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Responsive Industries Ltd.

BSE: 505509 | NSE: RESPONIND |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE688D01026 | SECTOR: Construction & Contracting - Civil

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

DEAR MEMBERS,

The Directors have pleasure in presenting this Thirty Sixth Annual Report on the business and operations of your Company with the Audited Financial Statements for the year ended March 31, 2018.

1. FINANCIAL PERFORMANCE

Financial Results

(Rs. in Million)

2017-18

2016-17

Sales and Other Income

10,985.18

18,406.50

Profit before Interest, Depreciation & Tax

1,086.08

1,516.07

Less: Interest

170.39

228.95

Profit before Depreciation & Tax

915.69

1,287.12

Less: Depreciation

656.70

987.66

Profit before Tax

258.99

299.46

Less: Provision for Taxation

128.24

105.58

Net Profit after Tax

130.75

193.88

Balance brought forward from previous year

4,338.35

4,144.14

Profit available for appropriations

4,472.39

4,338.35

Appropriations

Transfer to General Reserve

-

-

Proposed Final Dividend Interim Dividend

26.69

26.69

Corporate Dividend Tax

5.43

5.43

Balance carried to Balance Sheet

4,440.46

4338.35

2. OPERATIONS & STATE OF COMPANY’S AFFAIRS

Your Company earned total revenue of Rs. 10,985.18 Million for the year ended 31st March, 2018, as compared to Rs. 18,406.50 Million in the previous financial year. The Company recorded a Net Profit after Tax of Rs.130.75 Million for the year ended 31st March, 2018. The Net Profit after Tax for the financial year ended 31st March, 2017 was Rs. 193.88 Million. There was no change in nature of business of the Company during the year under review.

3. DIVIDEND

Your Directors recommend Dividend of 10% i.e. Re.0.10 per Equity share of face value of Re.1/- each fully paid up aggregating to Rs. 26.69 Million for the year ended 31st March, 2018.

4. TRANSFER TO RESERVES

The Board of Directors has not recommended transfer of any amount to reserves.

4. SHARE CAPITAL

The paid up Equity Share Capital as at March 31, 2018 stood at 266.91 Million. During the year under review, the Company has not issued shares with differential voting rights nor granted any stock options or sweat equity shares. As on March 31, 2018, none of the Directors of the Company hold instruments convertible into equity shares of the Company. During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014.

5. SUBSIDIARIES, ASSOCIATES & JOINT VENTURES

The Company has one material non listed Indian Subsidiary Company i.e. Axiom Cordages Limited. It also has one Hong Kong based subsidiary Responsive Industries Limited, and one step down subsidiary Axiom Cordages Limited incorporated on 02 June, 2017. The policy for determining material subsidiaries of the Company is available on the website of the Company i.e. www.responsiveindustries.com. Responsive International Limited, a wholly owned subsidiary of the Company is being Non operative since inception. The Company does not have any associate Company & Joint venture.

Performance of Axiom Cordages Limited is as follows:

The total revenue net of excise of Axiom Cordages Limited stood at Rs.2017.29 Million (Previous year 2194.02 Million). Profit after tax for the year stood at Rs. (35.32) Million (Previous year -108.24 Million).

The requirement of appointing Independent Director of the Company on the Board of Directors of the subsidiary Company has been duly complied with. The requirements of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 (“SEBI Listing Regulations”) with regard to subsidiary company have been complied with. Statement containing salient features of the financial statement of Subsidiary Companies in Form AOC-1 forms part of this Annual Report.

7. CONSOLIDATED FINACIAL STATEMENT

The Consolidated Financial Statements of the Company and of its Subsidiaries, Axiom Cordages Limited are prepared in compliance with applicable provisions of the Companies Act, 2013, and “Ind AS” issued by the Institute of Chartered Accountants of India as well as Listing Regulations as prescribed by the Securities and Exchange Board of India (SEBI). The Financial Statements of Hong Kong based subsidiary Responsive Industries Limited and Axiom Cordages Limited. are prepared in accordance with the Small and Medium sized Entity Financial Reporting Standard (SME-FRS) issued by the Hong Kong Institute of Certified Public Accountants (HKICPA) and in Compliance with the Hong Kong Companies Ordinance.

8. CORPORATE GOVERNANCE

The Company has complied with all the mandatory requirements of Corporate Governance. A separate report on Corporate Governance and a certificate from M/s. P. P. Shah & Co.,

Practicing Company Secretaries regarding compliance with the conditions of Corporate Governance is given in a separate section and forms part of the Annual Report. Further, a declaration affirming compliance with the code of conduct by all the Board members and senior management personnel along with certificate under Regulation 17(8) of the SEBI Listing Regulations is also given in this Annual Report.

9. DIRECTORS

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Rajesh Pandey (DIN 00092767) retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Accordingly, his re-appointment forms part of the notice of the ensuing Annual General Meeting.

Mr. Rishab Agarwal is appointed as Managing Director of the Company w.e.f. 02 May, 2018 by the Board of Directors of the Company for a term of 5 years subject to the approval of shareholders. Accordingly, his appointment forms part of the Notice of this ensuing Annual General meeting. Mrs. Rohini Agarwal is appointed as Additional Director on the Board w.e.f. 02 May, 2018 by the Board of Directors of the Company. Accordingly, her appointment as a Director of the Company forms part of the Notice of this ensuing Annual General meeting of the Company.

Mr. Jagannadham Thunuguntla and Mrs. Jyoti Rai were appointed as Independent Director at the Annual General Meeting held on 22nd September, 2015 for a period of 3 years and their tenure expires in this ensuing Annual General meeting. They are proposed to be re-appointed as an Independent Director for another term of five consecutive years for a term up to the conclusion of the 41st Annual General meeting to be held in the calendar year 2023. Accordingly, their re-appointment forms part of the notice of the ensuing Annual General Meeting.

Mr. S.S. Thakur was reappointed as Independent Director at the Annual General meeting held on 29th September, 2017 for another term of 5 consecutive years. All Independent Directors have given declaration that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013 and SEBI Listing Regulations. During the year, nonexecutive directors of the Company had no pecuniary relationship or transactions with the Company.

10. DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors state that:

(a) in the preparation of the annual financial statements for the year ended March 31, 2018, the applicable accounting standards have been followed and there are no material departures;

(b) the Directors 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 as at March 31, 2018 and of the Profit & loss of the Company for the year ended on that date;

(c) the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 f< safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; and

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

11. PLEDGE OF SHARES

None of the equity shares of the Directors of the Company are pledged with any banks or financial institutions.

12. PUBLIC DEPOSITS

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 (“the Act”) read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing details of deposits which are not in compliance with the Chapter V of the Act is not applicable.

13. DISCLOSURES UNDER SECTION 134(3)(l) OF THE COMPANIES ACT, 2013

No material changes and commitments which could affect the Company’s financial position have occurred between the end of the financial year of the Company and date of this report.

14. MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion & Analysis Report for the year under review is attached, whic forms part of the Annual Report.

15. PROPOSAL OF EMPLOYEE STOCK OPTION SCHEME:

Equity based compensation is considered to be an integral part of employee compensation across sectors which enables alignment of personal goals of the employees with organizational objectives by participating in the ownership of the Company through share based compensation scheme/plan. Your Company believes in rewarding its employees including Directors of the Company for their continuous hard work, dedication and support, which has led the Company on the growth path.

The Company intends to implement the RESPONSIVE INDUSTRIES LIMITED Employees Stock Option Scheme 2018 (RESPONSIVE ESOS 2018), with a view to attract and retain key talents working with the Company by way of rewarding their performance an and had replaced the earlier Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (‘SEBI ESOP Guidelines 1999’). All listed companies having existing schemes to which the SEBI Regulations apply were required to comply with the same in their entirety.

Accordingly, it is proposed to adopt a new scheme under the SEBI SBEB Regulations, under the name and style ‘RESPONSIVE ESOS 2018’ for the purposes of granting options to the Employees/Directors of the Company and its subsidiaries, as applicable.

The Resolutions contained in the AGM notice to the Members’ seeks their approval to authorise the Board of Directors of the Company to create, issue, offer and allot equity shares, from time to time, to employees/Directors of the Company and its subsidiaries under this Scheme.

A copy of the proposed RESPONSIVE ESOS Scheme 2018 will also be available for inspection at the Registered Office and Corporate Office of the Company between 10:00 a.m. to 1:00 p.m. on all working days up to the last date of the AGM. Also main feature of ESOP are also included in the explanatory Statement to the notice of AGM.

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

In accordance with the provisions of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, required information relating to the conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the “Annexure A” to the Directors’ Report.

17. GROUP

Pursuant to intimation from the promoters, the names of the promoters & entities comprising the “Group” are disclosed in the Annual report for the purpose of SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011 in “Annexure B”.

18. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has developed a CSR Policy which indicates the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013. The CSR Policy has been uploaded on the website of the Company. The Annual Report on CSR activities is annexed as “Annexure C” and forms a part of this Report.

19. EXTRACT OF ANNUAL RETURN

20. AUDITORS

20.1 Statutory Auditors

Pursuant to the provisions of Section 139 of the Act and rules framed thereunder, M/s. SGCO & Co. LLP, Chartered Accountants (Firm Reg. No: 112081W/W100184) were appointed as Statutory Auditors of the Company from the conclusion of the Thirty Fifth Annual General Meeting (AGM) of the Company held on 29th September, 2017 till the conclusion of AGM to be held in the calendar year 2022, subject to ratification of their appointment at every AGM. Accordingly resolution seeking member’s approval for ratification of the appointment of SGCO & Co. LLP, Chartered Accountants as Statutory Auditors forms part of the Notice convening the Annual General Meeting.

They have confirmed their eligibility and submitted the Certificate in writing that their appointment, if made, would be within the prescribed limit under the Act and they are not disqualified for appointment.

The Auditor’s Report for the f.y. ended 31st March, 2018 does not contain any qualification, reservation or adverse remark and is prepared as per “Ind AS”

20.2 Cost Auditors

Pursuant to Section 148 of Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, on recommendations of Audit Committee, your Directors has appointed M/s. S.K. Agarwal & Associates to audit the cost accounts of the Company for the financial year 2018-19.

A Resolution seeking member’s approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting.

20.3 Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made thereunder, the Company has appointed M/s. P.P. Shah & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report in Form MR-3 is annexed herewith as “Annexure E”. It does not contain any qualification, reservation or adverse remark except for Non-appointment of Chief Financial Officer (CFO) and partial spending of amount towards Corporate Social Responsibility (CSR) by the Company.

As per the provision of section 203(1) of the Companies Act, 2013, the Company is required to appoint CFO. The Company is in process of finding suitable person as its Chief Financial Officer. The Company has been working on identifying the other projects apart from already taken for carrying out CSR activities; this has taken more than the estimated time looking at the total spending requirement.

21. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the year under review were in the ordinary course of business and on arm’s length basis. The Company has not entered into any contract/arrangement/transaction with related parties which could be considered material in nature. All Related Party Transactions are placed before the Audit Committee and Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive in nature. Your Directors draw attention of the members to note no.33 to the standalone financial statement which sets out related party disclosures.

The Company has developed a Related Party Transactions Policy which has been uploaded on the website of the Company and web-link thereto has been provided in the Corporate Governance report.

22. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has set up an Internal Complaints Committee (ICC) for providing redressal mechanism pertaining to Sexual harassment of women employees at workplace. The Company has not received any compliant pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

23. RISK MANAGEMENT

The Company has laid down the procedures to inform the Board about the risk assessment and minimization procedures and the Board has formulated Risk Management Policy to ensure that the Board, its Audit Committee and its management should collectively identify the risks impacting the Company’s business and document their process of risk identification, risk minimization, risk optimization as a part of a risk management policy/ strategy. At present there is no identifiable risk which, in the opinion, of the Board may threaten the existence of the Company.

24. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is also defined. To maintain its objectivity and independence, 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 system 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, corrective action are undertaken in the respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

Internal Financial Control

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors, including audit of internal financial controls over financial reporting, and the reviews performed by management and the audit committee, the Board is of the opinion that the Company’s internal financial controls were adequate and operating effectively as at March 31, 2018.

During the year under review, no material or serious observation has been observed for inefficiency or inadequacy of such controls.

25. VIGIL MECHANISM / WHISTLE BLOWER POLICY

In line with the best Corporate Governance practices, Company has put in place a system through which the Directors and employees may report concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct & Ethics without fear of reprisal. The employees and directors may report to the Compliance officer and have direct access to the Chairman of the Audit Committee. The Whistle blower Policy is placed on the website of the Company.

26. BOARD MEETINGS

During the year, 4 (Four) Board Meetings were held on 30th May 2017, 10th August, 2017, 14th November, 2017 and 14th February, 2018. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

As stipulated by code of Independent Director under the Companies Act, 2013. A separate meeting of the Independent Director of the Company was held on 14th February, 2018 to review the performance of Non Independent Directors, Chairman and the Board as a whole.

27. AUDIT COMMITTEE

The Board has well-qualified Audit Committee with majority of Independent Directors including Chairman. As on date, it comprises of Mr. S. S. Thakur - Chairman of Committee, Mr. Rajesh Pandey, Mr. Jagannadham Thunuguntla and Ms. Jyoti Rai as member. The Company Secretary of the Company acts as a Secretary of the Committee.

28. NOMINATION & REMUNERATION POLICY

The Board has in accordance with the provisions of sub-section (3) of Section 178 of the Companies Act, 2013, formulated the policy setting out the criteria for determining qualifications, positive attributes, independence of a Director and policy relating to remuneration for Directors, Key Managerial Personnel and other employees. The detail of the same has been disclosed in the Corporate Governance Report.

29. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, performance evaluation of Board and that of its Committees and Individual Directors was carried out. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board’s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgment, participation by all directors and developing consensus amongst the directors for all decisions. The Chairman was evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the view of the Executive Directors and Non-Executive Directors.

30. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators/Courts/tribunals which would impact the going concern status of the Company and its future operations.

31. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES

During the year under review, the Company has not given any loan or guarantee or provided security in connection with loan to any other body corporate or person as specified in Section 186 of the Companies Act, 2013. For information pertaining to Investments, kindly refer notes to financial statements.

32. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

There were no employees of the Company drawing remuneration exceeding the specified limit during the year under consideration, hence the details prescribed under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are not applicable.

Details pertaining to remuneration as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014:

(i) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year 2017-18 and

(ii) The percentage increase in remuneration of each Director and Company Secretary in the financial year 2017-18.

Sr. No.

Name of the Director/KMP and Designation*

Remuneration of Director/KMP for financial year 2017-18 (Rs. in Million)

Ratio of remuneration of each director to the median remuneration of employees

% increase in remuneration in the financial year 2017-18

1

Mr. Atit Agarwal (Non-Executive Chairman)

-

-

-

2.

Mr. S.S.Thakur (Independent NonExecutive Director)

0.50

1.58

-9.09%

3.

Mr. Jagannadham Thunuguntla (Independent NonExecutive Director)

0.50

1.58

-7.41%

4.

Ms. Jyoti Rai (Independent NonExecutive Director)

0.25

0.79

-16.67%

5.

Ms. Ruchi Jaiswal Company Secretary & Compliance Officer

0.39

1.23

-

6.

**Ms. Alpa Ramani Company Secretary & Compliance Officer

0.07

0.23

3.05%

* Details not given for Mr. Rajesh Pandey as he did not receive any remuneration from the Company.

** Remuneration of Ms. Alpa Ramani is for the month of April and May, 2017.

She resigned w.e.f 30 May, 2017.

(iii) The Median Remuneration of employees of the Company for the financial year 2017-18 is Rs. 0.32 Million and there was a decrease of 3.03 % compared to the previous financial year.

(iv) The number of permanent employees on the rolls of the Company is 264 for the financial year ended March 31, 2018.

(v) Average percentage decrease in the salaries of employees other than the key managerial personnel for the financial year 2017-18 was approx. 4.30%. The decrease in the remuneration of key managerial personnel was approx. 31.23%. The remuneration is determined based on the performance of the employees of the company.

(vi) The remuneration of Whole-Time Director of the Company does not include any variable component. The key parameters for the variable component of remuneration availed by Independent Non-Executive Directors is based on their attendance and contribution at the Board and Committee Meetings.

(vii) It is hereby affirmed that the remuneration is as per the Remuneration Policy of the Company.

34. HUMAN RESOURCES

The industrial relations at the manufacturing facilities of your Company have been cordial during the year. Employees are considered to be team members being one of the most critical resources in the business which maximize the effectiveness of the Organization. Human resources build the Enterprise and the sense of belonging would inculcate the spirit of dedication and loyalty amongst them towards strengthening the Company’s Polices and Systems. The Company maintains healthy, cordial and harmonious relations with all personnel and thereby enhancing the contributory value of the Human Resources.

35. ENVIRONMENT AND SAFETY

The Company is conscious of the importance of environmentally clean and safe operations. The Company’s policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.

36. ENHANCING SHAREHOLDERS VALUE

Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company’s operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

37. ACKNOWLEDGEMENTS

Your Directors gratefully acknowledge the support given by the Customers, Dealers, Distributors, Suppliers, Bankers, various departments of the Central and State Governments, Local Authorities and members of the Company.

Your Directors would further like to record their appreciation for the unstinted effort put by all Employees of the Company during the year.

For and on behalf of the Board,

Place : Mumbai Rajesh Pandey

Date : 02nd May, 2018 Director

Director’s Report