DIRECTORS' REPORT Dear Shareholders, Your directors have pleasure in presenting the Twenty Ninth Annual Report together with the Audited Statement of accounts of the Company for the year ended March 31, 2015. TRANSFER TO RESERVES It is proposed to be carried Rs. 10.00 crore from the net profits for the financial year under review to General Reserve. DIVIDEND Your directors recommend dividend on 2,00,000, 6% Non Convertible Redeemable Cumulative Preference Shares of Rs. 100/- each. Your directors also recommend dividend of 8% (Rs. 0.16 per share on face value of Rs. 2/-) on equity capital of Rs. 66.82 crore for the year under review as against 8% (Rs. 0.16 per share on face value of Rs. 2/-) for the previous year. The total cash outgo on account of equity and preference dividend and tax thereon amounts to Rs. 6.58 crore as against Rs. 6.39 crore in the previous year. The dividend payment is subject to approval of members at the ensuing Annual General Meeting. OPERATION AND STATE OF AFFAIRS During the year under review, the total income (revenue) of your Company have increased to Rs. 28,411.61 crore as against Rs. 24,601.09 crore in the previous year. The Profit after tax increased to Rs. 60.93 crore as against Rs. 13.42 crore in the previous year. The sharp fall in commodity prices during the first half of the year has led to intense competition and pressure on margins. Also, higher price of soya bean in domestic market due to lower domestic crop and lower realization for end products namely soya meal and oil, caused a drastic fall in domestic crushing operations. The above primary factors affected the operating performance of your company during the year under review. FUTURE OUTLOOK Keeping in view the size of the population, expectation of improved business sentiments and the growing disposable income, the demand for food products will continue to grow in the times to come. The low commodity prices have resulted in increase in demand and imports to bridge the demand-supply gap. This is expected to expand the capacity utilization of production facilities. Also, the industry expects that due to improved weather conditions and the satisfactory sowing of soya seed in terms of acreage, the current year augurs well for better crop size than the previous year, entailing better availability of seeds for crushing and capacity utilization of the production capacities. Thus the company anticipates better operational performance in the current year. Considering the trend of edible oil growth in packed form far exceeding the overall growth and our consistent and concerted strategy in sustaining leadership in the retail segment, it is anticipated that the product and activity mix of our operations will result in adding sustainable value to the company in future. EXPORTS The Company exported products of Rs. 4,578.14 crore during the year under review as compared to Rs. 4,843.68 crore in the previous year. Owing to lower domestic soyabean crop and lack of competitive pricing of indian soya meal in the international markets, the quantity of soya meal export had declined considerably during the year. However, the company has diversified the product range for export markets and initiated actions to have a sustainable export volumes in future. CHANGE IN SHARE CAPITAL During the financial year under review, the share capital of the company has increased from 33,40,46,422 equity shares to 33,40,60,422 equity shares pursuant to allotment of 14,000 equity shares of Rs. 2/- each under Employee Stock Option Scheme of the Company. CONSOLIDATED FINANCIAL STATEMENTS In accordance with the Companies Act, 2013 and Accounting Standard (AS) — 21 on consolidated Financial Statements, the audited consolidated financial statement is provided in the Annual Report. DIRECTORS As per the provisions of Section 152 of the Companies Act, 2013, Mr. Kailash Shahra, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. During the year under review, Mr. Sanjeev Asthana, Executive Director vacated the office. The Board takes on record the valuable contribution made by him during the tenure with the Company. During the year under review, the Board of Directors of the Company, by a resolution passed by circulation on 26th March, 2015, appointed Mrs. Meera Dinesh Rajda as Additional Director. Based on the recommendation of the Nomination and Remuneration Committee and after reviewing the declarations submitted by Mrs. Meera Dinesh Rajda, the Board of Directors of the Company formed an opinion that the said Mrs. Meera Dinesh Rajda meets with the criteria of Independence as per Section 149(6) of the Companies Act, 2013 ("the Act") and the rules made there under and also meets with the requirements of Clause 49 of the Listing Agreement executed with the Stock Exchanges, for being appointed as an Independent Director on the Board of the Company to hold office for a term of 5 (five) years with effect from 23rd September, 2015. Your Company has received the requisite disclosures / declarations from Mrs. Meera Dinesh Rajda as required under the relevant provisions of the Companies Act, 2013. Your Company has also received Notice under Section 160 (1) of the Companies Act, 2013 from a member signifying intention to propose Mrs. Meera Dinesh Rajda as candidate for the office of an Independent Director at the ensuing Annual General Meeting. Further, your Company has also received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges. Profiles of the Directors seeking appointment / re-appointment have been given in the Notice of the ensuing Annual General Meeting of the Company and Corporate Governance Report forming part of this Report. The details of programs for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are available on the website of the Company i.e. www.ruchisoya.com BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its various committees as per the criteria of evaluation provided in the Nomination, Remuneration and Evaluation Policy adopted by the Company. The performance evaluation of Independent Directors was carried out by the entire Board and the performance evaluation of the Chairman and the Board as a whole was carried out by the Independent Directors. KEY MANAGERIAL PERSONNEL During the year under review, Mr. V Suresh Kumar has been appointed as Chief Financial Officer of the Company. Remuneration and other details of the Key Managerial Personnel for the financial year ended March 31, 2015 are mentioned in the extract of the Annual Return which is attached to this Report. MEETINGS OF THE BOARD The Board of Directors of your company met 4 times during 2014-15. The meetings were held on May 30, 2014, August 14, 2014, November 11, 2014 and February 9, 2015. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013. PARTICULARS OF LOAN GIVEN, INVESMENT MADE, GUARANTEE GIVEN AND SECURITIES PROVIDED Particulars of loan given, Investment made, guarantee given and securities provided along with the purpose for which the loan and guarantee or securities proposed to be utilized by the recipient are provided in the standalone financial statements (Please refer to Note 46 to the standalone financial statements). EXTRACT OF ANNUAL RETURN Extract of Annual Return of the Company in form MGT-9 is annexed as Annexure I to this Report. EMPLOYEES STOCK OPTION SCHEME (ESOS) The Company has introduced Employee Stock Option Scheme, 2007 (referred to as "the scheme') to enable the eligible employees of the Company and its subsidiary to participate in the future growth of the Company. The necessary disclosures required in terms of Securities & Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 in regard to such Scheme of your company are enclosed herewith as Annexure II forming part of this Report. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES As on March 31, 2015, the Subsidiaries, Joint Ventures and Associate Companies of your company are as follows: Subsidiary Companies Ruchi Worldwide Limited (Subsidiary) Mrig Trading Private Limited (Subsidiary) Gemini Edibles & Fats India Private Limited (Subsidiary) (up to 11.11.2014) Ruchi J-Oil Private Limited (Subsidiary) RSIL Holdings Private Limited (Subsidiary) Ruchi Hi-rich Seeds Private Limited (Step-down subsidiary) Ruchi Industries Pte. Limited, Singapore (Subsidiary) Ruchi Ethiopia Holdings Limited, Dubai (Subsidiary) Ruchi Agri Plantation (Cambodia) Pte. Limited, Cambodia (Step-down subsidiary) Ruchi Agri Trading Pte. Limited, Singapore (Step-down subsidiary) Ruchi Agri SARLU, Madgascar (Step-down subsidiary) Ruchi Agri PLC, Ethiopia (Step-down subsidiary) Palmolein Industries Pte. Ltd., Cambodia (Step-down subsidiary) Joint Ventures Indian Oil Ruchi Biofuels LLP Associate Companies GHI Energy Private Limited Ruchi Kagome Foods India Private Limited The statement containing salient features of the financial statement of its Subsidiaries, Joint Ventures and Associate comanies is attached with the standalone financial statements in form AOC-1. The Policy for determining material subsidiary as approved by the Board of Directors of the Company may be accessed on the Company's website at www.ruchisoya.com CORPORATE GOVERNANCE The Company is committed to maintain the highest standard of corporate governance and adhere to the corporate governance requirements set out by the SEBI. The Company has also implemented several best corporate governance practices as prevail globally. The report on corporate governance as stipulated under clause 49 of Listing Agreement forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliances with the conditions of corporate governance is attached to the report on Corporate governance. DIRECTORS' RESPONSIBILITY STATEMENT In accordance with the provisions of Section 134(5) of the Companies Act 2013, your directors confirm that: a) in the preparation of the annual accounts for the financial year ended March 31, 2015, 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 as at March 31, 2015 and of the profit 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 the Companies Act 2013 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 basis; 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; and 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. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES In terms of the provisions of Section 197(12) of the Act read with Rules 5 (1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement setting out remuneration and other particulars of the employees, forms part of Annual Report. 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 this Report as Annexure III. Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the information prescribed under Rule 5 (2) and 5(3) of the above mentioned Rules, is being sent to the members of the Company. Such information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE Information required under Section 134(3)(m) of Companies Act, 2013 read with Companies (Accounts) Rules, 2014 is given in the Annexure IV forming part of this Report. CONTRACT AND ARRANGEMENTS WITH RELATED PARTIES All contracts/arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on the arm's length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the Policy on materiality of related party transactions and on dealing with related party transactions. The same may be accessed on the company's website at www.ruchisoya.com Your Directors draw attention of the members to Note 38 to the financial statements which set out related party disclosures pursuant to clause 32 of the listing agreement. AUDIT AND AUDITORS' REPORT STATUTORY AUDITORS The Members of the Company had, at the 28th Annual General Meeting ("AGM") held on September 26, 2014 approved the appointment of M/s. P.D. Kunte & Co., Chartered Accountants (Firm Registration No. 105479W), as the Statutory Auditors of the Company, to hold office from the conclusion of that AGM until the conclusion of the 31st AGM, subject to ratification of the appointment by the Members at every AGM held after the above said AGM. Rule 3(7) of Companies (Audit and Auditors) Rules, 2014, provides that appointment of the Auditor shall be subject to ratification by the members at every Annual General Meeting till the expiry of the term of the Auditor. In view of the above, the existing appointment of M/s. P.D. Kunte & Co., Chartered Accountants, as Statutory Auditors of the Company till the conclusion of 31st Annual General Meeting of the Company, is being placed for members' ratification at the ensuing Annual General Meeting. As required under Section 139 of the Companies Act, 2013, the Company has obtained a written consent from the Auditors to such continued appointment and also a certificate from them to the effect that their appointment, if ratified, would be in accordance with the conditions prescribed under the Companies Act, 2013 and the rules made thereunder, as may be applicable. During the year, the Company had paid excess remuneration of Rs. 0.12 lac to an earlier Executive Director. The same has since been recovered. The Company discovered in June, 2015 misappropriation of funds of approximately Rs. 900 lacs by certain employees of the Company at two of its branches situated in the State of Andhra Pradesh. The Company has recovered Rs. 164.06 lacs till date. The Company is in the process of filing complaints before judicial authorities and taking action for further recovery. The Company has taken steps to strengthen the internal controls and business processes, and improvements to information systems, which will augment effectiveness of its control systems. The other notes on financial statement referred to in the Auditors' Report are self explanatory and do not call for any further comment. BRANCH AUDITORS The Members of the Company had, at the 28th Annual General Meeting ("AGM") held on September 26, 2014 approved the appointment of M/s. KR & Co., Chartered Accountants (Firm Registration No. 025217N), as the Branch Auditors of the Company, to hold office from the conclusion of that AGM until the conclusion of the 33rd AGM, subject to ratification of the appointment by the Members at every AGM held after the above said AGM. Rule 3(7) of Companies (Audit and Auditors) Rules, 2014, provides that appointment of the Branch Auditor shall be subject to ratification by the members at every Annual General Meeting till the expiry of the term of the Branch Auditor. In view of the above, the existing appointment of M/s. KR & Co., Chartered Accountants, as Branch Auditors of the Company till the conclusion of 33rd Annual General Meeting, is being placed for members' ratification at the ensuing Annual General Meeting. As required under Section 139 of the Companies Act, 2013, the Company has obtained a written consent from the Branch Auditors to such continued appointment and also a certificate from them to the effect that their appointment, if ratified, would be in accordance with the conditions prescribed under the Companies Act, 2013 and the rules made thereunder, as may be applicable. COST AUDITORS M/s. K. G. Goyal & Co., Cost Accountants (Registration No. 00017/07/2008) has been re-appointed by the Board of Directors of the Company at a remuneration of Rs. 4,40,000/- subject to payment of applicable taxes thereon and re-imbursement of out of pocket expenses to conduct audit of the cost accounting records of the Company for the financial year 2015-16. As required under the Companies Act, 2013, a resolution seeking members' approval for the remuneration payable to the Cost Auditors forms part of the Notice convening the Annual General Meeting. SECRETARIAL AUDITORS The Board has appointed Mr. Prashant Diwan, Practising Company Secretary to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith as Annexure V to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. NOMINATION, REMUNERATION AND EVALUATION POLICY The Nomination, Remuneration and Evaluation Policy recommended by the Nomination and Remuneration committee is duly approved by the Board of Directors of the Company and the same is attached to this Report as Annexure VI. The same is also available on the Company's website at www.ruchisoya.com CORPORATE SOCIAL RESPONSIBILITY (CSR) The Board of Directors of your Company has constituted a CSR committee which comprises Mr. N. Murgan (Chairperson), Mr. Dinesh Shahra and Mr. Vijay Kumar Jain (members). The committee is responsible for formulating the CSR Policy and monitoring the CSR activities of the Company. The Corporate Social Responsibility Policy recommended by the CSR Committee of the Directors has been approved by the Board of Directors of the Company. The same is available on the website of the Company i.e. www.ruchisoya.com and is also attached to this report as Annexure VII. The Annual Report on CSR activities is attached as Annexure VIII to this Report. RISK MANAGEMENT The Board has constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company's enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. A Risk Management Policy was reviewed and approved by the committee and Board. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations to safeguard and protect from loss, unauthorized use or disposition of its assets. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system of the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. All the transactions are properly authorized, recorded and reported to the Management of the Company. Significant audit observations and recommendations along with corrective actions taken by the management thereon are presented to the Audit Committee meetings and thereafter to the Board Meetings. VIGIL MECHANISM POLICY The Company has a vigil mechanism policy which also incorporates a whistle blower policy in terms of Listing Agreement, which deals with the genuine concerns about unethical behaviour, actual or suspected fraud and violation of the Company's Code of Conduct and ethics. The vigil mechanism policy is uploaded on the website of the Company at www.ruchisoya.com COMMITTEES OF BOARD The Board of Directors of your Company had already constituted various committees in compliance with the provisions of the Companies Act, 2013 and Listing Agreement viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee, CSR Committee, Risk Management Committee. All decisions pertaining to the constitution of committees, appointment of members and fixing the terms of reference / role of the Committees are taken by the Board of Directors. Detail of the role and composition of Committees, including the number of meetings held during the financial year and attendance at meetings, are provided in the Corporate Governance Report section of the Annual Report. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & 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 Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (Permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during the year under review : No. of complaints received : Two No. of complaints disposed off : One OTHER DISCLOSURES Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report. 4. Neither the Managing Director nor the Wholetime Director of the Company receive any remuneration or commission from any of its subsidiaries. 5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 6. No Material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and the date of this Report. ACKNOWLEDGEMENT Your directors place on record their gratitude for the valued support and assistance extended to the Company by the Shareholders, Banks, Financial Institutions and Government Authorities and look forward to their continued support. Your directors also express their appreciation for the dedicated and sincere services rendered by employees of the Company. For and on behalf of the Board of Directors Kailash Shahra Chairman DIN: 00062698 Date : August 14, 2015 Place : Mumbai |