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Your Directors have pleasure in presenting their Twenty - Fourth Annual Report and Audited
Annual Accounts of the Company for the year ended on 31st March, 2019.
|FINANCIAL RESULTS:||(Figures in Rs. Lakhs)|
|For the year||Previous Year|
|Profit / (Loss) before Depreciation & Tax||121.30||286.65|
|Profit / (Loss) before tax||110.21||274.21|
|Tax Expenses / (Savings)||26.67||55.91|
|Profit / (Loss) after tax||83.54||218.30|
REVIEW OF OPERATIONS
The Company has recorded income from operations of Rs. 12802.43 Lakhs in current year as compared to Rs. 8626.62 Lakhs achieved during the corresponding period representing a growth of 67.38 % over the previous year. After offsetting the expenses, the Company has achieved Net Profit (after tax) of Rs. 83.54 Lakhs during the year as against Profit after tax of Rs. 218.30 Lakhs earned in the previous year.
The year under review was tough due to lower margins, which contributed to lower profitability. However, it is of comfort to note that ultimately the bottom line was positive.
In order to meet the gap in working capital requirements, your Company converted warrants, issued to the promoters, into equity shares on preferential basis, pursuant to which 8,10,000 warrants of Rs. 10/- each where converted into 8,10,000 equity shares of Rs. 10/- each respectively. The paid-up equity share capital of the company was increased by Rs. 81,00,000 and consequently, the paid-up equity share capital of the company stands at Rs. 6,98,50,000.
The directors are confident that the company will be able to achieve higher sales and profitability in the times to come, as investments are made in the new businesses and various plans for expansion are gradually getting crystallized.
Considering the need to conserve resources for future expansion and growth and also lower profits for the year under review, no dividend is recommended by the Board.
During the year, Mr. Jitendra Shah was appointed as Independent Director w.e.f 12 April, 2018 and further was resigned w.e.f 25 June, 2018.
Subsequent to the year end, Mrs. Kalpana Kulkarni was re-designated as the Executive
Director and was appointed as the CFO of the Company w.e.f 1 April, 2019.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Act and the Listing Regulations. Based on Disclosures provided by Directors, none of them are disqualified from being appointed as Directors under section 164 of the companies Act, 2013.
Mr. Navin Madhavji Mehta retires by rotation and being eligible offers himself for reappointment. The directors recommend his re-appointment.
Pursuant to the provisions of the Companies Act, 2013, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit and Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
Nomination & Remuneration Policy
The Board has constituted a Nomination and Remuneration Committee and has framed policy for selection and appointment of Directors, Senior Management and there remuneration. The Nomination & remuneration Policy is stated in the Corporate Governance Report.
During the year under review, fourteen (14) Board Meetings were convened and held i.e.12.04.2018, 15.05.2018, 28.05.2018, 11.06.2018, 25.06.2018, 25.07.2018, 14.08.2018, 26.10.2018, 12.11.2018, 24.11.2018, 15.01.2019, 11.02.2019, 21.02.2019, 22.03.2019. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to provisions of Section 134(5) of the Companies Act, 1956, the Directors would like to state that:
1. In preparation of the Annual Accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures
2. They had selected such accounting standards, 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.
3. They had taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the relevant acts for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.
4. That the accounts are prepared on a going concern basis.
5. They had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
6. They had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.
CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviours of any form and the Board has laid down the directives to counter such acts.
The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders.
All the Board Members and the Senior Management personnel have confirmed compliance with the Code.
PARTICULARS OF EMPLOYEES
During the year under review, there was no employee employed who was in receipt of remuneration in excess of the limits prescribed under section 197 read with Schedule V of the Companies Act, 2013.
Since there were only 5 employees during the year under review, the particulars required to be disclosed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 cannot be meaningfully given. The remuneration paid to the Key Managerial Personnel and the Whole Time Director is disclosed in the Corporate Governance Report annexed herewith.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO.
Your Company has not carried out any manufacturing activities during the year. Hence no separate details of the energy consumption and conservation is provided in the report. However the company has taken all possible steps for conservation of the energy in the company.
The company has not adopted any foreign technology during the year.
The details of the foreign exchange is provided in the notes to the accounts forming part of the Balance sheet.
M/s M.A Chavan and Co., Chartered Accountants, statutory auditors of the Company were appointed by the members at 22 Annual General Meeting of the members to hold office for a period of 5 years i.e. until the conclusion of 27 Annual General Meeting. They have confirmed that their appointment is within the limits provided under Section 139 of the Companies Act, 2013 and they are otherwise eligible to continue as the Statutory Auditors.
The observations made by the auditors in their report are self explanatory when read with the notes to accounts and need no further elaboration.
Pursuant to provisions of section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the company had appointed Mrs. Shailashri Bhaskar, Practising Company Secretary to undertake the Secretarial Audit of the Company. The Secretarial Audit report furnished by her is annexed herewith as "Annexure I"
OBSERVATIONS IN THE SECRETARIAL AUDIT REPORT
The Secretarial Auditor have observed in their report that the Company did not have a Chief Financial Officer (CFO) as required under Section 203 of the Companies Act, 2013, read with Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 during the year under review, though the position has been filled up subsequent to the end of the year under review.
It is stated that though the company had made its best efforts to appoint a CFO, it could not succeed to do so in the year under review. CFO has however been appointed immediately after the end of the year under review.
The company has not accepted and/or renewed deposits from public during the year within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013, except to its wholly owned subsidiary namely, RR Lifecare Pvt. Ltd.
The details of the investments made by the company are given in the notes to the financial statements.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has an Internal Control System, commensurate with the size and the nature of its business with regard to purchase of inventory and fixed assets and the sale of goods and services. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee and of the Board.
The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies.
In order to further strengthen the operations of the company and also to address the requirements of internal controls, the company has installed integrated ERP system. The system has been fully implemented.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were on arms length basis and were at prevailing market price. There are no materially significant related party transactions made by the company with Directors, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large.
Details of Related Party Transactions are annexed vide Form No. AOC 2
The company is diversifying its activity which is being implemented through a wholly owned subsidiary, namely RR Lifecare Private Limited, which is in course to set up a project for manufacturing pharmaceutical formulations. This will be a greenfield manufacturing facility in Wada, a northern suburb of Mumbai. The Company will be manufacturing dental cartridge, prefilled syringe, vial, ampule & eye drops. The manufacturing facility will be of international standard and fully compliant with U.S. FDA rules.
MATERIAL CHANGES AND COMMITMENTS
Subsequent to year end, the Company has acquired the business of a partnership firm namely M/s. Alaknanda Tubes, thereby entering into manufacturing activity, having its factory located at Survey. No. 36, Nr. Navavas Village, Dehgam -Dhansura Road, Tal: Talod, Dist.: Sabarkantha and which is in the production of ERW Pipes, with all its assets and liabilities, on a slump sale basis and as a going concern.
The Wholly Owned Subsidiary, RR Lifecare Pvt. Ltd. is setting up a project for manufacturing pharmaceuticals formulations at Wada, District - Palghar. The project is expected to go on stream shortly.
With investment in the new line of business, your Company is expecting to earn higher profits which in turn will help in expansion of the business and higher returns to the investors.
UTILISATION OF FUNDS RAISED ON CONVERSION OF WARRANTS ISSUED THROUGH PREFERENTIAL ALLOTMENT
During the year under review, your Company has received Rs. 60,75,000 (75% of the issue price) from the warrant holders namely, Mr. Virat Shah and Mr. Alok Shah, for issue and allotment of 8,10,000 Equity Shares on conversion of warrants issued on preferential basis with the approval of shareholders through postal ballot exercise, result of which was declared on 26 December, 2016.
The funds raised by the said conversion has contributed to shore up the financial position of the Company and were utilised to reduce the existing debt, for financing the expansion plans and also to meet the working capital requirements of the Company.
STATEMENT OF DEVIATION OR VARIATION
The Company has received Rs. 60,75,000 (75% of the issue price) as aforesaid on conversion of warrants issued on preferential basis with the approval of shareholders.
Accordingly, on the basis of the statement received by the Company from the Statutory Auditors and pursuant to Regulation 32 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Directors hereby submit that: i) there is no deviation in the use of the proceeds / funds from the objects stated in the explanatory statement of the notice of the Postal Ballot Meeting dated 15 November, 2016 ii) there has been no variation between projected utilization of funds, made by the Company as stated in the Explanatory statement of notice dated 15 November, 2016 of the Postal Ballot Meeting, and the actual utilization of funds.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a vigil mechanism / Whistle Blower Policy to deal with instance of fraud and mismanagement, if any.
A Vigil (Whistle Blower) mechanism provides a channel to the employees and Directors to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the Codes of conduct or policy.
PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code.
All Board Directors and the designated employees have confirmed compliance with the Code.
RISK MANAGEMENT POLICY
Pursuant to section 134(3) (n) of the Companies Act, 2013, the company has adopted a Risk Management Policy. The details of the policy and its terms of reference are set out in the corporate governance report forming part of the Boards report.
At present the company has not identified any element of risk which may threaten the existence of the company.
CORPORATE COMPLIANCE POLICY
Pursuant to section 134(5)(f) of the Companies Act, 2013, the Company has constituted Corporate Compliance Policy, to ensure compliance with the provisions of all applicable laws and to report that such systems were adequate and operating effectively.
ANTI SEXUAL HARRASMENT POLICY
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. However, the Company does not have more than ten employees and as such, has not constituted Internal Complaints Committee.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required by Schedule V of SEBI (Listing Obligations and Disclosure Requirements), 2015, the Management Discussion and Analysis Report, which form an integral part of this Report, is set out as a separate Annexure.
The requirement to report on Corporate Governance is applicable to Companies having paid up capital of Rs. 10 crores. Since the paid up capital of the company is only Rs. 6,98,50,000 there is no requirement to report on Corporate Governance as per Reg. 15(2) of SEBI (Listing Obligations and Disclosure Requirements), 2015.
However, Corporate Governance Report is attached as a separate annexure dealing with various governance aspects which are emanating from the provisions of the Companies Act, 2013.
Your Directors take the opportunity to thank all staff members for their Co-operation and contribution to the Companys operation during the year. Your Directors also wish to place on record their appreciation for the support and co-operation by the Banks, Business Associates and Financial Institutions during the period under review.
For and on behalf of Board of Directors
RR Metalmakers India Limited
Dated:31 May, 2019
Office No.501, Neel Kamal Complex,
Nr. Havmor Ice Cream Parlour, Navrangpura,