85.06. Lakhs, has been transferred to General Reserve as per the provisions of Companies Act, 2013.

Pursuant to the provisions of Sec 124 (5) of the Companies Act, 2013, no amount on account of the unpaid dividend is due to be transferred to investors Education Protection Fund (IEPF) as on the date of report.

4. Capital Expenditure

As on 31st March 2019, the gross fixed assets of the company stand at Rs.12313.63 Lakhs and net fixed assets Rs. 6792.09 Lakhs. Capital additions during the year amounted to Rs 1830.39 Lakhs, which include addition to Land Rs.1194.76 Lacs, Building Rs.80.55 Lakhs, Plant & Machinery and other assets amounting to Rs.555.09 Lakhs; and Capital Work in Progress of Rs.808.94. Lakhs.

5. Future Prospects

The rubber thread industry in India continues to face challenges in the form of huge imports coming into the country from South East Asian countries, but your company expects to retain its share in the domestic market irrespective of these challenges. As has been the case, the Indian latex prices continue to remain at higher levels compared to highly competitive levels in the South East Asian countries impacting the profitability of the operations. The margins continue to be under pressure due to this and your company has managed to face challenges due to effective management of costs and operations.

Rubfila remains as the undisputed leader of rubber thread industry in India and has built a good reputation internationally too. The industry is growing, though in a muted manner and your company plans to keep the domestic market share and also tap into the larger international market in the coming years. For this purpose, your company is in the process of expanding production capacity by putting up a plant in Tamil Nadu and expects to commission the first line by the fourth quarter of the current financial year. Further addition to capacity will be done subsequently in a progressive manner.

With the brand well known in many countries around the world, your company is confident of finding markets for the product from the expanded capacity.

6. Directors Responsibility Statement The Directors report that

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

ii. The Directors have 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 of the company for the period ended 31st March 2019.

iii. The Directors have 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.

iv. The Directors have prepared the annual accounts on a going concern basis.

v. The Directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively.

vi. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

7. Listing on Stock Exchanges

Your Companys shares are listed on the BSE Ltd. The Company has paid Listing Fee for the year 2019-20.

8. Declaration by Independent Directors

Pursuant to the provisions of Section 149 of the Companies Act, 2013 Mr.Samir K. Shah (DIN 01714717), Mr.S.N.Rajan (DIN 00105864), Mr. Patrick M Davenport (DIN 00962475), Ms.R.Chitra (DIN 01560585) and Mr.S H Merchant (00075865) are the Independent Directors of the Company. They have submitted a declaration that each of them meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations). There has been no change in the circumstances affecting their status as an Independent Director during the year

(a) in the opinion of the Board, these persons are of integrity and possess relevant expertise and experience;

(b) (i) who were not Promoters of the company or its holding, subsidiary or associate company

(ii) who are not related to Promoters or Directors in the company, its holding, subsidiary or associate Company

(c) who have or had no pecuniary relationship with the company, its holding, subsidiary or associate company or their Promoters or Directors, during the two immediately preceding financial years or during the current financial year;

(d) None of whose relatives has or had pecuniary relationship or transaction with the company, its holding, subsidiary or associate company or their Promoters, or Directors, amounting to two percent or more of its gross turnover of total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;

(e) Who, neither himself/herself/her nor any of his relatives-

(i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the three financial year immediately preceding the financial year in which he is proposed to be appointed;

(ii) is or has been an employee or propriety or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed of-

(A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or

(B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to ten percent or more of the gross turnover of such firm;

(iii) holds together with his/her relative two percent, or more of the total voting power of the company; or

(iv) is a Chief Executive or Director, by whatever name called, of any non-profit organization that receives twenty-five percent or more of its receipts from the company, any of its Promoters, Directors or its holding, subsidiary or associate company or that holds two percent or more of the total voting power of the company; or

(e) who possess appropriate skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations and other disciplines related to the Companys business.

A note on the familiarizing programme adopted by the Company for the orientation and training of the Directors and the Board evaluation process undertaken in compliance with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the Corporate Governance Report which forms part of this Report.

Further, the Independent Directors of the Company met once during the year on 01-02-2019 to review the performance of the Non-executive directors, Chairman of the Company and performance of the Board as a whole

9. Particulars of Loans, guarantees or investments

Pursuant to Section 186 of the Companies Act, 2013 your company has not directly or indirectly -

a) given any loan to any person or other body corporate other than usual advances envisaged in a contract of supply of materials if any,

b) given any guarantee or provide security in connection with a loan to any other body corporate or person and

c) acquired by way of subscription purchase or otherwise, the securities of any other body corporate

d) exceeding sixty percent, of its paid-up share capital, free reserve and securities premium account or one hundred percent of its free reserves and securities premium account whichever is more.

10. Deposits

Your company has not accepted any deposits from public as envisaged under Sections 73 to 76 of Companies Act, 2013 read with Companies (acceptance of Deposit) Rules, 2014 and no amount remain unpaid or unclaimed as at the end of the period under review.

11. Conservation of Energy, technology absorption, foreign exchange earnings and outgo

Information relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are given in Annexure forming part of this report.

12. Related Party Transactions

All contracts/ arrangements / transaction entered by the Company during the financial year were in compliance with the applicable provisions of the Companies Act, 2013 and Rules made thereunder and according to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. All transactions entered into with the Related Parties during the financial year under the review were on an arms length basis and were in the ordinary course of business. There are no materially significant Related Party transactions made by the Company with its Promoters, Directors, Management or their relatives that could have had a potential conflict with the interests of the Company at large.

The Company had framed a policy on materiality of related party transactions and on dealing with related party transactions. The policy as approved by the Board is uploaded on the Companys website: http://www.rubfila.com/policies. The Form AOC-2 containing the particulars of contracts or arrangements with related parties made during the period under review is annexed herewith as

The Members may refer to Note 40 to the Standalone Financial Statements which sets out the related party disclosures as per the Accounting Standards.

13. Corporate Social Responsibility:

The Board of Directors, the Management and all of the employees believe in giving back to the society as part of corporate ethos. The team believes that society too is a major stakeholder in the ecosystem and investing in building the society is an important duty of a corporate citizen.

The CSR Policy may be accessed on the Companys website at the l i n k : http://www.rubfila.com/about us

The CSR activities are overseen by a committee of Directors comprising of Mr. Bharat J. Dattani (DIN 1462746), Mr. S.N.Rajan (DIN 00105864) and Mr.G Krishna Kumar on a regular basis.

The prime areas which have been identified by the company for investing the CSR funds are health and education. The projects selected are of the nature of infrastructure development, support for needy for healthcare, financial assistance to the needy of the society. During the year Company has contributed Rs.20 lacs to the Chief Ministers Distress Relief Fund (CMDRF) to support the relief activities of the State of Kerala after the devastating kerala floods in August, 2018. Employees of the Company also contributed one day salary to the CMDRF as an empathetic effort towards those who suffered by the floods. In the year under consideration, the company spent Rs.45.53 Lakhs towards various CSR expenditures.

A report on the Corporate Social Responsibility activities is annexed to this report.

14. Directors and Key Managerial Personnel

The Board of directors of the Company comprises of 10 directors as on the date of report. Your Board comprises Mr.Bharat J Patel as Non-executive Chairman, Mr.G.Krishna

Kumar as Managing Director (Executive), Mr.Tommy Thompson, Mr. Bharat J. Dattani, Mr.Dhiren S. Shah as Promoter Non-executive, Non-independent Directors and five Non-executive Independent Directors namely Mr.Samir K. Shah, Mr.Patrick M Davenport, M r . S . N . Rajan ,  Mrs . R . Chitra and Mr.S.H.Merchant. The Details of composition of the mandatory Board committees namely Audit Commiee , Nomina t i o n a n d Remuneration Committee, CSR Committee, Stakeholders Relationship Committee, number of meetings held during the year under review and other related details are set out in the Corporate Governance Report which forms a part of this Report.

In accordance with the Companies Act, 2013, Mr. Bharat J Dattani (holding DIN 01462746) and Mr.Dhiren S Shah (holding DIN 01143496) retire by rotation and being eligible offer themselves for re-appointment in the ensuing Annual General Meeting.

No directors or Key Managerial Personnel were appointed during the year. Mr.Hardik B Patel (DIN 00590663) have resigned from the Board on 28-05-2019.

During the reporting period your Board met six times. The details of the meeting and attendance of directors are provided in the Corporate Governance Report annexed herewith. There were no instances in which the Board had not accepted any recommendation of the Audit Committee.

15. Performance Evaluation

The Companies Act, 2013 and SEBI (LODR) Regulations, 2015 stipulates the performance evaluation of the Directors including Chairman, the Board and its Committees. The Company has devised a Policy for performance evaluation of the Board, Committees and other individual Directors (including Independent Directors) which includes criteria for performance evaluation of the Non-executive Directors and Executive Directors. The evaluation process inter alia considers attendance of Directors at Board and committee meetings, acquaintance with business, communicating inter se board members, effective participation, domain knowledge, compliance with code of conduct, vision and strategy, benchmarks established by global peers, etc, which is in compliance with applicable laws, regulations and guidelines.

The Board carried out annual performance evaluation of the Board, Board Committees and Individual Directors and Chairperson. The Chairman of the respective Board Committees shared the report on evaluation with the respective Committee members. The performance of each Committee was evaluated by the Board, based on report on evaluation received from respective Board Committees.

The reports on performance evaluation of the Individual Directors were reviewed by the Chairman of the Board.

16. Policy on Nomination and Remuneration and Performance evaluation of Directors, KMP and Senior Management Personnel:

Policy in accordance with the provisions of Section 178 of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Nomination and Remuneration Committee of the Company oversees the implementation of the Nomination and Remuneration Policy. The Nomination and Remuneration Policy prescribes for the criteria for determining the qualifications, positive attributes , independence of a Director and the policy on remuneration of Directors, Key Managerial Personnel, senior management employees including functional heads and other employees. The Nomination and Remuneration Policy of the Company is available on the website of the Company in the following weblink: http://www.rubfila.com/ img/pdf/ Nomination-RemunerationPolicy.pdf

17. Auditors

a) Statutory Auditors

Shareholders in their meeting held on 15-09-2017 appointed M/s. Cyriac & Associates, Chartered Accountants (Firm Registration No. 014033S.) as Statutory Auditors of the Company for a term of 5 years to hold office from the conclusion of 24th Annual General Meeting until the conclusion of 29th Annual General Meeting.

There is no qualification, disclaimer, reservation or adverse remark made by the Statutory Auditors in Auditors Report.

During the period under review, there were no frauds reported by the auditors under provisions of the Companies Act, 2013

b) Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of the Directors of the Company had appointed M/s. SVJS & Associates, Company Secretaries to undertake the Secretarial Audit of the Company for the year ended March 31, 2019. The Secretarial Auditors have submitted their report and the Board took note of the same. The Secretarial Audit Report is annexed herewith.

Management reply to Secretarial Audit Report:

On 28.05.2019 one of the promoter non independent director has resigned from the Board of Directors of Company. Since 28.05.2019 half of the Board of Directors of the Company comprises of 50% Independent Directors. Company has remitted the fine imposed by BSE on 29.05.2019.

c) Cost Audit

M/s. Ajith Sivadas & Co. Cost Accountants was appointed as Cost Auditors for the year 2018-19 and a resolution for ratification of the appointment and remuneration payable was approved by the members in their meeting held on 22-09-2018. The remuneration payable for the Financial Year 2019 - 20 will be ratified in the ensuing Annual General Meeting.

d) Internal Auditors

The Board has appointed M/s.Pratapkaran Paul & Company, Chartered Accountants, Chennai as the Internal Auditors of the Company pursuant to Section 138 of the Companies Act, 2013 for the period 2018 - 19.

18. Disclosures :

i) Particulars of employees :

Your Company believes that people make the difference and acts according to this principle. In line with the importance of its human capital, it provides positive work environment which is conducive, flexible and enriched. No employee of the Company was in receipt of remuneration exceeding the amount prescribed under 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Company is not paying any commission to its Directors.

The details of other employees required to be provided in compliance with the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed herewith.

ii) Vigil Mechanism / Whistle Blower Policy

Pursuant to Section 177 of the Companies Act, 2013 the rules made thereunder and the Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has established a Vigil Mechanism and has adopted a whistle blower policy for the directors and employees to report genuine concerns about any instance of any irregularity, unethical practice and/or misconduct.

The whistle blower policy of the Company is available in the following web link: http:www.rubfila.com/policies

iii) Risk Management Policy :

The Company has set up a robust risk management framework to identify, monitor and minimize risk and also to identify business opportunities. The Audit Committee also functions as the Risk Management Committee.

The Risk Management policy of the Company is available in the following weblink: www.rubfila.com/policies

iv) Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The 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. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment.

The following is the summary of sexual harassment complaints received and disposed off during the period under review :

No. of complaints at the beginning of the year : Nil.

No. of complaints received during the year : Nil.

No. of complaints disposed off during the year : Nil.

No. of complaints at the end of the year : Nil

v) Employees Stock Option Scheme (ESOS):

The Scheme RUBFILA ESOS-2017 introduced by the Company to reward the eligible employees of the Company for their performance and to motivate them to contribute to the growth and profitability of the Company was approved by the members in their meeting held on 15-09-2017 in terms of SEBI (Share Based Employee Benefits) Regulations, 2014 (SEBI Regulations).

Company has obtained in-principle approval from BSE vide their letter dt 03/07/2018 for the Scheme. Accordingly the Nomination and Remuneration Committee has granted options to the eligible employees of the Company in their meeting held on 01/08/2018.

There has not been any material change in the Employee Stock Option Scheme during the reporting period.

The Scheme is in line with the SEBI (Share Based Employee Benefits) Regulations, 2014 (SBEB Regulations). The Company has received a certificate from the Auditors of the Company that the scheme is implemented in accordance with the SBEB Regulations and the resolution passed by the shareholders in the Annual General Meeting held on 15-09-2017. The certificate would be available at the Annual General Meeting for inspection by the shareholders. Disclosure as required under Regulation 14 of SEBI Circular - CIR/CFD/POLICY CELL/2/2015 dated 16 June, 2015 has been made available at the Company website: www.rubfila.com/investors

vi) Change in the Nature of Business

There was no change in the nature of business of the Company during the Financial Year 2018-19.

vii) Material changes and commitments affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which the financial statements relate and the date of the report.

No material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which this financial statements relate and the date of report.

viii) Significant or Material Orders passed by Regulators / Courts / Tribunals

During the year under review, BSE Ltd has imposed a fine of Rs.13.71 Lacs on 11-01-2019 on the Company as there was a delay in submitting Listing Application for the shares issued to Promoters / PAC on a preferential allotment basis. Considering the amount, the matter is not considered as material. Other than the above there were no significant or material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

ix) Subsidiaries, Joint Ventures and Associate Companies

During the year, your company acquired 5620427 shares amounting to 50% of the Share Capital in M/s. Premier Tissues India Ltd (CIN U85110KA1998PLC023512) which is engaged in the manufacturing of Tissue Paper and other related products. M/s.Premier Tissues India Ltd was a wholly owned subsidiary of M/s.Ballarpur Industries Ltd.

Further, pursuant to the provisions of Sec 136 of the Act, the standalone financial statements (including consolidated) of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries/ associates are available on the website of the Company.

A Report on the salient features of the financial statements of Subsidiaries/ Associate Companies/ Joint Ventures prepared in form AOC-1 is provided as Annexure - A.

There are no companies which have ceased to be its Subsidiaries, joint ventures or associate companies during the year under review

x) Internal Financial Controls

Internal Financial Controls are an integrated part of the risk management process, addressing financial and financial reporting risks. The internal financial controls have been documented, digitised and embedded in the business processes.

Assurance on the effectiveness of internal financial controls is obtained through management reviews, control self assessment, continuous monitoring by functional experts as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended

xi) Extract of Annual Return

The Extract of Annual Return in Form No.MGT-9 as per Section 134 (3) (a) of the Companies Act, 2013 is available on the website of the Company in the following web link : www.rubfila.com/investors

xii) Cost Records

The Company has maintained cost records as prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, in respect of manufacturing activities of the Company.

xiii) Secretarial Standards

The directors state that the applicable Secretarial Standards as prescribed the Institute of Company Secretaries of India i.e. SS-1 and SS-2, relating to Meetings of the Board of Directors and General Meetings, respectively have been duly followed by the Company.

xiv) Management Discussion Analysis Report

Management Discussion Analysis Report for the year under review as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented in a separate section forming part of the Annual Report.

xv) Corporate Governance

The report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Report. The requisite certificate from the Secretarial Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance.

15. Appreciation and Acknowledgment

Your Directors acknowledge with gratitude the co-operation and assistance given by M/s. Rubpro Sdn. Bhd., Malaysia, Kerala State Industrial Development Corporation Ltd, M/s. Integrated Registry Management Services Pvt Ltd, and other agencies of the Central and State government.

Your Directors also wish to place on record the sincere appreciation of services rendered by the employees at all the levels towards your companys success during the year under review and share holders for their active support and co-operation.

For and on behalf of Board of Directors

Bharat J. Patel

Place : Mumbai

DIN 01100361

Date : 09-08-2019

Chairman