DIRECTORS’ REPORT

To,

The Members,

1. Your Directors have pleasure in presenting their 21st Annual Report on the business and operations of the Company together with the Audited Statement of Accounts of Rainbow Foundations Limited (“the Company”) for the year ended March 31, 2015.

2. FINANCIAL PERFORMANCE OF THE COMPANY

During the year under review, the Company’s Profit before Interest, Depreciation & Tax increased to Rs. 558.87 Lakhs as compared to Rs. 391.85 Lakhs in the previous year. The Company earned a net profit of Rs. 61.48 Lakh in the Current Financial Year as against a net profit of Rs. 83.87 Lakh in the previous year. The increase in net profit is on account of increased revenue and marginal reduction of project expenditure. Your directors are expecting to provide a better performance in the forthcoming years.

3. CHANGE IN NATURE OF BUSINESS, IF ANY

Our Company has not deviated its line of business activity nor has expanded the area of activities; therefore, there is no change in the nature of business for the year under review.

4. DIVIDEND

In order to conserve the resources’ of your Company, the Board of Directors of do not recommend any dividend for the financial year 2014-15.

5. TRANSFER TO RESERVES

The Company has not transferred any amount to reserves for the financial year 2014-15.

6. SHARE CAPITAL

The Board of Directors of the Company has not issued any shares during the year.

7. SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

The Company has no subsidiaries, associate and joint ventures, therefore, disclosing the names of the respective entities does not arise.

8. MATERIAL CHANGES & COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY, OCCURRING AFTER BALANCE SHEET DATE

There are no material changes or commitments likely to affect the financial position of the Company which is having an impact on the functioning and working of the Company. The operations of the Company have been effectively being managed and the Management shall review the performance from time to time in order to monitor the business activities of the Company.

9. PARTICULARS OF LOANS, INVESTMENTS AND GUARANTEES UNDER SECTION 186 OF THE COMPANIES ACT, 2013

There were no loans, guarantees and investments under Section 186 of the Companies Act, 2013 during the year 2014-15.

10. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES TO REFERRED TO IN SUB SECTION (1) OF SECTION 188 OF THE COMPANIES ACT, 2013

During the year under review, the Company has not entered into any contracts or arrangements with its related parties.

11. DEPOSITS

The Company has not accepted any deposits either from the shareholders or public within the meaning of the Companies (Acceptance of Deposits) Rules, 2014. No amounts on account of principal or interest on deposits from public was outstanding as on 31st March, 2015.

12. STATUTORY AUDITORS

The Auditors of your Company, M/s. Jain Bafna & Co., Chartered Accountants, having Firm Registration Number 010657S, hold office until the conclusion of the Twenty first Annual General Meeting and, being eligible, offer themselves for re-appointment as the Auditors of your Company for the financial year 2015-16. The Company has received the consent from the Auditors for their appointment for the respective year.

The Auditor’s report on the financial statements for the year 2014-15 does not contain any qualification, reservation or adverse remark.

13. COST AUDITORS.

Cost Audit is not applicable to the Company. The Central government has not specified maintenance of cost records for the Company under sub – section (1) of section 148 of the Companies act 2013. Therefore, there is no requirement for appointment of Cost Auditors.

14. SECRETARIAL AUDIT REPORT

Pursuant to provisions of Section 204 of the Companies act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/S. JM & Associates, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company for the financial year 2014- 15.The report of Secretarial Audit is annexed herewith in Form MR - 3 as annexure.

15. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies act, 2013, the Board of Director’s to the best of their knowledge and ability, confirm 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. 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 at the end of the financial year and of the profit and loss of the company for that period;

iii. 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. Had prepared the annual accounts on a going concern basis; and

v. Had laid down 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.

16. COMPOSITION OF BOARD

The Composition of Board is governed by the applicable laws and regulations and Articles of Association of the Company.

17. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Pursuant to Section 149(10) of the Companies Act, 2013, read along with Rules framed thereunder, the Members had at the Annual General Meeting of the Company held on September 29, 2014, approved the change in designation of Mr. Mukesh Kumar Manilal Mehta, Mr. P.M. Mothiram and Mr. Sampat Raj Singhvi as Independent Directors for a term of five years. All the Independent Directors have given declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In the opinion of the Board, they fulfill the conditions of independence as specified in the Act and the rules made thereunder and they are independent of the management.

During the last Annual General Meeting held on September 29, 2014, Mr. Anopchand Jain was re-appointed as the Managing Director of the Company for a term of five years commencing from June 7, 2014 upto June 6, 2019.

Also, during the year under review Mr. Gajraj Jain has been re-appointed as the Joint Managing Director for a period of five years commencing from January 1, 2015 and is paid remuneration as per the terms of his employment.

Mr. Anopchand Jain retire by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-election. Brief particulars and expertise about him has been given in the annexure to the Notice of the Annual General Meeting in accordance with the requirements of listing agreement with the Stock Exchange.

In order to comply with Section 149 of the Companies Act, 2013, the Company had appointed Ms. Lakshmi Sreedhar as the Woman director of the Company vide Board Meeting dated March 23, 2015.

18. POLICY ON APPOINTMENT OF DIRECTORS AND CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR

The Nomination and Remuneration committee is responsible for developing competency requirements for the Board and in this regard conducts a gap analysis to determine the Board composition on a periodic basis including each time a Director appointment or reappointment is required. The committee has framed a policy to determine the qualifications, positive attributes and independence of  a Director. The key features of the policy are:

- Qualifications - The Board nomination process encourages diversity of thought, experience, knowledge, age and gender. It also ensures that the Board has an appropriate blend of functional and industry expertise.

- Positive attributes – Apart from the duties of Directors as prescribed in the Companies act, 2013, the Directors are expected to demonstrate high standards of ethical behavior, communication skills and independent judgement.

- Independence – A Director will be considered independent if he/she meet the criteria laid down in Section 149(6) of the Companies act, 2013 and clause 49 of the listing agreement.

19. EVALUATION OF THE BOARD’S PERFORMANCE

In accordance with the provisions of the Companies Act, 2013 and Corporate Governance requirements as prescribed by SEBI under Clause 49of the Equity Listing Agreement, the Board along with the Nomination & Remuneration Committee have carried out an annual evaluation of its own performance and that of its committees and individual Directors.

The Independent Directors evaluated the performance of the individual Directors on the basis of various criteria included attendance & participation in Board Meeting, engagement with the management in decision making, understanding about the company’s business and its affecting industries.

The criteria for performance evaluation of Board included the aspects such as composition of Board and its structure, roles and responsibilities under various provisions of the Companies Act, 2013 etc. The criteria for performance evaluation of Committees of the Board included the aspects like composition of Committees, effectiveness of Committee meetings etc.

20. COMMITTEES OF BOARD

During the financial year 2014 -15, the Board constituted some of its Committees, in accordance with the Companies Act, 2013. There are currently three Committees of the Board, as follows:

i. Audit Committee

ii. Nomination and Remuneration Committee

iii. Stakeholders’ Relationship Committee

Details of all the Committees along with their charters, composition and meetings held during the year, are provided in the “Report on Corporate Governance”.

21. BOARD MEETINGS

The Board of Directors met 8 (Eight) times during the year financial year 2014-15.

Details of the composition of the Board and its committees and of the meetings held, attendance of the Directors at such meetings and other relevant details are provided in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

During the year under review, the Board has accepted all recommendations of the Audit Committee.

22. VIGIL MECHANISM

The Company has adopted a Whistle blower policy establishing vigil mechanism, to provide a formal mechanism to the directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy. The policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee. It has affirmed that no personnel of the Company has been denied access to the Audit Committee.

23. EXTRACT OF ANNUAL RETURN

Pursuant to section 92(3) of the Companies Act, 2013 (‘the Act’) and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return in Form MGT- 9 is enclosed as Annexure.

24. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

A) Conservation of energy, technology absorption

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 and technology absorption have not been furnished considering the nature of activities undertaken by the Company during the year under review

25. REVIEW OF RISK MANAGEMENT POLICY ADOPTED BY THE COMPANY

The Company in order to comply the provisions of the Companies Act, 2013 and provide an effective mechanism for implementing risk management system had adopted the policy on risk management for evaluating and monitoring various risks that could threaten the existence of the Company. The Company had not faced any major risks and no major deviations from the actuals as attained by the Company. The Audit committee has to review the policy periodically. The Board takes overall responsibility for the overall process of risk management in the organisation.

The Board shall take note of any future threats and shall report to the Company for formulating an effective mechanism and strategy.

26. MATERIAL ORDERS PASSED BY THE REGULATORS, COURTS, TRIBUNALS

There are no significant material orders passed by the Regulators or Courts or Tribunals which would have impact on the going concern status of the Company and its future operation.

27. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

The Company has an adequate system of internal controls in place. It has documented policies and procedures covering all financial and operating functions. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls for ensuring reliability of financial reporting, monitoring of operations, protecting assets from unauthorised use or losses, compliances with regulations. The Company has continued its efforts to align all its processes and controls with global best practices.

28. PREVENTION OF SEXUAL HARASSMENT

The “Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 is applicable to your Company.

Your Company has inplace an Anti Sexual Harassment Policyinline withther equirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 to prevent sexual harassment at work place. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

During the year under review, the Company has not received any complaints from the employees with regard to Sexual Harassment.

29. REPORT ON CORPORATE GOVERNANCE

A separate section on Corporate Governance forming part of the Directors Report and the Certificate from the Practicing Company Secretary confirming compliance of Corporate Governance norms as stipulated in Clause 49 of the listing agreement with the Bombay Stock Exchange is included in the Annual Report.

30. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The management discussion and analysis of the financial conditions including the result of the operations of the company for the year under review as required under clause 49 of the Listing Agreement is given as a separate statement in the Annual Report.

31. REMUNERATION POLICY:

The Nomination and Remuneration Committee (NRC) has formulated a policy relating to the remuneration of the directors, key managerial personnel and other employees. The philosophy for remuneration is based on the commitment of fostering a culture of leadership with trust. The remuneration policy has been prepared pursuant to the provisions of Section 178(3) of the Companies act, 2013 and Clause 49 of the listing agreement. While formulating this policy, the committee has considered the factors laid down in Section 178(4) of the Companies Act, 2013, which are us under:

- That the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully;

- Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

- Remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

The key principles governing the remuneration policy are as follows:

- Market Competitiveness

- Role played by the individual

- Reflective of size of the company, complexity of the sector/industry/Company’s operations and the Company’s capacity to pay

- Consistent with recognised best practices and

- Aligned to any regulatory requirements.

In accordance with the policy, the Managing/Executive/KMPs/ employees are paid basic/fixed salary.

The non-executive Directors, including Independent directors are paid sitting fees for attending the meetings of the Board and committees of the Board.

The NRC is responsible for recommending the remuneration policy to the Board. The Board is responsible for approving and overseeing implementation of the remuneration policy.

The information required under Section 197 of the Companies act, 2013 read with rule 5(1) of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 has been attached as annexure.

32. COMMENTS ON QUALIFICATIONS MADE IN SECRETARIAL AUDIT REPORT

The Following qualifications were made in the secretarial audit report;

1. Non appointment of CFO

2. Non appointment of Internal Auditor

Board’s reply;

1. The Company is in process of recruiting right candidate as CFO to adhere due compliance under the Act.

2. The Company is under process to appoint Internal Auditors to conduct internal audit of the functions and activities of the Company.

33. DETAILS OF EMPLOYEES DRAWING SALARY ABOVE PRESCRIBED LIMITS

There are no employees who are paid remuneration in excess of the limits specified under Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration) Rules, 2014 as amended from time to time.

34. ACKNOWLEDGEMENTS

Your Director’s wish to convey their appreciation to all of the Company’s employees for their enormous personal efforts as well as their collective contribution to the Company’s performance. The Director’s would also like to thank the employees, shareholders, customers, dealers, suppliers, bankers, Government and all other business associates for the continuous support given by them to the Company and their confidence in its management.

FOR AND ON BEHALF OF THE BOARD

Sd/- Managing Director

Sd/- Whole Time Director

Place : Chennai

Date : 14.08.2015