You can view full text of the Director's Report for Raj Rayon Industries Ltd.
The Directors have pleasure in presenting their 22nd Annual Report on
the business and operations of the Company and the accounts for the
Financial Year ended on 31st March, 2015.
(Rs. in Lacs)
Particulars Current Previous
Net Sales and Other Income 19169.17 47276.74
Net Profit before interest, 565.25 (4725.17)
Depreciation and Tax
Less: Interest 7108.72 4874.03
Depreciation 4240.75 3161.11
Profit/ (Loss) before Tax (10784.22) (12760.31)
Less: Provision for Current Tax 0.00 0.00
Provision for Deferred Tax (3297.96) (3982.51)
Tax Adjustment for earlier years 0.12 (152)
Profit/(Loss) After Tax/ Profit/ (7486.38) (8776.28)
(Loss) for the Period
*Previous years'' figures have been regrouped wherever necessary to
bring them in line with the current year''s representation of figures
During the financial year, your Company recorded Net Sales and Other
Income of Rs. 19169.17 Lacs as compared to Rs. 47276.74 Lacs of
previous year. The Company incurred a Net Loss of Rs. 7486.38 Lacs as
compared to previous year''s Net Loss of Rs. 8776.28 Lacs. The Company
incurred Cash losses of Rs. 3245.63 Lacs as compared to Cash Losses of
Rs. 5615.17 Lacs of previous year.
In absence of profits for the year ended and past accumulated losses,
your directors do not recommend payment of any dividend for the year
ended 31st March, 2015.
Management Discussion and Analysis Report:
Management Discussion and Analysis Report for the year under review,
which also deals with the opportunities, challenges and the future
outlook for the Company, as stipulated under Clause 49 of the Listing
Agreement with the Stock Exchange of India, is presented in a separate
section forming part of the Annual Report.
Updates on Expansion/modernisation:
During the Year under review, in order to utilize the surplus backward
capacity of CP plant with aim for improvement in profitability, the
company has undertaken Direct Polymer Melt (DPM POY) project for
production of POY by utilizing Direct Polymer Melt produced by CP plant
The plant has been implemented in August 2014 and commercial operation
of dPm POY plant has started in October 2014. The Capacity of the plant
is 75347 MTPA. During the implementation of this project some
old/obsolete POY Lines have also been replaced/sold.
Corporate Debt Restructuring (CDR):
The detailed key features of the CDR Proposal are given in under Notes
No. 2 of Notes forming part of Notes to Accounts given in this Annual
Internal Control System and Adequacy:
The Board has adopted the policies and procedures for ensuring orderly
and efficient conduct of its business, including adherence to the
Company''s policies, safeguarding of its assets, prevention and
detection of frauds and errors, accuracy and completeness of the
accounting records and timely preparation of financial disclosures.
The Company''s Internal Audit department evaluates the efficiency and
adequacy of internal control system and gives its report and
recommendations to the Chairman of Audit Committee and based on
Internal Audit Report the corrective actions are taken.
Subsidiary/Joint Ventures/Associate Companies:
Your Company does not have any subsidiary company or joint ventures
however M/s. Raj Money Market Limited is its Associate Company, holding
35.55% Equity Shares (as on 31st March, 2015) in the Company.As on 31st
March, 2015 the Company had a Net Worth of Rs. 127847935 and registered
a Net Loss of (Rs. 725033).
The Company has not accepted any deposits within the meaning of Section
73 of the Companies Act, 2013 and the Companies (Acceptance of
Deposits) Rules, 2014 and no such amount of principal or interest was
outstanding as on the Balance Sheet date.
Listing with Stock Exchanges:
The Company confirms that it has paid the Annual Listing Fees for the
year 2015-2016 to National Stock Exchange Limited (NSE) and BSE Limited
(BSE) where the Company''s Shares are listed.
At the Annual General Meeting held on 30th September, 2014, M/s. K.M.
Garg & Co., Chartered Accountants (Registration No. 120712W), were
appointed as Statutory Auditors of the Company to hold office till the
conclusion of the four consecutive Annual General Meetings to be held
in year 2018. In terms of the first proviso to Section 139 of the
Companies Act, 2013, the appointment of Auditors shall be placed for
ratification at every Annual General Meeting.
Accordingly, the appointment of M/s. K.M. Garg & Co., Chartered
Accountants, as Statutory Auditors of the Company, is placed for
ratification by the shareholders. In this regards, the Company has
received a letter from them to the effect that their re-appointment, if
made, would be within the prescribed limits under Section 139 of
Companies Act, 2013 and that they are not disqualified for such
re-appointment within the meaning of Section 141 of Companies Act,
Auditors'' observation and Management''s response to Auditors''
The Directors refer to the Auditors'' observation in the Auditors''
Report and provide their explanation as under:
i) In respect of Note 2 of the Financial Statement regarding amount
payable towards recompense:
The recompense payable is contingent on various factors including
improved performance of the Company (Borrowers) and many other
conditions, the outcome of which currently is materially uncertain and
cannot be determine.
ii) In respect of Auditors observation in Financial Statements
regarding cash losses incurred by the Company:
It is clarified that the cash losses were primarily attributable to the
lower volumes due to prevailing uncertain economic conditions, lower
sales volume coupled with increase in depreciation and interest/finance
The Central Government had approved appointment of Mr. Jayant J.
Paleja, Cost Accountant, Mumbai as Cost Auditor to conduct Cost Audit
relating to the products manufactured by your Company for the financial
year 2014-2015, the E-Form 23C for his appointment was filed on 23rd
June, 2014. Further the Company has also appointed him to conduct the
Cost Audit for the financial year 2015-2016 as per Section 148 of
Companies Act, 2013 and his remuneration has to be ratified at the
ensuing Annual General Meeting.
The Company had appointed Prasad Raghunath Baraskar, Practicing Company
Secretary to undertake Secretarial Audit of the Company, pursuant to
Section 204 of Companies Act, 2013 and the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 to conduct
Secretarial Audit for the financial year 2014-2015.
The Secretarial Audit Report for the financial year 2014-2015 forms
part of the Annual Report as Annexure I to the Board''s Report.
Share Capital and Net Worth:
During the financial year there was no change in the Share Capital of
the Company. However the Company took Members approval on 14th March,
2015 for issue 8.00 crs Equity Shares of Rs. 1/- each at par
aggregating to Rs. 8.00 crs. The Company has received in-principle
approvals from National Stock Exchange of India (NsE) on 30th March,
2015 and from BSE Limited on 15th April, 2015.
Further the Company has on 24th April, 2015 allotted 8.00 crs Equity
Shares of Rs. 1/- each at par on preferential basis to allottees
belonging to the category of Promoters and Non Promoters, consequently
the paid-up share capital increased from Rs. 40,64,54,000 as on 31st
March, 2015 to Rs. 48,64,54,000 as on the date of allotment.
Further the net worth of the Company has reduced to (Rs. 992.35 Lacs)
as compared to Rs. 6503.52 Lacs in previous year. Since the Company''s
accumulated losses had resulted into erosion of more than fifty percent
of its peak net worth during the immediately preceding four financial
years i.e. Rs. 15279.80 Lacs, the Company proposes to make necessary
reference to the Board for Industrial and Financial Reconstruction
(BIFR) in due course of time pursuant to the provisions of Sick
Industrial Companies (Special Provisions) Act, 1985.
Extract of the annual return:
Pursuant to Section 134 (3) (a) of the Companies Act, 2013 an extract
of the Annual Return in Form No. MGT - 9 is annexed herewith as
Conservation of energy, technology absorption and foreign exchange
earnings and outgo:
The details of conservation of energy, technology absorption, foreign
exchange earnings and outgo are as follows:
(A) Conservation of energy:
The conservation of energy is of paramount importance and not only
necessary for conserving national resources but also inevitable across
all industry, as it has far reaching impact on the bottom line of the
company. We have taken several steps in this regard related to our
manufacturing activity but the key steps are-
1. We have taken initiatives for replacement of existing lights with
"LED Lights" to save power consumption and during the current year we
have completed this process in all the key areas where power
consumption is high. In the ensuing year, we will complete the process
of replacement of Existing Light with "LED Light" in all the area where
2. One of our key raw materials is PTA, which is available both in
bags and tanker. Now we are bringing material in tankers as it directly
fed in the process rather than bringing in Bag. As material brought in
bags, require additional consumption of electrical energy on account of
charging of electrical hoist for lifting and pulling down the bags.
3. The cooling Tower Fan and Air Cooler Fan are one of the major
components which consume energy. We have optimised use of number of
fans depending upon the temperature difference during the day and
4. We have optimised the plant process parameter, process activity and
reduced the load on the cooling tower and chiller.
5. We have started using of turbo vent in place of electrical operated
exhaust fan to contain electrical energy consumption.
(B) Technology absorption:
1. We have installed modern Power Capacitor Bank for increasing power
factor which will directly reduce electric consumption.
2. We have implemented a Direct Polymer Melt line for direct
consumption of melt instead of Polyester Chips for producing POY. This
has actually reduced our process flow and not only improved quality but
also reduced power consumption ratio per ton of production
(C) Foreign exchange earnings and Outgo:
The particulars regarding foreign exchange earnings and outgo are given
in Note No. 37 and 39 Notes forming part of the Accounts.
Corporate Social Responsibility (CSR) Initiatives:
The Company has constituted a Corporate Social Responsibility (CSR)
Committee as per provisions of Section 135 of Companies Act, 2013 to
spend in various CSR initiatives as provided under schedule VII of the
Companies Act, 2013 and rules made thereunder.
However due to losses suffered and your company been into Corporate
Debt Restructuring (CDR), we didn''t spend into any CSR
activities/projects. However your Company is enthusiastic to serve the
society at large, which it will do in the coming years.
During the year the Company has re-designated Mr. Sushil Kumar Kanodia,
from Chief Executive Officer to Chief Executive Officer and Chief
Financial Officer of the Company. In accordance with the provisions of
the Companies Act, 2013 and in terms of the Memorandum and Association
of the Company, Mr. Naval Babulal Kanodia, Whole Time Director of the
Company retires by rotation and is eligible for re-appointment.
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an Annual performance
evaluation of its own performance and that of its committees and
individual Directors. A structured questionnaire was prepared after
taking into consideration inputs received from the Directors, covering
various aspects of the Board''s functioning such as adequacy of the
composition of the Board and its Committees, Board culture, execution
and performance of specific duties, obligations and governance.
The Board of Directors has on recommendations of the Nomination &
Remuneration Committee outlined policy for selection & appointment of
Directors, Key Managerial Personnel & Senior Management and also to
decide their remuneration along with the perks. The Nomination &
Remuneration Committee revises the remuneration from time to time
depending upon the performance of the Company and the Individual
Director''s/Key Managerial Personnel and other Senior Management. At
Director level the Company pay''s remuneration to Mr. Naval Babulal
Kanodia, Whole Time Director of the Company.
Training of Independent Directors:
The Independent Directors appointed on the Board are made familiarised
with the business and affairs of the Company in which the Company
operates and its long terms plans and expectations.
At the time of appointment of Independent Director, the Company issues
a formal letter of appointment providing in details their functions,
roles & responsibility as an Independent Directors.
Board of Directors Meeting:
During the year ended 31st March, 2015, the Company had Nine (09) Board
Meetings and the gap between the two meetings of the Board is as per
Companies Act, 2013. The details of the Board Meetings are provided in
the Corporate Governance Report.
Committees of Board:
Following are the various Committees formed by Board:
* Audit Committee
* Nomination & Remuneration Committee
* Stakeholders Relationship Committee
* Allotment Committee
* Risk Management Committee
* Corporate Social Responsibility Committee
The details of the composition of committees, its roles and
responsibility along with no. of meetings held are given in the Report
of Corporate Governance.
The Company has established a vigil mechanism for its Directors and
Employees to report genuine concerns relating any violations legal or
regulatory requirements or misconduct in the Company through its
Whistle Blower Policy. And also to report concerns of unethical
behavior, actual or suspected, fraud or violation of the Company''s code
of conduct and ethics policy, incorrect or misrepresentation of any
financial statements and reports thereon.
The protected disclosures will be dealt by the Chairman of the Audit
Committee and the Chairman should address the same carry out the
investigation and take needful action.
The policy on Whistle Blower as approved by the Board of Directors is
uploaded on company''s website.
Particulars of loans, guarantees or investments under Section 186:
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the
notes to the Financial Statements.
Related Party Transactions:
All the related party transactions which were entered by the Company
during the financial year were done on arm''s length basis and were in
the ordinary course of business of the Company. Also there are no
materially significant related party transactions made by the company
with Directors, Key Managerial Personnel, Promoter or any other
designated persons which may conflict with the interest of the Company
The policy on Materiality of Related Party Transactions as approved by
the Board of Directors is uploaded on company''s website.
Particulars of Employees and related disclosures:
Disclosures pertaining to remuneration and other details as required
under Section 197(12) of the Act read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are
provided in the Annual Report as Annexure III.
In terms of the provisions of Section 197(12) of the Act read with
Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, a statement showing the names and
other particulars of the employees drawing remuneration in excess of
the limits set out in the said rules are required to be provided in the
Annual Report. However there were no employees who were in receipt of
remuneration for which details need to be disclosed.
Directors'' Responsibility Statement:
The Directors'' Responsibility Statement referred to in clause
(c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall
(a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
(b) the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company at the end of the financial year and of the profit and
loss of the company for that period;
(c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern
(e) the directors, had laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively.
(f) the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
Risk Management Policy:
The Company has laid down procedures to inform the members of the Board
about the risk assessment and minimization procedures and the same is
reviewed by the Board periodically. A Risk Management Committee has
been duly constituted to formulate policy for framing, implementing and
monitoring the risk management plan and to take remedial actions.
Prevention of Sexual Harassment at Workplace:
The Company has adopted Policy on Prevention, Prohibition and Redressal
of Sexual Harassment at the workplace, to provide protection to
employees at the workplace. The Company has constituted Internal
Complaints Committee as per the requirement of The Sexual Harassment of
Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 to
consider and redress complaints of sexual harassment. The Committee
has not received any complaints of sexual harassment during the year.
Corporate Governance Certificate:
Your Company is committed to maintain the highest standards of
Corporate Governance. Your Directors'' adhere to the requirements set
out by the Securities and Exchange Board of India, Corporate Governance
practice and have implemented all the prescribed stipulations.
Report on Corporate Governance, as stipulated under Clause 49 of the
Listing Agreements with the Stock Exchanges in India, forms part of the
Annual Report. Certificate from the Auditor of the Company M/s. K.M.
Garg & Co., Chartered Accountants confirming compliance of conditions
of Corporate Governance as stipulated under the aforesaid Clause 49 is
annexed to this Report.
Your Directors'' would like to express their grateful appreciation for
assistance and co-operation received from the Banks, Government
Authorities, Customers, Vendors and Members during the year under
review. Your Directors also wish to place on record their deep sense of
appreciation for the committed services of the Executives, Staff
members and Workers of the Company.
For and on behalf of the Board of the Directors
Place: Mumbai Non Executive
Dated: 30th May, 2015 Chairperson & Director