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Directors Report of Rajapalayam Mills Ltd.

Mar 31, 2015

DEAR MEMBERS

The Directors have pleasure in presenting their 79th Annual Report and the Audited Accounts of the Company for the year ended 31st March 2015.

FINANCIAL RESULTS

The financial results for the year ended 31st March, 2015 after charging all expenses and contribution to P.A.C. Ramasamy Raja Memorial Fund of Rs.50 Lakhs (which is within the limits laid in the Articles of Association) but before deducting finance cost and depreciation have resulted in operating profit of Rs. 5,315.38 Lakhs against Rs.9,795.88 Lakhs for the previous financial year 2013-14.

After deducting Rs.2,765.78 Lakhs towards finance cost and providing Rs.1,655.12 Lakhs towards Depreciation and considering Rs.1,019.11 Lakhs being Profit on Sale of Assets related to Rajapalayam Mills - Subramaniapuram Unit, the Net Profit for the year is Rs. 1,913.59 Lakhs, against Rs.4,125.67 Lakhs for the previous financial year 2013-14. Adding the surplus of Rs.950.13 Lakhs brought forward from the previous year, your Directors propose to appropriate the total sum of Rs.2,863.72 Lakhs as detailed below:

Rs. in Lakhs

Provision for Taxation Current Tax - MAT 328.71

MAT credit entitlement (328.71)

MAT credit entitlement related to earlier years withdrawn 10.83

Deferred Tax 698.45

Dividend Rs.2.50 per share (PY: Rs.7.50 per share) 184.40

Tax on Dividend @20.358% 37.54

Transfer to General Reserve 1,000.00

Balance carried over to Balance Sheet 932.50

TOTAL 2,863.72

SHARE CAPITAL

The Paid-up Capital of the Company is Rs.737.62 Lakhs (Previous Year: Rs.737.62 Lakhs) consisting of 73,76,160 Shares of Rs.10/- each.

DIVIDEND

Your Directors have pleasure in recommending a Dividend of Rs. 2.50 per share (Previous Year: Rs.7.50 per share). The dividend will be tax free income in the hands of Shareholders as the Company will pay Dividend Distribution Tax under Income Tax Act, 1961. The total amount of Dividend outgo for the year will be Rs.184.40 Lakhs. The amount of tax on dividends would be Rs.37.54 Lakhs.

TAXATION

The Company is not liable to pay income tax under regular Income-Tax provisions. An amount of Rs. 328.71 Lakhs towards Current Tax (MAT) and Rs. 698.45 Lakhs towards Deferred Tax has been provided for the year. The tax paid under MAT will be available for set off in the year of regular income tax liability.

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

Pursuant to Rule 8(3) of Companies (Accounts) Rules, 2014, the information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is attached as Annexure - IV.

EXTRACT OF ANNUAL RETURN

In Accordance with Section 92(3) of the Companies Act, 2013, read with Rule 12(1) of Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in Form MGT-9 is attached herewith as Annexure - V.

CORPORATE GOVERNANCE

The Company has complied with the requirements regarding Corporate Governance as stipulated in Clause 49 of the Listing Agreement. As required under Clause 49(X) of the Listing Agreement, a Report on Corporate Governance being followed by the Company together with a Certificate from the Statutory Auditors confirming compliance as required under Clause 49 (XI) of the Listing Agreement is set out in Annexure - VI to this report.

RELATED PARTY TRANSACTION

The transaction with related party entered into by the Company are periodically placed before the Audit Committee for its approval. No transaction with the related party is material in nature, in accordance with Company's "Related Party Transaction Policy" and Clause VII(C) of the Listing Agreement. In accordance with Accounting Standard - 18 (Related Party Disclosure), the details of transactions with the related parties are set out in Note No:26 (20) of disclosures forming part of Financial Statements.

As required under Clause 49(VIII)(A)(2) of the Listing Agreement, the Company's Related Party Transaction Policy is disclosed in the Company's website and its weblink is - http://www.rajapalayammills.co.in/pdf/related-party-tranactions- policy.pdf.

RISK MANAGEMENT POLICY

Pursuant to Section 134(3)(n) of the Companies Act, 2013, the Company has developed and implemented a Risk Management Policy. The Policy envisages identification of risk and procedures for assessment and minimization of risk thereof.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that:

(a) in the preparation of the annual accounts, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

(b) they 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;

(c) they 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;

(d) they had prepared the Annual Accounts on a going concern basis;

(e) they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors, For RAJAPALAYAM MILLS LIMITED,

RAJAPALAIYAM P.R.RAMASUBRAHMANEYA RAJHA 21st May, 2015. CHAIRMAN


Mar 31, 2014

TO THE MEMBERS

The Directors have pleasure in presenting their 78th Annual Report and the Audited Accounts of the Company for the year ended 31st March 2014.

FINANCIAL RESULTS

The financial results for the year ended 31st March, 2014 after charging all expenses and contribution to P.A.C. Ramasamy Raja Memorial Fund of Rs. 100 Lakhs (which is within the limits laid in the Articles of Association) but before deducting finance cost and depreciation have resulted in operating profit of Rs. 9,795.88 Lakhs against Rs. 8,836.01 Lakhs for the previous financial year 2012-13.

After deducting Rs. 2,849.64 Lakhs towards finance cost and providing Rs. 2,820.57 Lakhs towards Depreciation, the Net Profit for the year is Rs. 4,125.67 Lakhs, against Rs. 3,374.88 Lakhs for the previous financial year 2012-13. Adding the surplus of Rs. 1,819.73 Lakhs brought forward from the previous year and after deducting Rs. 954.00 Lakhs, being the debit balance in the profit and loss account of transferor Company on amalgamation, your Directors propose to appropriate the total sum of Rs. 4,991.40 Lakhs as detailed below:

Rs. in Lakhs Provision for Taxation Current Tax - MAT 792.00 MAT credit for current year (792.00) MAT credit related to earlier year (144.18) Deferred Tax 1,611.30 Interim Dividend Rs. 5/- per share (PY: Rs. 5/- per share) 368.81 Tax on Interim Dividend @16.995% 62.68 Final Dividend Rs. 2.50 per share (PY: Rs. 1/- per share) 184.40 Tax on Final Dividend @16.995% 31.34 Transfer to General Reserve 1,926.92 Balance carried over to Balance Sheet 950.13

TOTAL 4,991.40

DIVIDEND

Your Directors have pleasure in recommending a Final Dividend of Rs. 2.50 per share. Together with the Interim Dividend of Rs. 5/- per share paid during the year, the total dividend for the year is Rs. 7.50 per share (Previous Year: Rs. 6/- per share). The dividend will be tax free income in the hands of Shareholders as the Company will pay Dividend Distribution Tax under Income Tax Act, 1961. The total amount of Dividend outgo including interim dividend for the year will be Rs. 553.21 Lakhs. The amount of tax on dividends (including tax on interim dividend already paid) would be Rs. 94.02 Lakhs.

TAXATION

The Company is not liable to pay income tax under regular Income Tax provisions. An amount of Rs. 792.00 Lakhs towards Current Tax (MAT) and Rs. 1,611.30 Lakhs towards Deferred Tax has been provided for the year. The tax paid under MAT will be available for set off in the year of regular income tax liability.

TRADE CONDITIONS

Your Directors are glad to inform you that the performance of the Company during the year was good due to good demand for our yarn, both in domestic as well as export market. Though there was volatility in cotton prices, constant demand for the value added yarn produced by your Company has helped to maintain the yarn prices at reasonable levels. The capacity of spinning and other value added facilities have been utilized well during the year. Better yarn realization coupled with higher capacity utilization have contributed for overall improved financial performance of the Company.

The power cut in Tamil Nadu / Andhra Pradesh is still continuing. Timely decision taken by your Directors to install Windmills in previous years has helped the Company to mitigate the power short fall during peak wind season. During this year, there was an unusual restrictions imposed by the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) in evacuation of power generated by wind mills, which has resulted in loss in generation of power from wind mills to the extent of approximately 19 million units, which translated into Rs. 11 Crores in monetary terms.

Due to shut-down of wind mills by TANGEDCO, the Company was forced to purchase the power from power generating companies / run the DG & HFO sets, which are costly compared to wind mills. Due to this, the power cost during the year has gone up substantially.

Inspite of spiraling wage cost, power cost and logistics cost, the strategic decisions taken by the Company to focus on high quality value added yarn catering to the premium customers in fabric and garment segments, both in domestic and export markets have helped the Company to improve operational and financial performance.

EXPORTS

On the export front during the year, we have made export of Cotton Yarn / Fabrics (including Merchant Exports) for a value of Rs. 122.56 Crores as against Rs. 78.64 Crores of the previous year.

Your Directors are thankful to M/s. Mitsubishi Corporation, M/s. Doko Spinning Co. Ltd., and M/s. Unitika Ltd., Japan for their continued support and efforts for promotion of exports to Japan and other countries.

MODERNISATION

As a part of continuous thrust on modernization programme, the company has invested about Rs. 31 Crores for investment in state-of-the-art textile machinery & equipment like Carding, Combers,

Compact Ring Spinning Frames, Auto doffing System in Ring Frames, Auto Cone Winding Machines, Link Coners, Open End Spinning Machines etc. There was an increase in capacity by 3,312 Spindles & 448 Rotors because of above modernization during the current year.

PROSPECTS FOR THE CURRENT YEAR

The cotton prices are currently ruling high at uneconomical levels. Due to sluggish demand for yarn, the Spinning Mills are not able to increase the yarn prices in line with the increased cotton cost. While the cost of major inputs are increasing steeply, the yarn prices are falling due to sluggishness in both domestic and global yarn markets. There is no parity between cotton cost and yarn selling prices.

The Company is maintaining high standards of yarn quality, cost effective production and stringent waste control measures and focusing on more automation with a view to utilize the skilled manpower more efficiently. The Company is making all efforts to cope up with the current challenges through continuous cost reduction, imparting training to the employees at all levels, re-engineering of process and improved customer service to protect the profit margins. Your Directors are hopeful of achieving satisfactory results for the current year with the implementation of above steps.

WIND MILL

The Company has wind mills with installed capacity of 32.75 MW for its captive power consumption. These wind mills are connected to the grids maintained by Tamil Nadu Generation and Distribution Corporation (TANGEDCO). These wind mills were permitted to run and generate power throughout the wind season until previous yeaRs. But during this year, TANGEDCO did not evacuate the power generated by wind mills and the wind mills were forced to shut down during peak wind season, ranging from eight to twenty hours resulting in heavy financial losses to the Company. Due to this, there was drastic reduction in the power generated by our wind farm, though there was good wind season during the year compared to previous year.

The wind farm has generated 546 Lakhs Kwh as compared to 644 Lakhs Kwh of the previous year. The income during the year from the Wind Mill Division was Rs. 31.55 Crores as against Rs. 36.54 Crores of previous year.

PERSONNEL

Industrial relations with employees remained cordial during the year. Human Resources Development activities received considerable focus. The emphasis was on imparting training and development of the skill-set of the employees to enable them to face the challenges in the work environment. The scarcity of skilled labour coupled with high labour cost is a matter of concern for textile mills. We are striving our best to retain them by implementing various attractive incentive schemes.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the

employees are required to be set out in the Annexure to the Directors'' Report. However, as per the provisions of Section 219 (1) (b) (iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Member who is interested in obtaining such particulars may write to the Company.

INTERNAL CONTROL SYSTEM

Your Company has adequate internal control procedures commensurate with the size and nature of its operations. The audit committee constituted by the Board of Directors is functioning effectively. All significant audit observations were discussed in the audit committee, which met Four times during the year under review. ERP System developed by Ramco Systems Limited, has been installed for online monitoring of all functions and management information reports are being used to have better control and to take decisions in time.

DIRECTORS

Shri N.R.K. Venkatesh Raja, has resigned from the Board on 19-05-2014 and he had been on the Board of the Company for 28 yeaRs. The Directors place on record the valuable and constructive contribution made by Shri N.R.K. Venkatesh Raja during his association with the Company.

The following Directors retire by rotation at the ensuing Annual General Meeting and they are eligible for re-appointment.

1. Dr. K.T. Krishnan

2. Shri A.V. Dharmakrishnan

3. Shri P.R. Venketrama Raja

During the year, Justice Shri P.P.S. Janardhana Raja and Shri V. Santhana Raman have been co-opted by the Board as Additional Directors and they will hold office till the date of the forthcoming Annual General Meeting. A Notice has been received from a Member signifying his intention to propose the appointment of Justice Shri P.P.S. Janardhana Raja and Shri V Santhana Raman as Directors at the Annual General Meeting.

In accordance with Clause 49 of the Listing Agreement, 50% of the total number of Directors should be Independent DirectoRs. Accordingly, Members'' approval is being sought to have the following as Independent DirectoRs.

1. Dr. K.T. Krishnan

2. Shri N.K. Ramasuwami Raja

3. Justice Shri P.P.S. Janardhana Raja

4. Shri V. Santhana Raman

As per Companies Act 2013, the independent directors have to be appointed for a term of 5 years and they are not liable to retire by rotation. The proposal for the appointment of above Independent Directors along with their profile is attached in the Notice of the AGM.

PUBLIC DEPOSITS

The total deposits from the public outstanding with the Company as on 31-03-2014 were Rs. 868.58 Lakhs including the deposits renewed in accordance with Section 58A of the Companies Act, 1956. There was no deposits unclaimed / unpaid as on 31-03-2014.

Section 74 of the Companies Act, 2013 has provided an option to repay the existing deposits accepted on or before 31-03-2014. The Company has decided not to accept fresh deposits from 01-04-2014 and to repay all the existing deposits by complying with the formalities required in this regard.

SHARES

The Company''s shares are listed in Madras Stock Exchange Limited and Bombay Stock Exchange Limited. The Company had paid listing fees to the Stock Exchanges for the financial year 2014-15.

AUDITORS

M/s. M.S. Jagannathan & N. Krishnaswami, Chartered Accountants, and M/s. Ramakrishna Raja and Co., Chartered Accountants, are the Auditors of the Company.

Under Section 139 of the Companies Act, 2013, a listed Company can appoint an Audit Firm as Auditor for a maximum of 2 terms of 5 consecutive yeaRs. However, they are eligible for reappointment after a period of 5 years from the completion of such term. Both the Auditors have completed the maximum threshold limit of 10 consecutive yeaRs. However, a period of 3 years is given for compliance of the new requirement. Since a period of 3 years is available to continue with the existing auditors, it is proposed to appoint them for the remaining eligibility period of 3 yeaRs.

COST AUDITORS

The Government has approved the Company''s proposal to appoint M/s. Geeyes & Co., Cost Accountants, Chennai for audit of Company''s cost accounts for the year ended 31-03-2014 on a remuneration of Rs. 1,10,000/- exclusive of out-of-pocket expenses.

The Cost Audit Report for the financial year 2012-13 due to be filed with Ministry of Corporate Affairs by 27-09-2013, had been filed on 16-09-2013. The Cost Audit Report for the financial year 2013-14 is due to be filed within 180 days from the closure of the financial year and will be filed within the stipulated period.

Under Section 148 of the Companies Act, 2013, the Government is yet to notify the class of companies to which the Cost Audit is applicable. Based upon such notifications as and when issued, the Company will take steps for implementation.

AMALGAMATION

At the meeting held on 28-05-2012, the Board of Directors approved the proposal for the amalgamation of its wholly owned subsidiary, Rajapalayam Spinners Limited (RSL) with the Company. The Honorable High Court of Madras vide its order dated 13-06-2013, sanctioned the ''Scheme of Amalgamation'' of RSL with the Company. The "Appointed Date" has been fixed as 01-04-2012. Thus from this date, RSL stands amalgamated with the Company and more details are furnished in the Notes to the Financial Statements of this Annual Report.

SALE OF ASSETS AND LIABILITIES OF A SPINNING UNIT OF THE COMPANY

After amalgamation, the Spinning Mill owned by Rajapalayam Spinners Limited was re-named as Rajapalayam Mills - Subramaniapuram Unit. Before the acquisition, RSL has established market for coarser yarn counts. Since the other units in the Company was producing fine and super fine counts, in order to cater the coarser yarn segment also, the Company has acquired the business of RSL.

Rajapalayam Mills - Subramaniapuram Unit has very limited synergies with other Units of Rajapalayam Mills owing to super fine and value added count pattern and finest quality yarn segment, where the existing other Units focus their production and marketing.

Different ownership structure with different brand can fully utilize the capacity and business potential of Rajapalayam Mills - Subramaniapuram Unit. In these circumstances, selling off this Unit is considered to be a better proposal in the long term interests of Rajapalayam Mills Limited.

Hence the Board at its meeting held on 03-02-2014 has approved the proposal of the Company to sell the assets along with liabilities of above Unit, subject to the approval of the Shareholders of the Company and formed a Committee of Directors to decide the fair market value and other matters related to the above sale.

In order to decide the fair market value of the Assets of Rajapalayam Mills - Subramaniapuram Unit, the Company was advised to get tenders by publishing an advertisement in the leading Newspapers about the Company''s proposal to sell the assets of the above said Unit. The Company has published an advertisement on 12-02-2014 in Business Line (All India Edition) and The Hindu-Tamil (Tamil Nadu Edition).

Based on the tender received in response to the above advertisement & based on the report of two independent chartered engineers, the Committee recommended that Rs. 33.31 Crores may be fixed as fair market value of fixed assets and the same has been approved by the Board on 24-02-2014. The proposal was also approved by the Shareholders of the Company by way of Special Resolution passed through Postal Ballot on 31-03-2014.

The Company, on 25-04-2014 has completed the sale of assets and liabilities of Rajapalayam Mills - Subramaniapuram Unit in accordance with the above said Special Resolution. The effect of this sale will be given effect in the financial statements of next Financial Year 2014-15.

CONSERVATION OF ENERGY, ETC.,

The Company continues to take keen interest in conservation of energy and the information required under Section 217(1) (e) of the Companies Act, 1956 read with the relevant Rules, with regard to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in Annexure I to this report.

CORPORATE GOVERNANCE

The Company has complied with the requirements regarding Corporate Governance as required under Clause 49 of the Listing Agreements with the Stock Exchanges. A Report on Corporate Governance followed by the Company together with a Certificate from the Statutory Auditors confirming compliance is set out in Annexure II to this report.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors Confirm that -

i) In the preparation of Annual Accounts for the year ended 31st March 2014, the applicable accounting standards had been followed;

ii) The selected accounting policies were applied consistently and judgments and estimates that are reasonable and prudent were made 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 of the Company for that period.

iii) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act had been taken for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

iv) The annual accounts were prepared on a going concern basis.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors, For RAJAPALAYAM MILLS LIMITED, RAJAPALAIYAM, 25th May, 2014. P.R.RAMASUBRAHMANEYA RAJHA CHAIRMAN


Mar 31, 2013

TO THE MEMBERS

The Directors have pleasure in presenting their 77th Annual Report and the Audited Accounts of the Company for the year ended 31st March 2013.

FINANCIAL RESULTS

The financial results for the year ended 31st March, 2013 after charging all expenses and contribution to P.A.C. Ramasamy Raja Memorial Fund of Rs.57.31 Lakhs (which is within the limits laid in the Articles of Association) but before deducting finance cost and depreciation have resulted in operating profit of Rs. 8,836.01 Lakhs against Rs.6,184.36 Lakhs for the previous financial year 2011-12.

After deducting Rs. 2,648.45 Lakhs towards finance cost and providing Rs.2,812.68 Lakhs towards Depreciation, the Net Profit for the year is Rs.3,374.88 Lakhs (Previous year: Net Loss of Rs. 529.37 Lakhs). Adding the surplus of Rs.289.84 Lakhs brought forward from the previous year, your Directors propose to appropriate the total sum of Rs. 3,664.72 Lakhs as detailed below:

Rs. in Lakhs

Provision for Taxation Current Tax - MAT 357.00

MAT credit entitlement (219.15)

Deferred Tax 859.90

Interim Dividend Rs.5/- per share (PY: Rs.Nil) 368.81

Tax on Interim Dividend @ 16.2225% 59.83

Final Dividend Rs.1/- per share (FY: Rs.1/- per share) 73.76

Tax on Final Dividend ©16.995% 12.54

Transfer to General Reserve 332.30

Balance carried over to Balance Sheet 1,819.73

TOTAL 3,664.72





DIVIDEND

Your Directors have pleasure in recommending a Final Dividend of Rs. 1/- per share. Together with the Interim Dividend of Rs.5/- per share paid during the year, the total dividend for the year is Rs. 6/- per share (Previous Year: Rs.1/- per share). The dividend will be tax free income in the hands of Shareholders as the Company will pay Dividend Distribution Tax under Income Tax Act, 1961. The total amount of Dividend outgo including interim dividend for the year will be Rs.442.57 Lakhs. The amount of tax on dividends (including tax on interim dividend already paid) would be Rs.72.37 Lakhs.

TAXATION

The Company is not liable to pay income tax under regular Income Tax provisions. An amount of Rs. 357.00 Lakhs towards Current Tax (MAT) and Rs. 859.90 Lakhs towards Deferred Tax has been provided for the year. The tax paid under MAT will be available for set off in the year of regular income tax liability.

TRADE CONDITIONS

After a long spell of sluggishness, there was a sign of revival witnessed in Textile Industry. The cotton and yarn prices prevailed at a reasonable level. The expanded capacity with most modern and automatic machines has been utilized fully to make use of the improved demand situation. Better yarn realization coupled with higher capacity utilization have contributed for overall improved financial performance of the Company.

The severe power cut in Tamilnadu / Andhrapradesh is still continuing. Timely decision taken by your Directors to install Wind Mills in previous years and purchase of power from Third Party have helped the Company to tide over the power crisis to a greater extent. Still to meet the power short fall, we have to use Furnance Oil / Diesel Generator sets resulting in higher costs. The hike in electricity tariff rate by 30% by Government of Tamilnadu and also hike in Wheeling and other charges imposed on Wind Mills have pushed up the cost of power very steeply.

Inspite of spiraling wage cost, cost of power and logistics cost, the strategic decisions taken by the Company for installation of Wind Mills, increasing the capacity of Spindles with most advanced machineries, implementation of various cost reduction measures and production of flexible/value added count pattern have helped the Company to achieve improved results in the current market scenario.

EXPORTS

On the export front during the year, we have made export of Cotton Yarn / Fabrics (including Merchant Exports) for a value of Rs. 78.64 Crores as against Rs. 95.66 Crores of the previous year.

Your Directors are thankful to M/s. Mitsubishi Corporation, M/s. Doko Spinning Co. Ltd., and M/s. Unitika Ltd., Japan for their continued support and efforts for promotion of exports to Japan and other countries.

MODERNISATION

As a part of continuous intensive modernization programme, the company has invested about Rs. 3 Crores for investment in state-of-the-art textile machinery & equipments like Soft Package, High Draft Conversion, Contamination Detector in Blow Room, Auto Doffer in Spinning, Yarn Conditioning Machines etc.

PROSPECTS FOR THE CURRENT YEAR

The high volatility in cotton prices during the current cotton season 2012-13 is creating uncertainties for Spinning Mills. The cotton prices are currently ruling high at uneconomical levels. There is no sustained demand for yarn both in domestic and global markets to absorb the increased cotton cost. The power cut imposed in Tamilnadu / Andhrapradesh and increase in power tariff are severely affecting the operations of the Company.

The Company is maintaining high standards of yarn quality, cost effective production and stringent waste control measures. The Company is focusing on more automation with a view to utilize the skilled manpower more efficiently and also focusing on value added yarn. These measures have strengthened the Company to face the challenges in the current scenario. Your Directors are hopeful of achieving satisfactory results for the current year with the implementation of above steps.

WIND MILL

The Wind Mill Division with an installed capacity of 30.35 MW is working satisfactorily. There was good wind velocity during the year compared to previous year, which resulted in higher generation of power. This year our wind farm have generated 644 Lakhs Kwh as compared to 527 Lakhs Kwh of the previous year because of favourable wind season. The income during the year from the Wind Mill Division was Rs. 36.54 Crores as against Rs.22.57 Crores of previous year. All the power generated from our wind farm were consumed captively.

PERSONNEL

Industrial relations with employees remained cordial during the year. Human Resources Development activities received considerable focus. The emphasis was on imparting training and development of the skill-set of the employees to enable them to face the challenges in the work environment. The scarcity of skilled labour and heavy absenteeism in labour attendance are causing loss of production. We are striving our best to retain them by implementing attractive incentive schemes to labours to achieve better attendance.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors'' Report. However, as per the provisions of Section 219 (1) (b) (iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Member who is interested in obtaining such particulars may write to the Company.

INTERNAL CONTROL SYSTEM

Your Company has adequate internal control procedures commensurate with the size and nature of its operations. The audit committee constituted by the Board of Directors is functioning effectively. All significant audit observations were discussed in the audit committee, which met five times during the year under review. ERP System developed by Ramco Systems Ltd., has been installed for online monitoring of all functions and management information reports are being used to have better control and to take decisions in time.

DIRECTORS

Shri RS. Jaganatha Raja, has resigned from the Board with effect from 27-05-2013 and he had been on the Board of the Company for 31 years.

Shri V.S. Vemban, has resigned from the Board with effect from 27-05-2013 and he had been on the Board of the Company for 35 years.

The Directors place on record the valuable and constructive contribution made by above Directors during their association with the Company.

In accordance with the provisions of Companies Act, 1956 and the Company''s Articles of Association, the following Directors retire by rotation at the ensuing Annual General Meeting and they are eligible for re-appointment.

1. Shri N.R.K. Venkatesh Raja

2. Shri S.S. Ramachandra Raja

3. Shri N.K. Ramasuwami Raja

PUBLIC DEPOSITS

The total deposits from the public outstanding with the Company as on 31st March, 2013 were Rs. 570.75 Lakhs including the deposits renewed in accordance with Section 58A of the Companies Act, 1956. There was no deposits unclaimed / unpaid as on 31-03-2013.

SHARES

The Company''s shares are listed in Madras Stock Exchange Limited and Bombay Stock Exchange Limited. The Company had paid listing fees to the Stock Exchanges for the financial year 2013-14.

AUDITORS

M/s. M.S. Jagannathan & N. Krishnaswami, Chartered Accountants and M/s. Ramakrishna Raja and Co., Chartered Accountants, Auditors of the Company retire at the end of the 77th Annual General Meeting and are eligible for re-appointment.

COST AUDITORS

The Government has approved the Company''s proposal to appoint M/s. Geeyes & Co., Cost Accountants, Chennai for audit of Company''s cost accounts for the year ended 31-03-2013 on a remuneration of Rs. 75,000/- exclusive of out-of-pocket expenses. As per Central Government''s direction, cost audit will be done every year.

SUBSIDIARY

Government of India, Ministry of Corporate Affairs, vide their General Circular No.2/2011 dated 08-02-2011, has granted general exemption under Section 212(8) of the Companies Act, 1956 to the Companies from attaching the full text of the Financial Statements of the Subsidiaries along with the Company''s accounts / Annual Report subject to certain conditions being fulfilled. As required under the said general exemption Circular, the Consolidated Financial Statements have been presented in this Annual Report and the other required disclosures on the Company''s Subsidiary namely Rajapalayam Spinners Limited have also been made in this report.

The Audited Annual Accounts of the subsidiary and the related detailed information will be made available to the Shareholders of the Company and also the Shareholders of the Subsidiary Company seeking such information. The Annual Accounts of the Subsidiary Company will also be kept for inspection by any Shareholder, at the Corporate Office of the Company and of the Subsidiary Company concerned between 10.00 am to 12.00 noon on any working day of the Company and of the respective subsidiary companies, upto the date of the 77th Annual General Meeting.

AMALGAMATION

At the meeting held on 28-05-2012, the Board of Directors approved the proposal for the amalgamation of its wholly owned subsidiary, Rajapalayam Spinners Private Limited ("Transferee Company") with the Company and the petition filed by the Transferee Company in CP No.71 / 2013 has already been admitted in the Madras High Court. The "Appointed Date" has been fixed as 1st April, 2012. The amalgamation is subject to all the necessary statutory / regulatory approvals and orders of the Madras High Court.

CONSERVATION OF ENERGY, ETC.,

The Company continues to take keen interest in conservation of energy and the information required under Section 217(1) (e) of the Companies Act, 1956 read with the relevant Rules, with regard to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in Annexure I to this report.

CORPORATE GOVERNANCE

This Company has complied with the requirements regarding Corporate Governance as required under Clause 49 of the Listing Agreements with the Stock Exchanges. A Report on Corporate Governance followed by the Company together with a Certificate from the Statutory Auditors confirming compliance is set out in Annexure II to this report.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors Confirm that -

i) In the preparation of Annual Accounts for the year ended 31st March 2013, the applicable accounting standards had been followed;

ii) The selected accounting policies were applied consistently and judgments and estimates that are reasonable and prudent were made 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 of the Company for that period.

iii) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act had been taken for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

iv) The annual accounts were prepared on a going concern basis.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors,

For RAJAPALAYAM MILLS LTD.,

RAJAPALAIYAM, P.R.RAMASUBRAHMANEYA RAJHA

27th May, 2013. CHAIRMAN


Mar 31, 2012

The Directors have pleasure in presenting their 76th Annual Report and the Audited Accounts of the Company for the year ended 31st March, 2012.

FINANCIAL RESULTS

The financial results for the year ended 31st March, 2012 after charging all expenses but before deducting finance cost and depreciation have resulted in operating profit of Rs. 6,184.36 Lakhs.

After deducting Rs. 3,706.18 Lakhs towards finance cost and providing Rs. 3,007.55 Lakhs towards Depreciation, the Net Loss for the year is Rs. (-) 529.37 Lakhs. Considering reversal of Deferred Tax Liability of Rs. 660.96 Lakhs and adding the surplus of Rs. 243.98 Lakhs brought forward from the previous year, your Directors propose to appropriate the total sum of Rs. 375.57 Lakhs as detailed below:

Rs. in Lakhs

Dividend Rs. 1/- per share 73.76 (PY : Rs.15/- per share)

Tax on Dividend @ 16.2225% 11.97

Balance carried over to Balance Sheet 289.84

TOTAL 375.57

DIVIDEND

Your Directors have pleasure in recommending a dividend of Rs. 1/- per share (Previous Year: Rs.15/- per share). The dividend will be tax free income in the hands of Shareholders as the Company will pay Dividend Distribution Tax under Income Tax Act, 1961. The total amount of Dividend outgo (including tax on dividend) would be Rs. 85.73 Lakhs.

TAXATION

The Company is not liable to pay income tax under regular method and there is no tax liability under Minimum Alternate Tax. An amount of Rs. 660.96 Lakhs has been withdrawn from Deferred Tax Liability provided in the earlier years which is in accordance with the Accounting Standards.

TRADE CONDITIONS

As reported in the Directors' Report in the previous year, Textile Industry especially Spinning Mills across the country are facing unprecedented crisis on account of inconsistent policies adopted by the Government of India with regard to export of cotton and cotton yarn. The cotton prices have gone up too steeply during the season 2010-11 due to unrealistic Government's decision to export huge quantity of cotton during peak cotton season. The Mills were forced to buy good quality cotton at abnormally higher prices during that season which was consumed during the financial year 2011-12. There was no parity between cotton cost and price of yarn sold. The Mills were forced to sell the yarn at very low price, though the yarn was produced with the stock of high-cost cotton procured during the season 2010-11 and thus incurred huge inventory losses.

The ban on cotton yarn exports for more than two months in the last quarter of the financial year 2010-11 and the declining domestic demand has resulted in piling up of huge stock of cotton yarn in the Mills. When export of cotton yarn was allowed in April 2011, the accumulated stock caused a crash of cotton yarn prices in the global and domestic markets. The mounting pressure of inventory with Indian Mills and their eagerness to get rid of their inventory before the arrival of new cotton, virtually pushed the global yarn prices down by more than 30 per cent within a month. The crisis in Europe had affected the exports from India and the export orders from European countries have started shrinking during the year under review.

The power cut in Tamilnadu has worsened during the year and severe power cut measures were announced and the power availability from the grid was only 25% from March, 2012 and is still continuing. The mismatch between increased demand for electricity and shortage in the supply has affected the capacity utilization of Mills in Tamilnadu. Timely decision taken by your Directors to install Windmills in previous years and purchase of power from Third Party have helped the Company to tide over the power crisis. Still to meet the full requirements, we have to use Diesel Generator sets resulting in higher costs.

In order to contain the inflation in India, The Reserve Bank of India has tightened the monetary policy by increasing the lending and borrowing rates. Because of these measures, all the Banks have hiked the rate of interest by 2% to 3% for all our term loans and working capital loans.

The cumulative effect of the above factors have adversely affected the performance of the Company.

EXPORTS

On the export front during the year, we have made direct export of Cotton Yarn / Fabrics for a value of Rs. 72.36 Crores as against Rs. 81.44 Crores of the previous year.

Your Directors are thankful to M/s. Mitsubishi Corporation, M/s. Doko Spinning Co. Ltd., and M/s. Unitika Ltd., Japan for their continued support and efforts for promotion of exports to Japan and other countries.

MODERNISATION

As a part of continuous intensive modernization programme, the company has invested about Rs. 9 Crores for investment in state-of-the-art textile machinery & equipments like Elite Compact Set, Open-End (OE) Spinning Machines, Compact Ring Spinning Machine with Automatic Link Coner, Gassing Machine, Soft Package Winding Machine, etc.

PROSPECTS FOR THE CURRENT YEAR

The Central Government's frequent interventions in the form of imposition and removal of quantitative restrictions on export of raw cotton as well as cotton yarn without taking a comprehensive view of demand and supply requirements of various segments of textile industry has resulted in high volatility in cotton prices during the cotton season 2011-12. The cotton prices still ruling high at uneconomical levels.

The yarn prices are stagnant due to recessionary trend in both domestic and global markets. The power cut imposed in Tamilnadu to the extent of 75% is severely affecting the operations of the Company. The Government of Tamilnadu has also announced the increase in power tariff by more than 30%.

The increase in wages, power cost, fuel prices & interest cost and the increase in the power cuts in recent period definitely pose a challenge. While the cost of major inputs are increasing steeply, the yarn price has not increased. Your Directors are therefore unable to predict the profitability of the Company in the current year. However, the Company is maintaining high standards of Quality Yarn, cost effective production and stringent waste control measures. These measures strengthened the Company to withstand the challenges in the current scenario.

WIND MILL

The Wind Mill Division with an installed capacity of 30.70 MW is working satisfactorily. The Division has generated 527 Lakhs Kwh as compared to 443 Lakhs Kwh of the previous year. The full benefit of windmills purchased during September, 2010 with the capacity of 8.80 MW has accrued during the year. The income during the year from the Wind Mill Division was Rs. 22.50 Crores as against Rs. 17.69 Crores of previous year.

PERSONNEL

Industrial relations with employees remained cordial during the year. Human Resources Development activities received considerable focus. The emphasis was on imparting training and development of the skill-set of the employees to enable them to face the challenges in the work environment. The scarcity of skilled labour and heavy absenteeism in labour attendance are causing loss of production. We are striving our best to retain them by implementing attractive incentive schemes to labours to achieve better attendance.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors' Report. However, as per the provisions of Section 219 (1) (b) (iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Member who is interested in obtaining such particulars may write to the Company.

INTERNAL CONTROL SYSTEM

Your Company has adequate internal control procedures commensurate with the size and nature of its operations. The audit committee constituted by the Board of Directors is functioning effectively. All significant audit observations were discussed in the audit committee, which met four times during the year under review. ERP System developed by Ramco Systems Ltd., has been installed for online monitoring of all functions and management information reports are being used to have better control and to take decisions in time.

DIRECTORS

The following Directors retire by rotation at the ensuing Annual General Meeting and they are eligible for re-appointment.

1. Shri P.R.Venketrama Raja

2. Shri P.S.Jaganatha Raja

3. Shri V.S.Vemban

PUBLIC DEPOSITS

The total deposits from the public outstanding with the Company as on 31st March, 2012 were Rs. 294.39 Lakhs including the deposits renewed in accordance with Section 58A of the Companies Act, 1956. There was no deposits unclaimed / unpaid as on 31-03-2012.

SHARES

The Company's shares are listed in Madras Stock Exchange Limited and Bombay Stock Exchange Limited. The Company had paid listing fees to the Stock Exchanges for the financial year 2012-13.

AUDITORS

M/s. M.S. Jagannathan & N. Krishnaswami, Chartered Accountants and M/s. Ramakrishna Raja and Co., Chartered Accountants, Auditors of the Company retire at the end of the 76th Annual General Meeting and are eligible for re-appointment.

COST AUDITORS

The Government has approved the Company's proposal to appoint M/s. Geeyes & Co., Cost Accountants, Chennai for audit of Company's cost accounts for the year ended 31-03-2012 on a remuneration of Rs. 50,000/- exclusive of out-of-pocket expenses. As per Central Government's direction, cost audit will be done every year. For the year ended 31st March, 2011, the due date of filing the cost audit report was 30th September, 2011 and the actual date of filing the cost audit report was 10th September, 2011.

SUBSIDIARY COMPANY

In terms of provisions of Section 212 of the Companies Act, 1956, the financial statements of the subsidiary company have to be attached along with the financial statements of the holding Company. Government of India, Ministry of Corporate Affairs, vide their General Circular No.2/2011 dated 08-02-2011, has granted general exemption under Section 212(8) of the Companies Act, 1956 to the Companies from attaching the full text of the Financial Statements of the Subsidiaries along with the Company's accounts / Annual Report subject to certain conditions being fulfilled. As required under the said general exemption Circular, the Consolidated Financial Statements have been presented in this Annual Report and the other required disclosures on the Company's Subsidiary namely M/s. Rajapalayam Spinners Limited have also been made in this report.

The Audited Annual Accounts of the subsidiary and the related detailed information will be made available to the Shareholders of the Company seeking such information at any point of time. The Annual Accounts of the Subsidiary Company will also be kept for inspection by any Shareholder, at the Registered Office of the Company and of the Subsidiary Company concerned.

The Board has approved a scheme of amalgamation of its wholly owned subsidiary M/s. Rajapalayam Spinners Limited with the Company, with effect from 01-04-2012, subject to completion of statutory formalities and the approval of the High Court of Judicature at Madras.

CONSERVATION OF ENERGY, ETC.,

The Company continues to take keen interest in conservation of energy and the information required under Section 217(1) (e) of the Companies Act, 1956 read with the relevant Rules, with regard to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in Annexure I to this report.

CORPORATE GOVERNANCE

This Company has complied with the requirements regarding Corporate Governance as required under Clause 49 of the Listing Agreements with the Stock Exchanges. A Report on Corporate Governance followed by the Company together with a Certificate from the Statutory Auditors confirming compliance is set out in Annexure II to this report.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors Confirm that -

i) In the preparation of Annual Accounts for the year ended 31st March 2012, the applicable accounting standards had been followed;

ii) The selected accounting policies were applied consistently and judgments and estimates that are reasonable and prudent were made 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 of the Company for that period;

iii) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act had been taken for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv) The annual accounts were prepared on a going concern basis.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors,

For RAJAPALAYAM MILLS LTD.,

RAJAPALAIYAM, P.R.RAMASUBRAHMANEYA RAJHA

28th May, 2012. CHAIRMAN


Mar 31, 2010

The Directors have pleasure in presenting their 74th Annual Report and the Audited Accounts of the Company for the year ended 31st March, 2010.

FINANCIAL RESULTS

The financial results for the year ended 31st March, 2010 after charging all expenses and contribution to P.A.C.Ramasamy Raja Memorial Fund of Rs. 30,00,000/- (which is within the limits laid in the Articles of Association), but before deducting interest and depreciation have resulted in operating profit of Rs. 74,49,21,965/-.

After deducting Rs. 29,36,58,880/- towards interest cost and providing Rs.30,33,70,292/- towards Depreciation, the Net Profit for the year is Rs.14,78,92,793/-. Adding the surplus of Rs. 1,55,95,709/- brought forward from the previous year, your Directors propose to appropriate the total sum of Rs. 16,34,88,502/- as detailed below :

Rs. Provision for Taxation - Current Tax - MAT 94,11,993

- Deferred Tax 2,08,00,000

Dividend Rs. 6/-per share 2,10,75,480

(RY. - Rs.5/- per share

Interim Dividend - Rs.3/-

Final Dividend - Rs.2/-)

Tax on Dividend @ 16.60875% 35,00,374

Transfer to General Reserve 1,17,70,000

Balance carried over to Balance Sheet 9,69,30,655

TOTAL 16,34,88,502

DIVIDEND

Your Directors have pleasure in recommending a dividend of Rs. 6/- per share. The dividend will be tax free income in the hands of Shareholders as the Company will pay Dividend Distribution Tax under Income Tax Act, 1961. The total amount of Dividend outgo (including tax on dividend) would be Rs. 2,45,75,854/-.

TAXATION

An amount of Rs. 94.12 Lakhs towards Current Tax (MAT) and Rs. 208 Lakhs towards Deferred Tax has been provided for the year. The tax paid under MAT will be available for set off in the year of regular income tax liability.

TRADE CONDITIONS

A sign of revival of economy has been witnessed from the last quarter of the financial year under review and the demand for yarn has increased globally. However the financial results of previous 3 quarters had been affected due to various factors viz., economic crisis, higher cotton cost, increased power cost due to power cut, stagnant yarn price etc.,

There was severe power cut in Tamilnadu and Andhra Pradesh, which affected the utilisation and productivity levels to some extent. Timely decision taken by your Directors to install Furnace Oil based Gensets and Windmills in previous years and purchase of power from Third Party have helped the Company to operate the Mills at optimum utilization level and also helped the Company to tide over the power crisis.

By implementing various cost reduction measures and production of flexible count pattern with more value added yarn, your Directors were able to achieve satisfactory results in the current market scenario.

FINANCE

The Company has availed working capital loan in foreign currency at a competitive rate of interest and gained an amount of Rs. 152 Lakhs towards exchange fluctuations, of which an amount of Rs. 102 Lakhs is notional entry made on 31-03-2010 in accordance with Accounting Standard-11. This gain is because of appreciation of rupee against ddllar and the foreign currency loans were repaid at the lower exchange rates.

As reported in the Directors Report in the previous year, the Company has approached the Banks for reschedulement of Term loan repayment installments of principal as per the norms suggested by the Reserve Bank of India and all the Banks have approved our reschedulement proposal. However the Company is prompt in making the Interest payment on due dates.

The increase in interest cost in recent period is a matter of concern, however with good standing of your company with the lenders, the company is confident of securing loans at optimum costs.

EXPORTS

On the export front during the year, we have made direct export of Cotton Yarn for a value of Rs. 44.26 Crores as against Rs. 84.36 Crores of the previous year.

Your Directors are thankful to M/s. Mitsubishi Corporation, M/s. Doko Spinning Co. Ltd., and M/s. Unitika Ltd., Japan for their continued support and efforts for promotion of exports to Japan and other countries.

MODERNISATION

As a part of continuous intensive modernization programme, the Company has invested about Rs. 4.36 Crores by availing term loan under Technology Upgradation Fund (TUF) scheme for investment in state-of-the-art textile machinery & equipments like Elite Compact Set, Carding Machines, Soft package winding machine etc.

PROSPECTS FOR 2010-11

The cotton prices continue to prevail at higher levels despite good yield during last cotton season due to export of cotton in huge quantities. The Domestic as well the International Yarn markets are improving after a long spell of sluggishness. The Government of India has withdrawn Export incentive Schemes viz., Duty Entitlement PassBook (DEPB) and Duty Draw Back scheme provided to cotton yarn exporters with effect from April, 2010. The Governments decision to withdraw the above scheme is very unfortunate and our prices for Yarn would not be competitive in the Global Market, which in turn will affect the profitability of the Mills. The Company is maintaining high standards of quality yarn, cost effective production and stringent waste control measures. These measures strengthened the Company to face the challenges in the current scenario. By improving productivity, taking various measures for production of value added yarns and other cost reduction measures, your Directors are hopeful of achieving satisfactory results for the year 2010-11.

WIND MILL

The Wind Mill Division with an installed capacity of 21.90 M.W is working satisfactorily. There was good wind velocity during the year compared to previous year, which resulted in higher generation of power. The Division has generated 460 Lakhs Kwh as compared to 413 Lakhs Kwh of the previous year. The income during the year from the Wind Mill Division was Rs. 16.87 Crores as against Rs. 15.55 Crores of previous year.

SHRI RAMCO BIOTECH (RESEARCH & DEVELOPMENT)

The working of the unit after charging all expenses but before providing interest and depreciation has resulted in operating profit of Rs. 101 Lakhs. New initiatives have been taken to develop quality products and various new measures have been taken including setting up of poly house for hardening the plants near the marketing locations. With this new initiatives, we hope to improve its contribution to the Company in the coming years.

PERSONNEL

Industrial relations with employees remained cordial during the year. Human Resources Development activities received considerable focus. The emphasis was on imparting training and development of the skill-set of the employees to enable them to face the challenges in the work environment.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are required to be set out in the Annexure to the Directors Report. However, as per the provisions of Section 219 (1) (b) (iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Member who is interested in obtaining such particulars may write to the Company.

INTERNAL CONTROL SYSTEM

Your Company has adequate internal control procedures commensurate with the size and nature of its operations. The audit committee constituted by the Board of Directors is functioning effectively. All significant audit observations were discussed in the audit committee, which met four times during the year under review. ERP System developed by Ramco Systems Ltd. has been installed for online monitoring of all functions and management information reports are being used to have better control and to take decisions in time.

DIRECTORS

The following Directors retire by rotation at the ensuing Annual General Meeting and they are eligible for re-appointment.

1. Shri V.S. Vemban

2. Shri N.R.K. Venkatesh Raja

3. Shri S.S. Ramachandra Raja

PUBLIC DEPOSITS

The total deposits from the public outstanding with the Company as on 31st March, 2010 were Rs.416.39 Lakhs including the deposits renewed in accordance with Section 5§A of the Companies Act, 1956. There was no deposits unclaimed / unpaid as on 31-03-2010.

SHARES

The Companys shares are listed in Madras Stock Exchange Limited and Bombay Stock Exchange Limited. The Company had paid listing fees to the Stock Exchanges for the financial year 2010-11.

AUDITORS

M/s. M.S. Jagannathan & N. Krishnaswami, Chartered Accountants and M/s. Ramakrishna Raja And Co., Chartered Accountants, Auditors of the Company retire at the end of the 74th Annual General Meeting and are eligible for re-appointment.

COST AUDITORS

The Government has approved the Companys proposal to appoint M/s. Geeyes & Co., Cost Accountants, Chennai for audit of Companys cost accounts for the year ended 31-03-2010 on a remuneration of Rs. 30,000/- exclusive of out-of-pocket expenses. As per Central Governments direction, cost audit will be done every year.

CONSERVATION OF ENERGY, ETC.

The Company continues to take keen interest in conservation of energy and the information required under Section 217(1) (e) of the Companies Act, 1956 read with the relevant Rules, with regard to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in Annexure I to this report.

CORPORATE GOVERNANCE

This Company has complied with the requirements regarding Corporate Governance as required under Clause 49 of the Listing Agreements with the Stock Exchanges. A Report on Corporate Governance followed by the Company together with a Certificate from the Statutory Auditors confirming compliance is set out in Annexure II to this report.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm that -

i) In the preparation of Annual Accounts for the year ended 31st March 2010, the applicable accounting standards had been followed;

ii) The selected accounting policies were applied consistently and judgments and estimates that are reasonable and prudent were made 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 of the Company for that period;

iii) Proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act had been taken for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) The Annual Accounts were prepared on a going concern basis.

Secretarial Compliance Certificate issued by a practicing Company Secretary u/s. 383(A) of the Companies Act, 1956 is given in Annexure III to this report.

ACKNOWLEDGEMENT

The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.

On behalf of the Board of Directors, For RAJAPALAYAM MILLS LTD.,

RAJAPALAIYAM, P.R.RAMASUBRAHMANEYA RAJHA

28th May, 2010. CHAIRMAN.

 
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