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Ruby Mills Ltd.

BSE: 503169 | NSE: RUBYMILLS | Series: NA | ISIN: INE301D01026 | SECTOR: Textiles - Composite Mills

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Director’s Report

The Directors are pleased to present the 102nd Annual Report of your company together with the Audited Balance Sheet and Profit & Loss Account for the year ended 31st March, 2018.

1. FINANCIAL RESULTS

The financial performance of the Company for the year ended 31st March, 2018 is summarized below:

Sl.No

Particulars

For the year ended (Rs. In Lakhs)

(IND AS) 31st March, 2018

(IND AS) 31st March, 2017

1.

Total Revenue

20,798

21,830

2.

Finance Costs

1,051

1,249

3.

Depreciation and Amortization Expense

1,547

1,499

4.

Profit before Tax

3,699

4,618

5.

Provision for Tax including Current Tax adjustments of Earlier Years.

1,237

1,400

6.

Provision for Deferred Tax

(1,054)

(523)

7.

Profit after Tax, Prior period and Exceptional Items

3,516

3,741

8.

Total comprehensive income for the period

3,551

3,746

The Indian Accounting Standards (IND-AS) were made applicable w.e.f 1st April, 2017.

2. STATE OF COMPANY''S AFFAIR

i) Textiles and Real Estate Division

The revenue from the textiles activity was Rs. 16,840 Lakhs as compared to Rs. 17,312 Lakhs in the previous year. The operating profit for the year was Rs. 1,515 Lakhs against Rs. 2,466 Lakhs in the previous year.

The revenue from real estate activity was Rs. 2,884 Lakhs as compared to Rs. 2,866 Lakhs in the previous year. The operating profit for the year was Rs. 2,404 Lakhs as against Rs. 2,427 Lakhs in the previous year.

ii) Land Development at Dadar

The Building has been fully completed structurally and is as per the approved plan. The company had already obtained Part Occupation Certificate (OC) up to 20 levels under the Development Control Rules (DCR) prior to 2012. Further as regards to Occupation Certificate after January 2012 is concerned, there was lack of clarity and confusion within the government departments as to how to take up proposals wherein part OC has already been obtained under DCR prior to 2012. The BMC finally issued a Circular in November 2017 giving complete clarity on cases where part OC has been issued under DCR prior to 2012. On receipt of the same, the Company once again followed up with the Department concerned for further processing of the company''s proposal. Subsequently, the Municipal Commissioner has approved the plan in April, 2018.

3. DIVIDEND

Your Directors have after assessing the need for corporate requirement, recommended a dividend at the rate of 35% i.e of Rs. 1.75 (One Rupee Seventy Five paise) per share on 1,67,20,000 equity shares of Rs. 5/- each aggregating to Rs. 292.60 lakhs. The dividend will be paid after your approval at the ensuing Annual General Meeting. The aggregate outflow on account of the equity dividend for the year would be Rs. 352.17 lakhs (inclusive of Dividend Tax of Rs. 59.56 lacs).

4. TRANSFER TO RESERVES:

No amount has been transferred to General Reserve.

5. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

During the year under review, your Company did not have any subsidiary, associate or joint venture company.

6. PUBLIC DEPOSITS

The Company has not accepted deposits from the public within the meaning of Section 73 of The Companies Act, 2013 and rules framed there under.

7. CHAIRMAN EMERITUS

Shri. Manharlal Chunilal Shah, Chairman Emeritus of your Company expired on 21st July, 2018 after devoting 65 years of his life working for the Company. Shri. Manharlal Chunilal Shah was an exceptional human being and an outstanding leader. Shri Manharlal Shah, a towering and well respected personality in the Indian Textile Industry was also well known for his philanthropic activities.

Your Directors express their deep sorrow on the sad demise of Shri. Manharlal Chunilal Shah. May almighty God grant peace to his soul.

8. DIRECTORS AND KEY MANAGERIAL PERSONNEL

(i) Directors

Appointment / Reappointment

- Smt. Aruna M. Shah (DIN:00070999) Director will retire by rotation and being eligible for reappointment and not being disqualified under section 164 of the Companies Act, 2013, offers herself for re-appointment. The Board recommends her re-appointment.

- Pursuant to Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, no listed Company shall appoint a person or continue the directorship of any person as a Non-Executive Director who has attained the age of seventy five years unless a Special Resolution is passed.

Since, Smt. Aruna Manharlal Shah has attained the age of Seventy-five years, the Board of Directors and Nomination and Remuneration Committee at their meeting held on 30th May, 2018 have recommended continuation of her term as Non-Executive Director beyond the age of Seventy Five (75) years considering her long-term association and wide experience.

- Shri Purav Hiren Shah (DIN: 00123460), Chief Executive Officer of the Company was appointed as an Additional Executive Director w.e.f. 13th December, 2017. Notices under Section 160 of the Companies Act, 2013 has been received proposing candidature of Shri Purav Hiren Shah for the position of Executive Director of the Company from a member of the Company.

Appropriate resolution for appointment of the aforesaid Director is being moved at the ensuing Annual General Meeting which the Board recommends for your approval.

- Shri Mehernosh Rusi Currawalla (DIN: 01089742) was appointed as an Additional Independent Director w.e.f. 28th November, 2017. Notices under Section 160 of the Companies Act, 2013 has been received proposing candidature of Shri Mehernosh Rusi Currawalla for the position of Independent Director of the Company from a member of the Company.

Appropriate resolution for appointment of the aforesaid Director is being moved at the ensuing Annual General Meeting which the Board recommends for your approval.

- Shri Pradip Narottamdas Kapasi (DIN: 01275033) was appointed as an Additional Independent Director w.e.f. 13th December, 2017. Notices under Section 160 of the Companies Act, 2013 has been received proposing candidature of Shri Pradip Narottamdas Kapasi for the position of Independent Director of the Company from a member of the Company.

Appropriate resolution for appointment of the aforesaid Director is being moved at the ensuing Annual General Meeting which the Board recommends for your approval.

- Shri Hiren M. Shah, Executive Chairman, Shri Bharat M. Shah, Managing Director and Shri Viraj M. Shah, Managing Director of the Company were re-appointed vide resolution passed in a Board Meeting dated 30th May, 2018 for a period of five years w.e.f 1st April, 2019 to 31st March, 2024 subject to the approval of members.

Appropriate resolution for appointment of the aforesaid Directors is being moved at the ensuing Annual General Meeting which the Board recommends for your approval.

Resignation/ Cessation:

Dr. Anup P. Shah, Independent Director of the Company resigned w.e.f. 29th August, 2017.

Except above, there are no changes in the composition of the Board of Directors.

(ii) Key Managerial Personnel

Appointment/Reappointment

The Board on recommendation of Nomination and Remuneration Committee appointed Mrs. Kanika Kabra as the Company Secretary and Compliance Officer of the Company with effect from 14th August, 2017 pursuant to the resignation of Mr. Nikhil Sankpal.

Ms. Naina Kanagat was appointed as the Company Secretary and Compliance officer of the Company on recommendation of Nomination and Remuneration Committee with effect from 30th May, 2018 pursuant to the resignation of Mrs. Kanika Kabra.

Resignation/Cessation

Shri. Nikhil N. Sankpal, erstwhile Company Secretary and Compliance Officer of the Company resigned w.e.f. 14th August, 2017.

Ms. Kanika Kabra, erstwhile Company Secretary and Compliance Officer of the Company resigned w.e.f. 3rd April, 2018.

(iii) Declaration by Independent Directors

The Company has received the necessary declarations from each of Independent Directors of the Company pursuant to Section 149(7) and provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Each of them meets the criteria of independence laid down in section 149(6) of the Companies Act, 2013 and Regulations of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and there has been no change in the circumstances which may affect their status as independent director during the year.

(iv) Annual Evaluation of Board

Pursuant to the provisions of the Companies Act, 2013 and relevant Regulations of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015, the Board has carried out the annual performance evaluation of its own performance and other Directors. 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.

Performance evaluation of independent directors was done by the entire board, excluding the independent director.

In a separate meeting of independent directors held on 28th February, 2018, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was reviewed and evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent directors.

v) Number of Board Meetings

During the year 2017-18, the Board met 7 (Seven) times on the following dates 17th May, 2017, 3rd August, 2017, 14th August, 2017, 11th September, 2017, 27th September, 2017, 13th December, 2017, and 12th February, 2018.

The Company has complied with the applicable Secretarial Standards in respect of all the above Board Meetings. For details of the meetings of the board, please refer to the Corporate Governance Report, which forms part of this report.

9. DIRECTOR''S RESPONSIBILITY STATEMENT

The Board of Directors acknowledge the responsibility for ensuring compliance with the provisions of section 134(3)(c) read with section 134(5) of the Companies Act, 2013 in the preparation of the annual accounts for the year ended on 31st March, 2018 and state that:-

i. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. 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 31st March, 2018 and of the profit of the Company for the year on that date;

iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv. The Directors had prepared the annual accounts on a going concern basis; and

v. The Directors had laid down proper systems of internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

vi. 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.

10. NOMINATION AND 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 of Directors, Key Managerial Personnel and other employees. The policy has been uploaded on the Company''s website at the following link- http://www.rubymills.com/investors/policies/nomination-cum-remuneration-policy

11. AUDIT COMMITTEE

The details pertaining to composition of audit committee are included in the Corporate Governance Report which forms part of this report.

12. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES

The Company promotes ethical behavior in all its business activities and has put in place a mechanism for reporting illegal and unethical behavior.

The Board of Directors of the Company has pursuant to the provisions of Section 177 (9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed “Vigil Mechanism Policy for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports, etc. which has been uploaded on the Company''s website at the following link- http://www.rubymills.com/investors/policies/vigil-mechanismwhistle-blower-policy. The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.

During the year under review, no employee was denied access to the Chairman of the Audit Committee.

13. RISK MANAGEMENT

The Board of Directors of the Company during the financial year 2014-15 had designed Risk Management Policy and Guidelines to avoid events, situations or circumstances which may lead to negative consequences on the Company''s businesses, and has defined a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. At present there is no identifiable risk which in the opinion of the Board may threaten the existence of the Company.

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

The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo are furnished in “Annexure A” which forms part of this Report.

15. EXTRACT OF ANNUAL RETURN:

Extract of the Annual Return in form MGT-9 for the financial year ended 31st March, 2018 made under the provisions of Section 92(3) of the Act is attached as “Annexure B” which forms part of this Report.

16. CORPORATE SOCIAL RESPONSIBILITY:

The Annual Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 on CSR activities is attached as “Annexure C” and forms a part of this Report. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which forms part of this report. The Corporate Social Responsibility policy has been uploaded on the Company''s website at the following link -http://www.rubymills.com/investors/policies/corporate-social-responsibility-philosophy

17. GST

Goods and Services Tax Act 2017 (GST) was introduced on 1st July, 2017 bringing an era of unified indirect taxes subsuming variety of taxes including Excise duty, VAT, Service tax, Octroi, Entry tax. While your Company had obtained exemption in 2004-05 of the Excise regime and that most of the Textile fabrics range of your Company was not covered under VAT, the introduction of GST enables credit of all taxes namely Excise duty and VAT in particular, making it a level playing field for the large and organized player vis-a-vis the small scale and the power loom sector. Your Company took timely measures including changes in system to comply with the same.

18. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations.

19. AUDITORS

(i) Statutory Auditors

At the 101st Annual General Meeting held on 27th September, 2017 , the Members approved appointment of M/s. CNK & Associates, Chartered Accountants (Firm Registration No. 101961W/W-100036) to hold office from the conclusion of the 101st Annual General Meeting until the conclusion of the 106th Annual General Meeting subject to ratification at every Annual General Meeting on such remuneration as may be fixed by the Board apart from reimbursement of out of pocket expenses as may be incurred by them for the purpose of audit.

On 7th May, 2018, Section 40 of the Companies Amendment Act, 2017 (amending Section 139 of the Companies Act, 2013) has been notified whereby ratification of Statutory Auditor''s appointment is not required at every Annual General Meeting.

(ii) Secretarial Auditor

The Board has appointed M/s. Vikas R. Chomal & Associates, Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2017-2018. The Report of the Secretarial Audit Report is annexed herewith as “Annexure D”

(iii) Cost Auditor and Cost Audit Report

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended from time to time, the Company is required to maintain Cost Records under Rule 3 of the said Rules. Accordingly, the Company has duly maintained the Cost Records in the format prescribed in Form CRA-1 under Rule 5 of the said Rules.

During the year under review, Shri. Dakshesh H. Zaveri, Cost Accountant has been appointed as Cost Auditor of the Company for the F.Y. 2017-2018, to carry out the Cost Audit, for auditing cost accounting Records in respect of the Textile Segment of the Company and to submit Cost Audit Report to the Board as required under Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Amendment Rules, 2014.

20. (i) Green Initiatives

Pursuant to Sections 101 and 136 of the Companies Act, 2013, the Company will be sending Annual Report through electronic mode i.e. email to all the shareholders who have registered their email addresses with the Company or with the Depository to receive Annual Report through electronic mode and initiated steps to reduce consumption of paper.

(ii) Human Resources

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.

(iii) 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 environmental Regulations and preservation of natural resources. There was no major accident during the year.

21. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

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.

22. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

There are adequate internal financial controls in place with reference to the financial statements. During the year under review, these controls were evaluated and no significant weakness was identified either in the design or operation of the controls.

23. PARTICULAR OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

All Related Party Transactions entered into by your Company during the Financial Year 2017-18 were on arm''s length basis and in the ordinary course of business. There are no material significant Related Party Transactions entered into by the Company with Promoters, Directors, Key Managerial Personnel or other Designated Persons which may have a potential conflict with the interest of the Company. Prior approval of the Audit Committee and the Board of Directors of the Company was obtained for all the Related Party Transactions. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is not applicable. Attention of Shareholders is also drawn to the disclosure of transactions with related parties as set out in Note No. 41 of Financial Statements, forming part of the Annual Report.

24. PARTICULARS OF EMPLOYEES:

The prescribed particulars of employees required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as “Annexure E” and forms a part of this Report of the Directors.

There were no employees drawing remuneration of Rs. One Crore and Two Lakhs per annum or more or Rs. Eight Lakhs Fifty Thousand per month or more during the year under review. However, Late Shri Manharlal Shah drew remuneration of Rs. 1,50,00,000/- per annum as Chairman Emeritus of the Company and Shri. Hiren M. Shah, Executive Chairman, Shri. Bharat M. Shah, Managing Director and Shri. Viraj M. Shah, Managing Director drew a remuneration of Rs. 1,08,00,000/- per annum during the year under review.

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

The Company has set up an Internal Complaints Committee (ICC) for providing a Redressal mechanism pertaining to Sexual harassment of women employees at workplace. There was no cases/ complaint received during the year under review.

26. PARTICULARS OF LOANS, GUARANTEE OR INVESTMENTS UNDER SECTION 186:

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of the notes to financial statements provided in this Annual Report.

27. DISCLOSURE REQUIREMENTS:

As per the relevant regulations of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Report (page 6 to 9) and Corporate Governance Report with auditor''s certificate thereon (page 68 to 85) are attached, which form part of this Annual Report.

28. GENERAL 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:

I. The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

II. The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

III. The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

IV. 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 is furnished.

V. No orders have been passed by any Regulator or Court or Tribunal which can have an impact on the going concern status and the Company''s operations in future.

29. CHANGE IN THE NATURE OF BUSINESS:

There was no change in the nature of Company''s business during the year under review.

30. SEGMENTS:

The Company has two segments namely Textile and Real Estate. The Statement of accounts prepared and submitted are therefore of two segments.

31. ACKNOWLEDGEMENT

Your Directors thank all the shareholders, all employees of the Company, customers, suppliers, Government Authorities, Financial Institutions and bankers for their continued support.

You Directors look forward to their continued support in future.

For and on behalf of the Board of Directors

The Ruby Mills Limited Hiren M. Shah

Place: Mumbai Executive Chairman

Dated: 14th August, 2018 DIN: 00071077

Director’s Report