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Relaxo Footwears Directors Report, Relaxo Footwear Reports by Directors
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Relaxo Footwears

BSE: 530517|NSE: RELAXO|ISIN: INE131B01039|SECTOR: Leather Products
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Directors Report Year End : Mar '18    Mar 17

Dear Members,

The Board of Directors of your Company take pleasure in presenting its report on the working of the Company for the Financial Year 2017-18.

1. FINANCIAL RESULTS (Rs. in Crores)

Particulars

2017-18

2016-17

Revenue from Operations

1964.44

1651.97

EBITDA

302.09

230.91

Other Income

4.46

13.61

Less: Finance Costs

8.59

15.03

Less : Depreciation and Amortisation Expense

54.34

51.46

Profit before Tax

243.62

178.03

Less: Tax Expense

82.55

58.08

Profit after Tax

161.07

119.95

Other Comprehensive Income

(0.40)

2.29

Balance brought forward from Previous year

12.81

9.24

Amount available for Appropriation

173.48

131.48

Appropriation:

Final Dividend *

12.01

7.20

Tax on Final Dividend *

2.45

1.47

Transfer to General Reserve

125.00

110.00

Balance carried to Balance Sheet

34.02

12.81

EPS-Basic (in Rs.)

13.40

9.99

EPS-Diluted (in Rs.)

13.38

9.98

*Dividend Distributed during the year.

The Ind (AS) provisions were applicable on the Company w.e.f. 01.04.2017, therefore the Financial statements for FY18 and corresponding previous year were prepared as per Ind (AS).

2. BUSINESS PERFORMANCE

The key highlights of the Company’s financial performance during the Financial Year 2017-18 are given here below:-

- Revenue from operations increased by 18.91% to Rs. 1964.44 Crores from Rs.1651.97 Crores in the last Financial Year.

- EBITDA increased by 30.82% to Rs. 302.09 Crores; with EBITDA margin increased by140 bps to15.38%.

- Net Profit increased by 34.28% to Rs. 161.07 Crores from Rs. 119.95 Crores in the last Financial Year.

- Net Profit margins increased to 8.20%.

- Total retail outlets increased from 270 to 302 during the Financial Year.

3. PERFORMANCE OVERVIEW

(A) FINANCIALS

Your Company has been able to show strong growth on the key financial metrics for the year, despite the market scenario being uncertain and increasing competition in the year. Management believes that your Company will continue its journey of profitable growth driven by the strong fundamentals of operating model, overwhelming desire to serve customers & end consumer, streamline of indirect tax laws by introduction of GST and continued focus on the long-term business plan.

- Unending focus on consumer needs and quality.

- Getting capable channel partners & superior on ground execution

- Increased presence in new / emerging channels (modern trade, e- commerce).

- Aggressive expansion in new/ under penetrated geographies.

- Continued expansion in owned retail footprint.

- Robust cost control with margin improvement initiatives

- Manufacturing excellence and quality improvement

- Implementation of value creation projects to aid bottom line improvement.

- Regular disposal of aged inventory.

- EBITDA growth driving PAT growth for the Company.

- Control over administrative and operative expenses

(B) NON-FINANCIALS - GROWTH ACROSS THE VALUE CHAIN

Consumer focus / Product Innovation

Your Company continued its relentless efforts to understand the consumer and has designed its portfolio in line with their changing tastes. Structured market research approach along with regular market sensing exercises have kept your Company abreast with consumer needs across different regional, economic and demographic strata. Our focus on in-season launches with an optimal product portfolio has enabled us to deliver right product, at right price, at right time.

Distribution architecture and footprint expansion

Your Company launched a strategic initiative to streamline the distribution network-especially in underpenetrated markets which have given us substantial incremental sales. This has laid the foundation for next wave of growth for Relaxo.

Your Company also moved away from a category led sales to a geography led sales organization structure. This allowed us to offer the full breadth of our brands to our distributor partners and providing scale in their business. The organization restructuring was carried out in a quick but streamlined manner without any market level disruptions and losing key talent.

Your Company has continued its effort to adapt its product portfolio with evolving consumer needs and trends enabling its impressive growth in FY18. Structured market research has been the corner stone of this portfolio strategy - it has helped us to better understand the customer’s typical usage occasions, key purchase drivers and identify any evolving opportunity spaces for our portfolio. All this has been achieved within the guardrails of Relaxo’s overall strategy of an “optimal sized” product portfolio with high quality products.

New products are the key to sustain any growth story and our in-house design team has supported us to maintain a strong new product portfolio over the years. As a result, sales contribution from new product launches has continued to grow in FY18, across all brands -Relaxo, Flite, Sparxand Bahamas.

In parallel, your Company has continued to invest extensively in its brands with an aim to reinforce trust, drive consumer recall and sustain demand pull for our brands.

- Acclaimed celebrities such as Salman Khan and Akshay Kumar continue to be brand ambassadors for Bahamas and Sparx respectively while Shahid Kapoor & Shruti Haasan have been engaged afresh for Flite.

- Digital marketing: With an objective to connect with the younger generation, your Company has enhanced its digital marketing strategy to stimulate consumers throughout the entire purchase cycle. Widening the range of digital marketing activities, we aim to (a) Enhance product exposure via greater social media campaigns, (b) Influence consumer purchase via advocacy marketing and (c) Build consideration via advertising on e-commerce portals.

E-commerce

Increasing smartphone penetration in the country coupled with evolving shopping habits of the consumer, who looks for ease and convenience, has resulted in rapid growth of e-commerce channels. Your Company has partnered with all major e-commerce companies for sales of its products to the emerging online consumers and has posted a decent growth in FY18. While the Indian market continues to be our focus, your Company made considerable efforts to strengthen operations in international markets, with a specific focus on Middle East, Africa and Oceania. Your Company has opened branch office in Dubai to be nearer to customer. Given a strong brand recall and a widespread Indian diaspora, your Company is well positioned to capitalize on growth from these regions.

Retail

In FY18, your Company has achieved landmark target of opening 300th exclusive retail outlet. Retail continues to be instrumental in increasing brand visibility and range of products. During the year, Company has opened 8 Franchise outlets (FOFO) in eastern region on experimental basis. The initial response to this concept is encouraging.

In order to maintain optimum inventory level, retail division has focussed on store to store rotation of stock and on liquidation of aged inventory, resulting in reducing inventory days.

Procurement

Vendor Portal was launched for online registration of new vendors to improve vendors base besides facilitating existing vendors to upgrade their profiles, new products offering etc.

During the year, audit was carried out on main vendors for assessment of their infrastructure and quality control systems maintained by them. This helped in making them more aware about ourexpectations about quality in supplies. This initiative helped in rationalizing and improving vendor portfolio.

During FY18, your Company not only focused on improving the quality of products but also in improving various packaging materials.

Manufacturing

Global competition is becoming a marathon race toward a new age of advanced and “smart” (lean, efficient, cost effective, flexible, robotics and Al based) manufacturing. Your Company took initiatives aimed at improving productivity and optimizing manufacturing costs by applying world class manufacturing concepts like Maynard Operation Sequence Technique (M05T), yield improvement etc. in all plants. We also continued 5S journey along with safety enhancement projects for betterworking environment.

Technology

FY18 was the year of technology advancement that has put us in the top of IT adoption and compliance graph helping the Company to leverage technology in achieving its business goals.

Your Company was ready for GST rollout with backend preparation before time, which helped in its smooth implementation. We initiated implementation of SAP HANA for retail operations which will help in improving and standardizing processes. Company updated its IT landscape / Applications by deploying ATP (Advance Threat Protection) solution for data security.

ISO Certification

Relaxo has been certified by British Standards Institute (B5I) for ISO 9001:2015 (Quality Management System), ISO 14001:2015 (Environmental Management 5ystem) & OHSAS 18001:2007 (Occupational Health & Safety Assessment Series) till June 2020. The Quality, Environmental and Safety Policy symbolizes the organization’s commitment towards improving product and process quality, protecting mother nature and safeguarding the people working for and on behalf of the organization.

People Focus

HR function has taken following key initiatives in FY18:

a) Recruitment: Your Company’s sales and capabilities are growing at a rapid pace. We drove a series of initiatives to improve quality and speed in hiring sales team by introducing new recruiters and created bench strength for the function. Your Company has created a pool of future leaders by hiring management trainees from top B-Schools and engineering institutes. 5everal initiatives were taken for employer branding by communicating company philosophy & culture through social media and guest lectures in premium campuses.

b) Employee Stock Options Plan (ESOP): Second phase of RFL ESOP PLAN -2014 was launched during the year. The 2nd phase of ESOP Plan was introduced encompassing more employees in its ambit and accordingly options were granted to them during the year.

c) Grievance Handling: Your Company has continued to spread awareness about the mechanism and facilities for grievance handling. We have a toll free helpdesk number and a dedicated email wherein the employees can report their grievances, which are thoroughly investigated and closed as per TAT (turn around time) defined in the policy.

d) Training and Development: Your Company has continued to impart need based functional and behavioral trainings to employees during FY18.

e) Employee Engagement: Your Company has focused on creating a congenial workplace & employee engagement by initiating family connect programs, skip level interaction sessions and health & wellness camps.

4. MANAGEMENT DISCUSSION & ANALYSIS REPORT

The Management Discussion & Analysis Report forms an integral part of this Report and gives details of the overall industry structure, developments, performance and state of affairs of the Company’s business, internal controls and their adequacy, risk management systems and other material development during the Financial Year.

5. DIVIDEND

Board of Directors in their meeting held on 11th May, 2018 have recommended a final dividend of 150% i.e.Rs. 1.50 per equity share for the Financial Year ended 31st March, 2018. The Proposed Dividend is subject to the approval of shareholders at the Annual General Meeting to be held on 27th September, 2018.

6. TRANSFERTO RESERVE

We propose to transfer Net Profit of Rs. 125.00 Crores to the General Reserve. An amount of Rs. 34.02 Crores is proposed to be retained in profit & loss account.

7. PUBLIC DEPOSITS

Your Company has not invited or accepted any deposits within the meaning of Sections 73 & 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force) from public during theyear under review.

8. BUSINESS RESPONSIBILITY REPORT (BRR)

In Compliance with the provisions of Regulation 34(2)(f) of SEBI (LODR) Regulations, 2015 read with Circular No CIR/CFD/CMD/10/2015 dated November 4, 2015, your Company has prepared a BRR in the prescribed format for the Financial Year ended March 31,2018, which forms an integral part of this report.

9. DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL & PARTICULARS OF EMPLOYEES

In accordance with 5ection 178 of the Companies Act, 2013 read with rules issued thereunder and SEBI laws, the Board of Directors at their meeting held on 10th May, 2014 formulated the Nomination & Remuneration Policy of your Company. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have been outlined in the Corporate Governance Report which forms part of this report. The Nomination and Remuneration Policy is available on the website of the Company at the following link http://www.relaxofootwear.com/pdf/Nomination-and-remuneration-policy.pdf.

The information required under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force)in respect of Directors / Employees of your Company is set out in Annexure-A to this report.

10. DIRECTORS AND KEY MANAGERIAL PERSONNEL

During Financial Year 2017-18, Mr. Nikhil Dua was reappointed as Whole Time Director for a period of three years w.e.f. 1st October, 2017 by the shareholders in the Annual General Meeting held on 21st September, 2017.

Mr. Ramesh Kumar Dua, Managing Director and Mr. Mukand Lai Dua, Whole Time Director of the Company retire by rotation at the ensuing Annual General Meeting and being eligible, offered themselves for reappointment.

Your Directors recommend their re-appointment as the Directors of the Company.

Pursuant to the provisions of Sections 195,197,198 and 203 read with Schedule V and other applicable provisions of the Companies Act, 2013 and on the recommendations of Nomination and Remuneration Committee and the Board of Directors, Mr. Ramesh Kumar Dua, whose term as Managing Director shall expire on 31.03.2019, is proposed to be re-appointed as a Managing Director of the Company for a period of 5 (five) years with effect from 01.04.2019 to 31.03.2024, and subject to retirement by rotation, on the terms and conditions including remuneration as set out in the explanatory statement annexed to the notice convening the ensuing AGM.

Pursuant to the provisions of Sections 195,197,198 and 203 read with Schedule V and other applicable provisions of the Companies Act, 2013 and on the recommendations of Nomination and Remuneration Committee and the Board of Directors, Mr. Mukand Lai Dua, whose term as Whole Time Director shall expire on 31.03.2019, is proposed to be re-appointed as a Whole Time Director of the Company for a period of 5 (five) years with effect from 01.04.2019 to 31.03.2024, and subject to retirement by rotation, on the terms and conditions including remuneration as set out in the explanatory statement annexed to the notice convening the ensuing AGM. He is also going to attain age of 70 years during the proposed tenure.

Pursuant to the provisions of Sections 195,197,198 and 203 read with Schedule V and other applicable provisions of the Companies Act, 2013 and on the recommendations of Nomination and Remuneration Committee and the Board of Directors, Mr. Deval Ganguly, whose term as Whole Time Director shall expire on 04.11.2018, is proposed to be reappointed as a Whole Time Director of the Company for a period of 3 (three) years with effect from 05.11.2018 to 04.11.2021, and subject to retirement by rotation, on the terms and conditions including remuneration as set out in the explanatory statement annexed to the notice convening the ensuing AGM.

The first term of Independent Directors Mr. Pankaj Shrimali, Mr. Vivek Kumar and Mr. Kuruvila Kuriakose shall expire on 31.03.2019. They have shown their interest to continue as Independent Directors for the next term of five years. On the recommendation of Nomination and Remuneration Committee and Board of Directors recommendation has been made to members for appointment of Mr. Pankaj Shrimali, Mr. Vivek Kumar and Mr. Kuruvila Kuriakose as Independent Directors of the Company for the next term of 5 (five) years with effect from 01.04.2019 to 31.03.2024 in the ensuing AGM.

A brief resume of the Directors proposed to be re-appointed, the nature of their expertise in specific functional areas, names of companies in which they have held Directorships, committee membership/s / chairmanship/s, their shareholding etc., are furnished in the explanatory statement to the notice of the ensuing AGM. The Board of Directors recommend their re-appointment at the ensuing AGM.

11. ANNUAL EVALUATION OF BOARD’S PERFORMANCE

In terms of provisions of Companies Act, 2013 read with Rules issued thereunder and SEBI (LODR) Regulations 2015, the Board of Directors on recommendation of the Nomination and Remuneration Committee, have evaluated the effectiveness of the Board/ Director(s) for the Financial Year 2017-18. Directors were evaluated on their contribution at Board / Committee meetings and guidance & support to the management outside Board / Committee meetings. During the year Company engaged renowned consultants to reset the parameters for performance evaluation of Board, Director(s) and Committees which helped in settingtheguidelinesforevaluation.

The Board’s functioning was evaluated on various aspects, including inter alia degree of fulfillment of key responsibilities, Board structure and composition, role and accountability, management oversight, risk management, culture and communication, frequency and effectiveness of meetings.

The committees of the Board were assessed on the basis of degree of fulfillment of key responsibilities, adequacy of committee composition and effectiveness of meetings. The Chairman appointed for the Board meetings was also evaluated by all the Directors on the basis of managing relations, leadership, competence and diligence.

The Independent Directors performance evaluation was carried out by the entire Board, excluding the Director being evaluated. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board as a whole.

12. NUMBER OF MEETINGS OFTHE BOARD

The Board met five times during the Financial Year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two consecutive meetings was within the period prescribed by the Companies Act, 2013, SEBI (LODR) Regulations, 2015 and Secretarial Standard-1 (SS-1).

13. DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(G) of the Companies Act, 2013.

14. TRAINING OF INDEPENDENT DIRECTORS

The Company makes presentation to the new Independent Directors about the strategy, operations, plants, products, organization structure, finance, human resource and facilities. During the year, Company had arranged presentations for the Independent Directors, on business operating plans, capital expenditure plans, HR policies, retail business, GST, Ind (AS), merger laws and compliance process.

Further at the time of appointment of an Independent Director, the Company issued a formal letter of appointment outlining his / her role function, duties & responsibilities as an Independent Director. The format of the letter of appointment is available on our website http://www.relaxofootwear.com/terms-conditions.aspx.

15. DIRECTOR’S RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act, 2013 with regard to Director’s Responsibility Statement, it is hereby confirmed that:

a) In the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgements 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, 2018 and of the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a ‘going concern’ basis;

e) the Directors have laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and are operating effectively; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

16. AUDITORS

The Statutory Auditors of the Company M/s B R Maheswari & Co LLP, Chartered Accountants were appointed during the year for a period of five years and will hold office till 38th Annual General Meeting subject to 5ection 139 and other applicable provisions of Companies Act, 2013 to be held in year 2022 subject to the annual ratification by members, if required at every Annual General Meeting.

The Ministry of Corporate Affairs vide its Notification dated 7th May, 2018, dispensed with the requirement of ratification of appointment of Statutory Auditors at every AGM. Accordingly, the proposal for ratification of appointment of Statutory Auditors is not forming part of the Notice convening ensuing Annual General Meeting of the Company.

17. AUDITORS’REPORT

The Auditor’s Report for the financial year ended 31st March, 2018 does not contain any qualification, reservation or adverse remarks. The observation of the Auditors on the Accounts for the year under report have been suitably explained in the Notes to Accounts and do not require any further clarification.

18. SECRETARIAL AUDITOR

Pursuant to the provisions of Section- 204 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, (including any statutory modifications(s) or re-enactment(s) thereof for the time being in force) your Company appointed M/s Vivek Arora, Company Secretaries, to conduct the Secretarial Audit of the Company for the Financial Year 2017-18. The Secretarial Audit Report for the Financial Year 2017-18 forms part of the Annual Report as Annexure-B to this Report.

19. ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 in accordance with 5ection 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as Annexure-C to this report.

20. CONTRACTS 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 the business and on the arm’s length basis and were in compliance with the applicable provisions of the Companies Act, 2013 (‘the Act’) and SEBI (LODR) Regulations, 2015. 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 of the Company on materiality of Related Party Transactions that would have required Shareholders approval under Regulation 23 of SEBI (LODR) Regulations, 2015.

The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company’s website at the link http://www.relaxofootwear.com/pdf/Policy-for-Transactions-with-related-Parties.pdf.

Your Directors draw attention of the members to Note No. 47 to the Financial Statements which sets out related party disclosures.

The form AOC-2 pursuant to section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof forthe time being in force) is set out as Annexure-D to this Report.

21. MERGERS AND AMALGAMATIONS

Your Company had filed a petition with National Company Law Tribunal (NCLT) Delhi for amalgamation of M/s Marvel Polymers Private Limited and M/s Relaxo Rubber Private Limited with your Company along with its shareholders and creditors. During FY18, your Company has obtained necessary approvals from stock exchanges NSE&B5E.

22. DETAILS OF LOANS, GUARANTEES & INVESTMENTS

The details of loans, guarantees and investments under 5ection 186 of the Companies Act, 2013 read with Companies (Meeting of Board and its Powers) Rules, 2014 are as follows :-

a) Details of investments made by the Company as on 31st March, 2018 (including investments made in previous years).

(i) Investment in equity shares : Rs. 20.00 Lacs

(ii) Investment in debt instruments : Rs. 50.00 Lacs

b) Details of loans given by the Company : Nil

c) There are no guarantees issued by your Company in accordance with 5ection 186 of the Companies Act, 2013 read with the Rules issued thereunder.

23. RISK MANAGEMENT

Your Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. The Company has adopted a Risk Management Policy which establishes various levels of accountability within the Company. The policy also ensures effective risk management systems to carry out risk assessment and also to document risk mitigation plans. In addition, all the key risks get continuously deliberated and discussed during business review meetings. Company has taken many initiatives to further strengthen the GRC framework at Relaxo which includes automation of compliance monitoring, litigation management and documentation of Delegation of Authority (Operational / Financial). The Company has benn taking necessary steps to mitigate foreseeable business risks. The Company has laid down procedures to inform the Audit Committee as well as the Board of Directors about risk assessment & management procedure and status. Business risk evaluation and management is an ongoing and continuous process within the Company.

24. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company believe that the collective development of all the stakeholders especially the people at the bottom of the pyramid is prerequisite for the sustainability & the holistic development of the business.

The CSR Vision of your Company is to ensure sustained human development of the most deprived communities by involving them & leveraging Company’s strength in need-based, result-oriented, and sustainable projects.

Your Company has decided to work under two thrust areas, ‘Education & Skill development’ and ‘Health & Hygiene’, primarily with the underprivileged communities living in the vicinity of Relaxo locations. However, being one of the most popular household brand Relaxo has presence across India therefore, your Company intends to work beyond these geographical boundaries.

Presently, Relaxo Foundation is running six projects in four different locations. During the reporting period, the activities of the Foundation have directly impacted more than 20,000 individuals. However, the indirect reach has been much more.

The rationale and strategy under both thrust areas are mentioned below-

a) Educations Skill Development

Relaxo Foundation is undertaking projects both in the rural and urban areas towards ensuring the holistic development of the underprivileged children through an integrated approach. The short-term goal of the education program is to improve the quality of education & learning outcome of the Government school students. However, the long-term goal is to create a model of school-led-individual & community-development, wherein through school the other aspects of the community can be addressed like health, gender, local self-governance, livelihood etc., so that the entire community could be uplifted. Along with school education, Relaxo Foundation is also providing Vocational training to school and college drop-out underprivileged youth.

During the year under review, your Company has initiated three projects under Education & Skill Development viz. project ‘Model School’ in 13 Primary schools of Khanpur Block in Haridwar District of Uttarakhand; ‘Student to Scholar’ program in Bahadurgarh and a retail sector specific vocational training course in Delhi.

b) Health & Hygiene

Availability, accessibility and affordability of health services is a huge challenge for the socio-economically backward communities that lead to higher morbidity and mortality. Also, in India, the Non-Communicable Diseases are on a rise which are the life style disorders and an emerging National Health challenge. Relaxo Foundation believes that protection from diseases not only ensure survival but can contribute significantly in the economic growth and prosperity of an individual, family and the Nation at large.

Through Need assessment, Bhiwadi emerged as the most deprived area in terms of availability and accessibility of health services. Therefore, in the reporting period, Relaxo Foundation has initiated two extensive projects involving both curative and preventive healthcare services. One project is ‘Smile on Wheel (Comprehensive Health Care)’ addressing the general health needs of the community and the other project is ‘Nayan’ towards preventable blindness covering the entire Tijara Block of Alwar District.

In FY18, the focus of your Company was more on developing the strategy and laying down strong foundation for the Relaxo CSR so that the amount could be spent on impactful and sustainable projects. Along with this, the Foundation adopted consultative process to finalize the projects and did stringent due diligence process for the identification of the Implementing Partners. The time invested in this whole process, resulted in the delay of project initiation that lead to underspent of CSR budget. However, a significant amount has been allocated and other projects are under consideration. Considering the progress, your Company is confident to increase CSR spending in the next financialyear.

Detailed report of all the on-going CSR projects is mentioned in Annexure-E.

25. COMPOSITION OF AUDIT COMMITTEE

The Audit Committee as on March 31, 2018 comprises of the following Directors:

Mr. Pankaj Shrimali (Chairman & Independent Director), Mr. Kuruvila Kuriakose (Independent Director), Mr. Vivek Kumar (Independent Director) and Mr. Nikhil Dua (Executive Director).

Further, all recommendations of Audit Committee were accepted by the Board of Directors.

26. VIGIL MECHANISM

Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177(10) of the Companies Act, 2013 and SEBI Laws. The copy of the policy is available at Company’s website at http://www.relaxofootwear.com/pdf/Vigil-Mechanism-Policy.pdf.

27. DISCLOSURE UNDER 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 gender neutral policy on prevention, prohibition and redressal of sexual harassment at workplace.

An Internal Committee (1C) is available at each of the units and offices of the Company as per the requirements of the law. The 1C is responsible for redressal of complaints related to sexual harassment as well as to create a preventive environment across the organization. The Company conducts sensitization / awareness sessions on a regular basis so as to create a free and fair working environment.

The 1C received one complaint of Sexual Harassment during the year under review and the same was disposed off as per the provisions of law. It is our constant endeavour to ensure that we provide harassment free, safe and secure working environment to all employees specially the women. We are proud to inform that our female workforce feels happy and safe while working at Relaxo.

28. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future.

29. CREDIT RATING

During the year under review, ICRA has upgraded Long term rating of the Company to ICRA AA- (stable outlook) from ICRA A (positive outlook). During the year, ICRA has reaffirmed shortterm rating of the Company as A1 which is the highest rating for the product. ICRA has also reaffirmed A1 top notch rating to the Company for Commercial Paperof Rs. 50.00 Crores

30. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed underthe Act, are provided in Annexure-Ftothis Report.

31. EMPLOYEES STOCK OPTION PLAN

During the year, 223,370 options were exercised by the employees after vesting. Accordingly, the Company has made allotment of 223.370 equity shares on 4th November, 2017 against the options exercised by the employees. Company launched 2nd tranche of Employee Stock Option Plan 2014 (“RFL ESOP PLAN-2014”) during the year and granted 494,200 options in 2 tranches to eligible employees of the Company.

During the Financial Year 2017-18, there has been no change in the Employee Stock Option Plan 2014 (“RFL ESOP PLAN-2014”) of the Company. Further, it is confirmed that the ESOP Scheme of the Company is in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014.

The details as per the requirements of SEBI Guidelines are annexed and form part of this Report as Annexure-G.

32. CHANGE IN SHARE CAPITAL

During the year under review, the Company has issued and allotted 223.370 equity shares of Rs.1.00 each fully paid up on exercise of stock options by the eligible employees under the Employee Stock Option Plan, 2014 (RFL ESOP PLAN -2014) thereby increasing the paid up share capital by Rs. 223,370/-.

33. INTERNAL FINANCIAL CONTROL SYSTEM

The Company has in place well defined and adequate Internal Financial Control framework which is independently evaluated by external agency apart from periodic evaluation by in-house Internal Audit function for necessary improvement, wherever required. The Company deploys a robust system of internal controls that facilitates the accurate and timely compilation of financial statements and management reports which ensures regulatory and statutory compliances along with safeguarding of investors interest by ensuring the highest level of governance. The control system ensures that all assets are safeguarded and protected and that the transactions are authorized, recorded and reported correctly. A CEO and CFO Certificate Included in the Corporate Governance Report confirms the existence of effective internal control systems and procedures in the Company. The Audit Committee reviews the effectiveness of the internal financial control framework in the Company.

34. CEO AND CFO CERTIFICATION

Pursuant to the requirement of Regulation 33(2)(a) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, the CEO and CFO certification is attached herewith the Annual Report which confirms the existence of effective internal control systems and procedures in the Company. The Managing Director and the Chief Financial Officer also provide quarterly certification on Financial Results while placing the Financial Results before the Board in terms of Regulation 33(2)(a) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.

35. TRANSFERTO UNCLAIMED SHARES

As per the provisions of Regulation 39(4) of the Listing Regulations, the unclaimed shares lying in the possession of the Company are required to be dematerialized and transferred into a special demat account held by the Company. Accordingly, unclaimed shares lying with the Company have been transferred and dematerialized in a ‘Unclaimed Suspense Account’ of the Company. This account is being held by the Company purely on behalf of the shareholders entitled for these shares. It may also be noted that all the corporate benefits accruing on these shares like bonus, split etc., if any, shall also be credited to the said ‘Unclaimed Suspense Account’ and the voting rights on these shares shall remain frozen until the rightful owner claims the shares.

Shareholders who have not yet claimed their shares, are requested to immediately approach the Registrar & Transfer Agents of the Company by forwarding a request letter duly signed by all the joint holders furnishing self attested copies of their complete postal address along with PIN code, a copy of PAN card along with proof of address and for delivery in demat form, a copy of Demat Account -Client Master Report duly certified by the Depository Participant (DP) and a recent Demat Account Statement, to enable the Company to release the said shares to the rightful owner. The summary of ‘Unclaimed Suspense Account’ during the year is given hereunder:

S. No.

Particulars

No of shareholders

No of equity shares held

1.

Aggregate number of shareholders and the outstanding shares lying in the suspense account at beginning

47

118,110

2.

Number of shareholders along with shares held who approached the Company for transfer of shares from the suspense account during the year

2

8,000

3.

Number of shareholders along with shares held to whom shares were transferred from the suspense account during the year

2

8,000

4.

Transfer of shares to IEPF Account

18

70,025

5.

Aggregate number of shareholders and the outstanding shares lying in the suspense account at the end of the year.

27

40,085

36.CORPORATEGOVERNANCE

The Company is committed to maintain the highest standard of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Report on Corporate Governance as stipulated under SEBI (LODR) Regulations, 2015 forms an integral part of the Report. The requisite certificate from the Statutory Auditors of the Company M/s. B R Maheswari 6 Co LLP, Chartered Accountants, confirming compliance with the conditions of Corporate Governance is attached to the Report of Corporate Governance as Annexure-H.

37. OTHER DISCLOSURES

(A) Dividend Policy: Your Company intends to maintain similar or better levels of dividend payout over the next few years. However, the actual dividend payout in each year will be subject to the investment requirements of the annual operating plan for the year and any other strategic priorities identified by the Company. The Company has formulated a Dividend Policy in accordance with SEBI (Listing obligation and Disclosure Requirements) Regulations, 2015 (hereinafter “LODR Regulations”) and the same is available on your Company’s website: www.relaxofootwear.com /pdf/Dividend-Policy.pdf.

(B) The Company is in compliance with the Secretarial Standards on Meetings of the Board of Directors (SS - 1) and General Meetings (SS - 2) issued by The Institute of Company Secretaries of India and approved by the Central Government.

(C) The Company affirms that the annual listing fees for the year 2018-19 to both National Stock Exchange of India Limited (NSE) and BSE Limited (Bombay Stock Exchange) has been paid.

(D) During the year, pursuant to the provisions of Section-138 of the Companies Act, 2013, your Company has appointed Deloitte Haskins & Sells LLP (Deloitte) as Internal Auditors for FY19 in addition to existing in -house Internal Audit Department.

38. ACKNOWLEDGEMENT

Your Directors express their gratitude to the Company’s shareholders, business partners and suppliers for their understanding and support. The Directors also take this opportunity to thank Banks, Government and Regulatory Authorities and Stock Exchanges, for their continued support. Finally, Your Directors acknowledge the dedicated services rendered by all employees of the Company.

For and on behalf of the Board of Directors

Ramesh Kumar Dua Mukand Lai Dua

Managing Director Whole Time Director

Delhi, 11th May, 2018 DIN :00157872 DIN :00157898

Source : Dion Global Solutions Limited
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