DIRECTORS' REPORT DEAR SHAREHOLDERS The Directors present the Annual Report together with the audited Balance Sheet and the Statement of Profit and Loss of RSWM Limited for the year ended 31st March, 2015. Number of meetings of the board The particulars of the meetings held during the year along with the details regarding the meeting attended by the directors from part of the corporate governance report. Dividend and other appropriation Your directors are pleased to recommend a dividend @100%i.e. Rs.10/-each equity share of Rs.10/-each for the year ended the 31st march 2015. This will absorb an amount of the dividend for the year ended 31st march 2015 will be placed before the shareholders at the ensuing annual general meeting. No amount is proposed to be transferred to General Reserve. The amount of Rs. 204.99 crore has been carried over to the next year. Operational performance Your Directors inform the members that the operational performance of the Company include the financial performance of the operations of M/s. Cheslind Textiles Ltd. which had since merged with the Company vide orders of the Hon'ble High Court of Rajasthan at Jodhpur and also the Hon'ble High Court of Madras at Chennai. Your Directors are pleased to inform the members that during the year under review, your Company recorded consistent performance vis-a-vis the previous year. The Company maintained its performance despite absorbing higher depreciation charges on account of various expansions which were completed during the year under review. The improved sentiments in the global markets also helped the Company to achieve the better performance. However, the profits of the Company were impacted on account of absorbing of losses and unabsorbed depreciation of erstwhile Cheslind Textiles Limited. The Company registered increase of 4.51% in its gross turnover from Rs.2884.32 crore in 2013-14 to Rs.3014.31 crore in 2014-15. The Domestic turnover also registered increase at Rs. 1,989.37 crore in 2014-15 as against Rs. 1961.76 crore in 2013-14 whereas Export turnover increased to Rs. 1,024.94 crore in 2014-15 from Rs.922.56 crore in the previous year. The analytical reviews of the Company's performance and its businesses, including initiatives in the areas of human resources and information technology, have been presented in the section on Management Discussion and Analysis of the Annual Report. Working results of last three financial years 2012-13 to 201415 are given in Annexure - 1 and form part of this report. Expansion and modernisation Your Directors feel great pleasure in informing the members about the completion of its expansion projects involving setting up of 25,344 spindles for melange yarn at Kanya Kheri, Bhilwara which will be commission shortly. Further, 50MT Green Polyester Fibre Project at Ringas and installation of 50 looms at Mordi, Banswara Unit have already been commissioned. Your Directors informed the members that the full benefits of these expansions would be reaped in the current financial year with the full working of these expansions. Your Directors inform the members that the capex proposal for modernization of fabric division amounting to Rs.3.17 crore and the modernization of Bagalur Unit of erstwhile Cheslind Textiles Limited amounting to Rs. 10 crore are being under implementation which would be helpful in enhancing the overall profitability of the Company. Your Directors, with the completion of above expansion programmes, are in the process of firming up new initiatives, once the above expansion programmes are fully stabilized. Subsidiary company and joint venture Your Directors in their previous report had informed the members about the Scheme of Amalgamation of M/s. Cheslind Textiles Limited, subsidiary of your Company. Your Directors informed the members that your Company obtained all the regulatory approvals as well as the approval of Shareholders and Creditors of the Company during the period under review. Yours Directors gladly inform the members that the Hon'ble High Court of Rajasthan at Jodhpur sanctioned the Scheme of Amalgamation on 26th March, 2015 and subsequently the Hon'ble High Court of Madras at Chennai also sanctioned the scheme on 31st March, 2015 which became effective with the filing of the orders of the respective High Courts with the Registrar of Companies. Your Directors informed the members that, accordingly financial statements of the Company have been drawn taking into account the operations of merged entity viz. erstwhile Cheslind Textiles Limited. Your Directors are hopeful that, with the combined operations of the Company, all the objectives of Scheme of Amalgamation would be achieved in due course. Your Directors also gladly inform the members that, during the year under review, your Company continuously received wind power supply from LNJ Power Ventures Ltd. which was set up as a Joint Venture Company to supply power to the Company under a Power Purchase Agreement for 20 years at fixed rate. This has also enabled the Company for meeting its Renewable Power obligations as per Rajasthan Electricity Regulatory Commission's guidelines. A statement containing the salient features of the financial statements of LNJ Power Ventures in the prescribed format AOC-1 is annexed as Annexure-II. Contribution to the exchequer Your Company has contributed an amount of Rs. 102.07 crore in terms of taxes and duties to the Exchequer. Corporate social responsibility Corporate Social Responsibility (CSR) had been the core philosophy of the Company since its existence spanning over five decades. For your Company, it is a continuous process wherein the focus is being given on creating new opportunities, providing education, helping the people in various ways and make them self reliant. With the Corporate Social Responsibility now becoming the statutory obligation, your Directors had during the year under review, formally constituted a Corporate Social Responsibility Committee comprising of Shri Arun Churiwal, Shri Riju Jhunjhunwala and Shri Amar Nath Choudhary. Your Directors, upon recommendation of the CSR Committee, adopted CSR Policy during the year and initiated the implementation. The detail of the CSR spend by the Company is enclosed as Annexure - III forming part of this report. Directors' responsibility statement Pursuant to Section 134(3) (c) of the Companies Act, 2013, the Directors state that: - in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same, - appropriate Accounting Policies have been selected and applied consistently and they have 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 on 31st March, 2015 and of the Profit and Loss of the Company for the year ended on that date, - proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, - the Annual Accounts have been prepared on a going concern basis. - that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. - that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. Energy conservation, technology absorption and foreign exchange earnings and outgo The information required to be disclosed pursuant to Section 134(3) (m) of the Companies Act, 2013 read with the Rules, 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure - IV forming part of this Report. Extract of annual return Pursuant to section 92 of the companies Act, 2013 read with Rule 12 of The Companies (Management and administration) Rules, 2014, the Extract of Annual Return in prescribed format MGT-9 is annexed as annexure - V. Directors & Key Managerial Personnel Your Directors in their previous report informed the members about the resignation of Shri L. N. Jhunjhunwala, Chairman-Emeritus and the founder of the Company as well as the Group from the directorship of the Company. Your Directors had also informed the members that Shri L. N. Jhunjhunwala upon the unanimous request of the Board of Directors had agreed to continue as Chairman-Emeritus. Your Directors are utmost thankful to Shri L. N. Jhunjhunwala for his continuous guidance to them and the Company. Shri Ravi Jhunjhunwala and Shri Arun Churiwal, Directors retire by rotation and being eligible offer themselves for re-appointment. As informed to the members in the previous report by your Directors, Dr. Kamal Gupta, Shri D. N. Davar, Shri Amar Nath Choudhary and Shri Sushil Jhunjhunwala, Independent Directors were appointed for a term of 5 years by the Shareholders at the last Annual General Meeting held on the 16th September, 2014. Shri P. S. Dasgupta, Independent Director was also appointed for a term of 4 years at the same Annual General Meeting. During the period under review, EXIM Bank has withdrawn its nomination of Shri T. G. Regunathan as its Nominee-Director on the Board of Directors of the Company. The Board places on record its deep appreciation for the services rendered by Shri T. G. Regunathan during his tenure. Your Directors further inform the members that, during the year under review, Smt. Geeta Mathur was appointed as an Additional Director in the category of Independent Director. Smt. Geeta Mathur brings with her vast experience in the field of Banking and Finance. Your Directors take this opportunity to welcome Smt. Geeta Mathur on the Board of Directors. The proposal for confirmation of her appointment as an Additional Director as well as Independent Director for a term of 5 years shall be put up before the ensuing Annual General Meeting. Your Directors further inform that, during the year under review, Shri J. C. Laddha was re-appointed as Executive Director till 31st March, 2015 after the expiry of his term on 31st December, 2014. However considering his experience and contributions towards the Company, your Directors requested Shri J. C. Laddha to continue as NonExecutive and Non-Independent Director w.e.f. 1st April, 2015 which was accepted by him. Further, your Directors taking into consideration the succession planning at the top Management of the Company, reappointed Shri Arun Churiwal, whose term was due to expire on the 16th March, 2015 as the Managing Director of the Company for a period upto the 31st March, 2016. Shri Riju Jhunjhunwala was also re-designated as Managing Director w.e.f. 10th February, 2015 for his remaining tenure upto the 30th April, 2016. Your Directors further inform the members that declarations has been taken from the Independent Directors at the beginning of the financial year stating that they meet the criteria of independence as specified under sub-section (6) of Section 149 of Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. During the year, Shri Arun Churiwal, Managing Director of the Company, Shri Surender Gupta, Company Secretary of the Company and Shri B. M. Sharma, Chief Financial Officer of the Company were designated as Key Managerial Personnel. Directors' appointment and remuneration policy Pursuant to the provision of Section 178 of the Companies act, 2013 and Clause 49 of the Listing Agreement the Board of Directors on the recommendation of Nomination and Remuneration Committee has framed a policy for the appointment of Directors and Senior Management and their remuneration. The policy forms part of the Board Report and is annexed as Annexure VI. Annual evaluation by the board Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing agreement, the annual evaluation has been made by the Board of its own performance, its committees and the individual directors. The manner of evaluation is mentioned in the Nomination and Remuneration policy which forms part of Board Report. Particulars of loans, guarantees or investments Details of loans, Guarantees and Investments are given in the notes to the Financial Statements at appropriate places. Particulars of contracts or arrangements with related parties All contracts/ arrangements/ transactions entered into by the Company during the financial year with the related parties are on arm's length basis and in the ordinary course of business. During the financial year, there was no material contracts or arrangements entered into by the Company with any of the related party. Your Directors draw attention of the members to note 41 to the financial statement which contain particulars with respect to related parties. The policy on dealing with the related party transactions as approved by the Board of Directors is disclosed on the website of the Company under the following link: <http://www.rswm.in/pdf/Policy_on_Related_Party_> Transaction.pdf Significant and material orders passed by the regulators or courts During the year under review, the Hon'ble High Court of Rajasthan at Jodhpur has approved the merger of Cheslind Textiles Limited with the Company vide its order dated 26th March, 2015. Further, the Hon'ble High Court of Rajasthan at Jodhpur dismissed the petition challenging constitutional validity of Entry Tax vide its order dated 11th December 2014.For details in this regard, the shareholders can refer to note no 31 in the notes on accounts. Risk management policy The Company has adopted the risk management policy which aimed at creating and protecting shareholders value by minimizing threats and losses and identifying and maximizing opportunities. Your Directors periodically review the risks associated with the business or which threaten the prospects of the Company. Internal control systems Your Company is having adequate internal control systems to ensure that all the assets are properly safeguarded, that the information provided to the management is reliable, all the obligations of the Company are properly adhered to. Your Directors also assess opportunities for improvement in systems and controls and provide value added services to the organization after it is reviewed by the Audit Committee and the Board. The up-gradation of ERP is made at regular interval to ensure the reliability of financial and other information. The annual operating plan is submitted to the Audit Committee for review and concurrence and the findings of internal audit are reported to the Audit Committee on quarterly basis. The Audit Committee then addresses the significant issues raised by the auditors. With the diversification of portfolio of the Company, the risk associated with the business also gets diversified. In order to minimize the risks your Company believes in strengthening the internal control system to continuously monitor the business of the Company. Particulars of employees The information pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, of the employees is annexed as Annexure - VII Further pursuant to Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the relevant statement is annexed as Annexure - VIII. Auditors Statutory Auditors The Company's Auditors M/s. S. Bhargava Associates, Chartered Accountants (Firm Registration No. 003191C) and M/s. S. S. Kothari Mehta & Co., Chartered Accountants (Firm Registration No. 000756N) who retires at the conclusion of the ensuing Annual General Meeting, are eligible for re-appointment. Further, they have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder. Internal Auditors Your Directors, during the year under review, appointed M/s. P. K. Deora & Co., Chartered Accountants (Firm Reg. No. 004167N), M/s. Doogar & Associates, Chartered Accountant (Firm Reg. No. 000561N) and M/s. SSMS & Associates, Chartered Accountants (Firm Reg. No. 019351C) to act asthe Internal Auditors of the Company for the financial year 2014-15, pursuant to Section 138 of the Companies Act, 2013 read with The Companies (Accounts) Rules, 2014, Secretarial Auditor Your Directors, during the year under review, also appointed Shri Mahesh Gupta, Practicing Company Secretary (Membership No. FCS 2870 and CP No.1999) Proprietor of M/s Mahesh Gupta & Company, Company Secretaries, Delhi as the Secretarial Auditor of the Company for the financial year 2014-15, pursuant to Section 204 of the Companies Act, 2013 read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Report of Secretarial Audit is annexed as Annexure IX. Cost Auditor Your Directors inform the members that Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Rules, 2014 and Notification issued by Ministry of Corporate Affairs dated 31st December, 2014, the textile Companies were notified to get its cost records audited from the financial year commencing on or after 1st day of April, 2015. Accordingly your Directors appointed M/s N D Birla & Company, Cost Accountants, Ahmedabad, (Firm Reg. No. 000028) as the Cost Auditor of the Company. Corporate governance Report on Corporate Governance along with the Certificate of Auditors M/s S. Bhargava Associates, Chartered Accountants (Firm Registration No. 003191C), 1, Pareek College Road, Bani Park, Jaipur (Rajasthan) and M/s. S. S. Kothari Mehta & Co., Chartered Accountants (Firm Registration No 000756N), 146-149, Tribhuvan Complex, Ishwar Nagar, Mathura Road, New Delhi-110065, confirming compliance to conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, form part of the Annual Report. Whistle blower policy Your Directors inform the members that with the objective of pursuing the business in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behavior and to encourage and protect the employees who wish to raise and report their genuine concerns about any unethical behavior, actual or suspected fraud or violation of Company's Code of Conduct, the Company has adopted a Whistle Blower Policy. The Policy adopted by the Company contains a framework whereby the identity of the complainant is not disclosed. The policy has been disclosed on the website of the Company, the link of which is given hereunder: <http://www.rswm.in/pdf/whistle_blower_policy.pdf> Management discussion and analysis report Management discussion and analysis report, as required by Clause 49 of Listing Agreement, forms part of the Annual Report. Acknowledgements Your Directors take this opportunity to thank Customers, members, suppliers, bankers, business partners / associates, Central and State Governments for their consistent support and co-operation extended to the Company. We also acknowledge the significant contribution made by the employees for their dedication and hard work and trust reposed on us. We look forward to have the same support in our endeavor to help the Company to grow faster. For and on behalf of the Board RAVI JHUNJHUNWALA Chairman DIN - 00060972 Place: Kharigram (Rajasthan) Date: 8th May, 2015 |