DIRECTORS' REPORT TO, THE MEMBERS, RADHA MADHAV CORPORATION LIMITED, Dear Sir/Madam The Directors have pleasure in presenting the Eleventh Annual Report together with the Audited Accounts for the accounting year ended on 31st March, 2015. OPERATION Since previous four years before the current year, the Company had been incurring continuous losses and the company has accumulated losses of Rs. 3020.64 millions as on 31stMarch, 2015. Amongst various reasons, one of the major reasons for such losses had been due to preparation of the RETAIL Venture of the Company. Company operates in two retail and Online Formats namely RMCL Retail and RMCL Universe. Whereas RMCL Retail is a Industrial Retail Format, RMCL Universe is a Consumer Fast Moving Goods Format. As compared in the year, the Company has started improved performance, which is due to cost engineering techniques adopted by the management. The causes for previous losses are manifold like high cost of finance, overall increase in cost of production (including losses arising out of deficiency of working capital), while there is no corresponding rise in turnover in same proportionate resulting losses. The management constantly focused on the marketing, creation of Brands and place necessary platforms in place. Such long term measures added heavy expenditure on marketing and brand building. Current Year had seen Roll-out of Company's Online Ecommerce business named RMCL Universe. With expenses being done during last few years, the results have started yielding for the company. The same trend will continue and will have positive impact on the long-term prospects of the company. In this year, Company generated revenues of 1126.78 Million INR in comparison to 172.39 Million INR in the previous year. There has been 6.53 Fold increase in revenue. Similarly Company generated business profit of 43.23 Million INR in comparison to losses of 649.75 Million in previous year. In its effort to deleverage Debts, Company could negotiate its Debt from one of its lender. Negotiated Debt has an impact of 981.94 Million INR on the company. The same has been reversed in the books and resulted into Total Profit of 1183.52 Million. This profit is in comparison of losses of 793.56 Million INR in the previous year. FINANCE During the Company has not availed credit facilities from any banks and finance institutions the performance of the last three years has led to significance liquidity pressure in the long term sources. INSURANCE All the properties of your Company including Factory, Building, Plant & Machinery, stock etc., are adequately insured. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS During the financial year 2014-15, the Board of Directors of the Company, met [12] (Twelve Times) times. The details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the Listing Agreement. DECLARATION BY INDEPENDENT DIRECTOR(S) AND RE-APPOINTMENT, IF ANY All the Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. NOMINATION AND REMUNERATION POLICY OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES DIRECTORS. In adherence of section 178(1) of the Companies Act, 2013, the Board of Directors of the Company approved a policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided u/s 178(3), based on the recommendations of the Nomination and Remuneration Committee. The broad parameters covered under the Policy are - Company Philosophy, Guiding Principles, Nomination of Directors, Remuneration of Directors, Nomination and Remuneration of the Key Managerial Personnel (other than Managing / Whole-time Directors), Key-Executives and Senior Management and the Remuneration of Other Employees. EXTRACT OF THE ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT 9 as per provisions of Companies Act, 2013 and rules thereto is annexed to this report [Annexure-A] PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 During the financial year ended 31st March, 2015, Neither the Company has not availed any Loan nor has given any Loan, Guarantees and Investment in accordance with section 186 of the Companies Act, 2013 PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES There have been no materially significant related party transactions between the Company and the Directors, the management, or the relatives except for those disclosed in the financial statements. Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form part of the report. CORPORATE SOCIAL RESPONSIBILITY (CSR) The Company's vision is to be a global benchmark in value creation and corporate citizenship and the Company's long-term Corporate Social Responsibility (CSR) objective, is to improve the quality of life of the communities through long-term value creation for all stakeholders. The Company has been a pioneer in various CSR initiatives. We continue to remain focused on improving the quality of life and engaging communities through health, education, sports and infrastructure development. PARTICULARS OF EMPLOYEES 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, the said information is available for inspection at Registered Office of the Company during working hours. Any member interested in obtaining such information may write to the Company Secretary, at the registered office and the same will be furnished on request. DIRECTORS In accordance with the requirements of the provision of the Companies Act 2013, Subhash Agarwal and Mr. Radhey Krishna Mishra will retire by rotation and, being eligible, have offered themselves for re-appointment . The office of Director Mr. Serge Lapointe became vacant as per section 167 of Companies Act 2013. AUDITORS AND AUDITORS' REPORT: STATUTORY AUDITORS Statutory Auditors, M/s. H. P. Shah Associates (Firm Registration No 109588W), Chartered Accountants, Vapi, hold office till the conclusion of ensuing Annual General Meeting and being eligible; offer, themselves for re-appointment to hold the office till the conclusion of next Annual General Meeting are recommended for re-appointment. The certificate from the Auditors have been received to the effect that their reappointment, if made, would be within the prescribed limit under section 141 of the Companies Act, 2013. The Auditors have confirmed that they have subjected themselves to the peer review process of the institute of Chartered Accountants of India (ICAI) and holds a valid certificate issued by the Peer Review Board of the ICAI." As to Auditors' Qualifications is self-explanatory in their report. MANAGEMENT COMMENTS AS TO THE AUDITORS' QUALIFICATION ARE AS FOLLOWS; 1. MANAGEMENTS COMMENTS FOR THE OPINION POINT NO. (a) (going on concern) FORMING PART OF AUDITORS' REPORT and POINT NO.10 ACCUMULATED LOSSES FORMING PART OF ANNEXURES OF THE AUDITORS' REPORT; As per the view of management there is no uncertainties about continues operation of the Company in foreseeable future on account of following measures taken by the Company; 1. The Company has begun Online E-Commerce business, which is already profitable. 2. The Company has also made profit during the year ended 31.03.2015. 3. The Management has induced long-term capital in the company on various occasions and shall thrive to do so in future. 4. The Management is also planning gradually to modify its business plan by appointing franchise there by reducing working capital intensive dependence. 5. The Company would be able to continue its operation in the foreseeable future through various restructuring and deleveraging 2. MANAGEMENTS COMMENTS FOR THE OPINION POINTNO. (b) (Outstanding balance) FORMING PART OF AUDITORS' REPORT; Company has started dedicated credit control & recovery department headed by a qualified legal expert and has also started serving notices to the defaulting parties. The Company is in process of recovering and has been partially successful. It is confident to recover substantial amount in reasonable time. 3. MANAGEMENTS COMMENTS FOR THE OPINION POINTNO. (c) (Interest payable) FORMING PART OF AUDITORS' REPORT; The company has not provided interest and also reversed provided interest on credit facilities granted by State Bank of India/AARC and Bank of Baroda due to ongoing Settlement process and due to the fact that interest on Substandard Assets are not charged by the Lenders. 4. MANAGEMENTS COMMENTS FOR THE OPINION POINTNO. (c) (Secured Creditors) FORMING PARTOF AUDITORS' REPORT; Company has booked a gain of INR 980.45 on settlement of Secured loans on the basis of negotiations of the debt at INR 450 Million. Companies in advance process of drafting the restructuring proposal with Alchemist Asset Reconstruction Company Ltd. 5. MANAGEMENTS COMMENTS FOR THE SUB SECTION (a) OF POINT NO.9 STATUTORY DUES & POINT NO. 11. REPAYMENT OF DUES OF FINANCIAL INSTITUTIONS FORMING PART OF ANNEXURES OF THE AUDITORS' REPORT; The Company was suffering heavy losses and it net worth was also negative so the Company could not pay up. 6. MANAGEMENTS COMMENTS FOR THE SUB SECTION (b) OF POINT NO.9 STATUTORY DUES FORMING PART OF ANNEXURES OF THE AUDITORS' REPORT; The Company has represented its case to appropriate authorities. It is of the opinion that no such dues shall materialize and hence it has SECRETARIAL AUDITORS Section 204 of the Companies Act, 2013 inter-alia requires every listed company to annex with its Board's report, a Secretarial Audit Report given by a Company Secretary in practice, in the prescribed form. The Board of Directors appointed M/s. VBNR & COMPANY, Practicing Company Secretaries as Secretarial Auditor to conduct Secretarial Audit of the Company for Financial Year 2014-15 and their report is annexed to this Board report [Annexure-B]. There are no qualifications, reservations or adverse remarks made by Secretarial Auditors in their Report. AUDIT COMMITTEE: The Board of Directors constituted an Audit Committee as per the existing clause 49 of the Listing Agreements entered into with Stock Exchanges and in terms of Section 177 of the Companies Act, 2013. The details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and the Listing Agreement. DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. VIGIL MECHANISM: The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising senior executives of the Company. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the CFO or to the Chairman of the Audit Committee. INTERNAL FINANCIAL CONTROLS The Company has an internal control system, commensurate with the size, scale and complexity of its operations. The Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. During the year, such controls were tested and no reportable material weakness in the design or operation were observed. DIRECTORS RESPONSIBILITY STATEMENT: Based on the framework of internal financial controls established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external agencies, the reviews performed by Management and the relevant Board Committees, the Board, with the concurrence of the Audit Committee, is of the opinion that the Company's internal financial controls were adequate and effective as on 31 March, 2015. Accordingly, pursuant to Section 134(5) of the Companies Act, 2013 the Board of Directors to the best of their knowledge and ability confirm: a) That in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) That we 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 and loss of the Company for that period; c) That 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; d) That the annual accounts have been prepared on a going concern basis; e) That proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively; f ) That proper internal financial controls were laid down and that such internal financial controls are adequate and were operating effectively. DEPOSITS: During the year, the Company has not accepted any deposits under the Companies Act, 2013. CORPORATE GOVERNANCE: Corporate Governance is a set of principles, processes and systems which govern a company. The elements of Corporate Governance are independence, transparent, accountability, responsibility, compliance ethics, values and trust. Corporate Governance enables an organization to perform efficiently and ethically generate long term wealth and create value for all its stakeholders. The Company believes that sound Corporate Governance is critical for enhancing and retaining investor trust and your Company always seeks to ensure that its performance goals are met with integrity. The Company has established systems and procedures to ensure that its Board of Directors is well informed and well equipped to fulfill its overall responsibilities and to provide management with the strategic direction needed to create long term shareholders value. The Company has always worked towards building trust with shareholders, employees, customers, suppliers and other stakeholders based on the principles of good corporate. A Separate section on Corporate Governance, Management discussion and Analysis and a Certificate from Company's Auditors regarding compliance of the conditions of the corporate governance as stipulated under clause 49 of the Listing Agreements with the Stock Exchanges forms part of this Annual Report. Certificate of CEO inter alia, confirming the correctness of the financial statements, adequacy of the internal measures and reporting of matters to the audit committee in terms of the clause 49 of the listing agreements with Stock Exchanges, is also attached as a part of this Annual Report. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE There have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations. However, members' attention is drawn to the note on Going Concern, Statement on Contingent Liabilities and Commitments in the notes forming part of the Financial Statements. APPRECIATION The Directors take this opportunity to express their appreciation for continued co-operation and assistance extended by Investors, Government Authorities, Bankers, Suppliers and Customers. Your Directors look forward to their continued support. Last but not the least; your Directors also sincerely acknowledge the significant contributions made by the devoted workers, staff and executives for their dedicated services to the Company. By Order and on behalf of the Board sd/- (Mr. Mitesh Agarwal) MD & CEO Place: Daman Date: 02.09.2015 |