Mar 31, 2018
The directors have pleasure in presenting the 44th Annual Report together with the Audited Accounts for the year ended March 31, 2018 (the year).
1 |
Performance highlights Revenue from Operations |
2017 - 18 2016 - 17 (Rupees in Lakhs) |
|
Direct exports |
708 |
381 |
|
Merchandise exports |
0 |
580 |
|
Domestic Sales |
18416 |
19736 |
|
Total Yarn and Process Waste Sales |
19125 |
19736 |
|
Wind Turbine Generator Power sold to third party |
158 |
159 |
|
Other Revenue |
25 |
40 |
|
Total Revenue from Operations Profit |
19308 |
20896 |
|
Gross profit [Profit before interest, depreciation & Tax] |
2279 |
3073 |
|
Cash profit [Profit before depreciation & Tax] |
1360 |
1962 |
|
Profit before tax [PBT] |
344 |
905 |
|
Less : Provision for Current Tax |
724 |
435 |
|
Provision for Deferred Tax |
-725 |
38 |
|
Profit after tax [PAT] |
345 |
432 |
|
Profit carried from previous year |
156 |
12 |
|
Profit available for appropriation APPROPRIATION OF PROFIT : |
501 |
444 |
|
Transfer to General Reserve |
0 |
465 |
|
Proposed Dividend on Equity Shares |
85 |
170 |
|
Tax on proposed equity dividend |
17 |
35 |
|
Surplus profit carried to Balance Sheet |
99 501 |
156 826 |
2 DIVIDEND
With a view to maintain the dividend payment track record of the Company, your directors decided to recommend payment of Dividend at 20% for the year, subject to the approval of the bankers of the Company.
3 MANAGEMENT DISCUSSION AND ANALYSIS
Core business of the company is manufacture and sale of cotton yarn. The management discussion and analysis given below discusses the key issues of the Industry with specific reference to the cotton yarn spinning sector.
a) INDUSTRY PERFORMANCE
The year 2017-18 has been a year of major challenges faced by the spinning industry, which faced almost year long downtrend in Selling prices, coupled with wide fluctuations in cotton prices. The power situation was also bad in the first few months but got stabilized in the subsequent period. Market demand for yarn was also continuously subdued which forced many units to reduce the working days and lower their production for export orders from global retail giants. On the other hand, from the raw material front during the year 17-18 even though domestic cotton was aplenty, still mills were importing fibre. Quality constraint is observed to be the primary reason for such industry behavior. High trash content, rampant adulteration and abnormal moisture content was observed in domestic supplies and this has resulted in rampant import by many spinners .A cross-section of spinners said that mills in Tamil Nadu have stopped procuring cotton from Gujarat, in particular, and reduced the quantity purchased from Maharashtra due to quality issues. There is said to be authenticated report on the fact that there is a mix up of quality cotton such as Sankar 6 with Comber Noil and carded waste. To make quick money, when demand surges, ginners sell cotton without removing trash. While 2 per cent trash is permissible, in recent months it has soared to 7 per cent. Many traders also liberally douse kapas with water, adding to the moisture content. âThe industry experts fears that this could adversely affect the India Cotton branding initiative. âIt could be a threat to the entire textile value chain. This has posed additional challenge to procure cotton at competitive costs . Experts in the industry have urged urgent government intervention for stopping such unethical trade practices and also urged for reintroduction of Cotton Control Order and ISI standards be enforced. According to experts in this industry , contracted import volumes could easily touch a record 30 lakh bales. âMills in Tamil Nadu invariably take the lead in importing the fibre, but this year, spinners in the North have also taken to imports as the realization is 3 to 4 per cent better than the domestic fibre.âSuch measures will not just conserve forex reserves, but also help every stakeholder in the textile value chain. Despite being the largest producer of cotton and the biggest exporter of yarn, India continues to depend on the US, West Africa and Australia for supply of quality fibre.Cotton farming is sustainable with minimum support from the government. The present state of affairs though would push farmers away from cotton cultivation,â is the general industrial observation.
There are about 600 spinning mills registered in Tamil nadu out which majority of them have faced shutdown like situation due to acute competition accentuated by continuous cost pressures from all fronts .The cotton arrivals have been affected to a larger extent due to demonetisation in the second part of the year as farmers preferred cash payment instead of other modes of payment .Spinning mills are under continuous stress .Spinning is feeder industry to weaving and knitting sectors, its fortunes mainly depend upon the dynamics of those sectors This will naturally have a cascading effect on the spinning sector, which feed the weaving and knitting sectors. The spun yarn production has been on the declining path from the month of June 2017 onwards. While in October 2017 all production was lower by about 10% ,cotton yarn production was lower by 12% when compared to the first half of the year .When compared to previous year performance ,country''s export during April - November 2017 was marginally higher, whereas import was lower by 8% in dollar terms
The textile Industry is facing lots of challenges and it is under transformation on following grounds
1. Excess spindle capacity due to unplanned expansion throughout the supply chain such as Ginning, spinning, weaving and till the end user stage
2. Soaring cotton prices coupled with increasing wage costs and power costs
3. Fast and quick fashion changes among consumers and other market dynamics
4. Stiff price competition
5. Entire textile industry is facing labour shortage due to labour migration and urbanisation of labour
6. Previous year economic challenges such as GST impact and tail end effect of demonetisation.
b) COMPANY''S PERFORMANCE
(i) In Spite of rough market condition as narrated in industry scenario, your company is able to overcome the challenges posed by competitive forces during the year. Thus during the year under review, your Company''s turnover was to Rs.193.08 crores as against Rs.209.10 crores recorded in the previous year. Your Company''s performance was satisfactory. This is mainly due to cost reduction measures that were adopted by the Company such as tie-up with Private Power Producers to get the required power at a price lesser than the TANGEDCO Power, securing dedicated power supply from EB Substation to all the three units of the Company and minimum use of diesel Gensets, supported by your Company''s Wind Turbine generated power. In addition to that the good performance of windmill and price saving in group captive power purchased has helped the company to earn reasonable profit during the year. These measures helped to achieve improved level of plant utilization to maintain production and quality of the product and achieve reasonable profit after tax of Rs.346.69 lakhs as against Rs.437.22 lakhs recorded in the previous year.
(ii) Your Company''s Wind Turbine Generators (WTGs) recorded generation of electric power of the value of Rs.1408.82 lakhs during the year (Rs.1408.63 lakhs in gross revenue 2016-17).
(iii) Bank interest rates remained high during the year, However management has exercised strict control on inventory and thus could maintain the interest costs at previous year level.
(iv) In spite of many challenges company is focussed on value creation such as improving the sale per spindle , better product mix, focus on internal costs, and use of non conventional power such as solar power and widening market foot print by improving product mix
c) FUTURE OUTLOOK
Industry expects improvement during the current financial year as cotton prices are stabilizing and yarn prices have started improving from the first quarter of the financial year 2018-19. Considering the present market demand for products like Viscose, Modal, Linen Fibre and value added products like Gassed and Mercerized Yarn, your Company has planned to produce these new products in addition to the existing products Viz., Combed, Carded and Compact Yarn. The Company also started converting its yarn into fabric as a measure of value addition.
On the wind energy side, with all set for the next windy season in the state, wind energy generation has started picking up. The State has a total installed wind energy capacity of 7,685 MW. Last year (2018-19), just about 262 MW was added in the State. The capacity addition was higher in states such as Andhra Pradesh. However, evacuation has improved in Tamil Nadu and during the last financial year, contribution of wind energy to total energy consumed in the State went up to 40 % during the peak wind season. The winds started in March last year and went on till November. Hence, generation was maintained in 2017-18. This year, winds started picking up in the first week of April and wind energy generation has steadily increased. Majority of the wind energy investors in the State are industries who have wind mills for captive use. âWe continue to appeal to the Government to continue with the banking option on wind energy that gives us a competitive edge in costs,â.
Going forward, in textile industry there will be increase in demand due to increase in population coupled with vast potential domestic market .In addition to existing products, lot of value added product is expected to go up manifold in the market .Also there is going to be exponential demand on technical textile products in the area of medical textiles, automobile textiles, agricultural textiles, flame retardant textiles, and other wide range of applications.
d) RISKS AND CONCERNS
Your Company has devised risk management policy which involves identification of the risks associated with the business risks as well as the financial risks, its evaluation, monitoring, reporting and mitigation measures. Audit Committee and the Board of Directors of the Company refined the risk management policy of the Company so that the management controls the risk through properly defined frame work. Heads of departments are responsible for implementation of the risk management system as may be applicable to their respective areas of functioning and report to the Board and the Audit Committee. Details of the risk management mechanism and key risks faced by the Company are enumerated in the risk management policy.
Risk Management Policy adopted pursuant to the provisions of Section 134 (3) (n) of the Companies Act 2013 is hosted on the website of the Company under the web link http://[email protected]
e) ENVIRONMENT PROTECTION, HEALTH AND SAFETY (EHS)
EHS continues to receive the highest priority in all operational and functional areas at all locations of your Company. Systematic process safety analysis, audits, periodic safety inspections are carried out by expert agencies and suitable control measures adopted for ensuring safe operations at the site. Various processes as required for Pollution Control and Environmental Protection are strictly adhered to.
f) INTERNAL CONTROL AND SYSTEMS
Your Company has in place well established internal control procedures covering various areas such as procurement of raw materials, production planning, quality control, maintenance planning, marketing, cost control and debt servicing. Steps are taken without loss of time, to correct if any weakness is observed.
Your Company is certified ISO 9001, ISO 14001 and OHSAS18001 for the systems. Further, your Company''s laboratory is also certified by NABL on Global Organic Textile Standard, Better Cotton Initiative and others as displayed on the cover page of this Annual Report.
g) HUMAN RESOURCES MANAGEMENT
Employees are your Company''s most valuable resource. Your Company continues to create a favourable environment at work place. Your Company has formulated and implemented various welfare measures for the employees. The Company also recognizes the importance of training and consequently deputes its work force in various work related courses/seminars including important issues like Total Quality Management (TQM), behavioural skills, soft skills, etc. Because of these labour welfare and improvement measures, your Company is able to attract and retain well trained and dedicated workforce.
The fact that relationship with the employees continues to be cordial is testimony to the Company''s ability to retain high quality workforce. In view of the aforesaid relationship no man days were lost during the year under report.
h) DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Work place (Prevention, Prohibition and Redressal) Act 2013. Management of the Company has set up an Internal Complaints Committee (ICC) to redress any complaint received regarding sexual harassment. All the employees of the Company are covered under this policy. Out of 896 permanent employees on the rolls of the Company, 313 are women and 583 are men. No complaint on sexual harassment has been received from any women employee during the year and no complaint is pending at the end of the year.
i.) COST AUDIT
Audit Committee at the Audit Committee Meeting held on 26th May 2018, board of directors have approved the appointment of M/s.K.M.Krishnamurthy & Co., (Firm Reg No 102198 Cost Accountants for audit of cost accounts of the Company. In accordance with the provisions of the Companies Act 2013 and the Rules framed there under, Cost Audit for the Company is applicable for the financial year commencing from 1st April 2018. On the recommendation of the Audit Committee, Board of Directors of the Company at their meeting held on 27.05.2018, approved the appointment of M/s.K.M.Krishnamurthy & Co., Firm Reg. No 102198, Salem, for audit of Cost Accounts of the Company for the year 2018-19 and the resolution for ratification of the remuneration payable to the Cost Auditor for the year 2018-19 will be placed before the members for their ratification at the 44th Annual General Meeting of the Company scheduled to be held on 11.08.2018.
In view of the Company maintaining the cost records and the statutory requirement for the cost audit of such records, your directors decided to continue the Cost Audit for the year 2017-18. The Cost Auditor will submit to the Board of Directors his report for the year 2017-18 after duly certifying the cost records. Cost Audit Report for the year 2017-18 will be submitted in XBRL format well before the due date.
j) BOARD MEETINGS :
During the year under review seven board meetings were held and the intervening gap between any two board meetings did not exceed 120 days. Dates of the board meetings and details of directors'' attendance at the meetings are furnished in the Corporate Governance report at Annexure - VIII.
k) DIRECTORS
At the 43rd Annual General Meeting of the Company held on 12.8.2017 members had appointed Dr.V.Sekar, Dr.R.Ramarathnam and Sri D.Balasundaram, as Independent Directors of the Company for a term of five consecutive years from the date of that AGM till the conclusion of the 47th AGM of the Company. Since all the five Independent Directors are not liable to retire by rotation, out of the remaining five non-independent directors, Sri S.Devarajan, opted to retire by rotation at the ensuing 44th Annual General Meeting. However, he is eligible for reappointment by members at the 44th AGM of the Company and hence reappointed as Executive Director of the Company.
Details of appointment of directors are shown in Corporate Governance Report.
Declaration by Independent Directors
Independent directors of the Company have submitted a declaration that each of them meets the criteria of independence as provided in Sub-Section (6) of Section 149 of the Act. Further, there has been no change in the circumstances which may affect their status as Independent director during the year.
l) DIRECTORS'' RESPONSIBILITY STATEMENT AS PER SECTION 134(5) OF THE COMPANIES ACT, 2013
Pursuant to the requirement of Section 134(5) of the Act, and based on the representations received from the management, the directors hereby confirm that:
a) in the preparation of the annual accounts for the financial year 2017-18, the applicable accounting standards Ind AS have been followed and there are no material departures;
b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year;
c) they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; It is reported further that during the period under review of last year, the company had no specific events /actions except the following mentioned event such as the management has reported that during the FY 17-18 an employee had misappropriated the funds of the company in tranches. The fraud by the employee was detected by the company during the year and the same was intimated to stock exchange. As per the information submitted by the company to the stock exchange , the amount misappropriated by the employee would be Rs 13.44 Crore. The company has taken all steps including appropriate actions such as criminal proceedings, and special investigative audit was instituted against the employee in this regard. In addition to that company has further strengthened internal control systems to prevent such occurrence in future.
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating properly; and
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
m) SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review no significant material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and the operations of the Company.
n) PARTICULARS OF EMPLOYEES - information pursuant to Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
None of the employees or directors of the Company has drawn remuneration exceeding Rs.8.5 lakhs per month or Rs.102 lakhs per annum during the year.
o) BOARD EVALUATION
Board of Directors carried out annual evaluation of its own performance and that of the Committees and the individual directors pursuant to the provisions of Section 134(3)(p) of the Companies Act 2013, and the corporate Governance requirements prescribed in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015. Performance of the Board was evaluated as per standard guide line prescribed by SEBI vide circular dt 5th January, 2017 after seeking input from the Directors on the basis of board evaluation guideline ,the criteria such as the Board Composition, effectiveness of board process, information flow and functioning of the Board. Performance of the Committees was evaluated by the Board after seeking inputs from the Committee Members on the basis of the criteria such as composition of the Committees, effectiveness of the Committee meetings, etc. and it was observed that the performance of the Board as well as the Committees was adequate.
Performance of the non-independent Directors were evaluated by the Independent directors at the meeting of the Independent directors on the basis of six criteria, viz. attendance and participation; Qualification, knowledge, skill and enterprise; updating of skill and knowledge; individual contribution; adherence to Company''s policies and procedures and benefits derived by the Company. On the basis of the above criteria performance of all the non-independent directors were found to be satisfactory. As regards the performance of the Chairman & Managing Director, after taking into consideration the views of the Executive Directors and the non-executive directors the Independent Directors were of the unanimous view that the Chairman & Managing Director is not only well informed and knowledgeable about the Industry but also has the requisite experience to execute his duties as Chairman and Chief Executive of the Company. His insight and forward looking policies have elevated the status of the Company in the eyes of the stakeholders and the wholesome performance of the Company is in his safe hands and the future of the Company is bright.
Performance evaluation of the independent directors was done by the entire board excluding the director being evaluated. None of the independent director is due for reappointment.
p) FAMILIARIZATION PROGRAMME OF THE INDEPENDENT DIRECTORS
Periodic presentations are made by Senior Management and Internal Auditors at the Board meetings and Committee meetings on the business and performance updates of the Company, global business environment, business risks and its mitigation strategy, impact of regulatory changes on strategy etc. Updates on relevant statutory changes encompassing important laws are regularly intimated to all the Directors including the Independent Directors.
q) DEPOSITS
Following are the details of deposits covered under Chapter V of the Companies Act 2013 :
i. Deposits Accepted from shareholders during the year (2017-18) : Rs.263.90 lakhs
ii. Deposits remaining unpaid or unclaimed as at the end of the year : NIL
iii. Any default in repayment of deposits or payment of interest thereon during the year : NIL
iv. Total Deposits from shareholders outstanding at the end of the year : Rs. 569.10 lakhs Company has duly complied with the provisions of Section 73 of the Companies Act, 2013 read with relevant rules with respect to fixed deposits.
r) INDUSTRY ASSOCIATIONS
Sri S.Dinakaran, Joint Managing Director of the Company is a member of the Committee of Administration and Chairman of the Yarn Committee of the Cotton Textiles Export Promotion Council (TEXPROCIL), Mumbai and the Confederation of Indian Textile Industry ( CITI ), Delhi. By virtue of the offices he holds, Sri S.Dinakaran has been representing to the Industries and Finance Ministries at the appropriate time to get relief to the ailing Textile Industry.
s) REPORT ON PERFORMANCE AND FINANCIAL POSITION OF THE ASSOCIATE COMPANIES :
There are two associate Companies -
SPMM Health Care Services Pvt. Ltd. - 49.75% investment in the share capital
This Company has recorded total revenue of Rs 437.73 Lakhs and profit after tax (PAT) of Rs 20.88 Lakhs during the year ended 31.3.2018 as against Rs. 374.39 Lakhs Revenue and Rs. 17.97 Lakhs PAT recorded in the previous year.
Salem IVF Centre Pvt. Ltd. - 27.73% investment in the share capital of that Company.
This Company incorporated on 17th November 2014 has recorded total revenue of Rs.195.75 lakhs and Loss of Rs.71.92 lakhs during the fourth year of its operations as against the revenue of Rs.185.79 lakhs and loss recorded Rs.92.21 lakhs the Previous Year (Period from 01.04.2016 to 31.3.2017).
Highlights of performance of subsidiaries or Associate Companies
SPMM Health Care Services Pvt Ltd., revenue increased by 16.92 % from operations during 17-18 when compared to 16-17. However, Also Profit after tax has increased by16.14 %.,and this is due to maintaining operational expenditure at the same level in 17-18 when compared to 16-17.
Salem IVF Centre Pvt Ltd., revenue from operations has increased by 5.36% from operations during 17-18 when compared to 16-17. This company was incorporated in November 2014 and is in its 4th year of operation and it is in gestation period and is still in progress and will take a few more years to earn profit .
t) CHANGES OR COMMITMENTS AFTER THE YEAR END ON 31.3.2018
No material change or commitment affecting the financial position of the Company has occurred between the close of the financial year on 31.3.2018 and the date of this report.
Information pursuant to section 197 (12) of the Act read with Rule 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 :
(i) Ratio of the remuneration of each Director, Company Secretary, Chief Financial Officer and Chief Technical Officer to the median remuneration of the employees of the Company; AND
(ii) Percentage increase in their remuneration in 2017-18 as compared to the previous year (2016-17): (Median Remuneration : Rs.1,17,805 in 2017-18)
Name of whole-time Directors and KMP |
Remuneration in 2017-18 Rs. lakhs |
Remuneration in 2016-17 Rs. lakhs |
% increase in 2017-18 Rs. lakhs |
Ratio to Median Remn. |
Ratio of 2017-18 Remuneration to |
|
Revenue |
Net Profit |
|||||
Mr. S.Devarajan, CMD |
48.00 |
36.00 |
NIL |
40.75 |
0.25% |
8.00% |
Mr. S.Jegarajan, JMD |
45.60 |
45.60 |
NIL |
38.71 |
0.24% |
5.70% |
Mr. S.Dinakaran, JMD |
19.20 |
19.20 |
NIL |
16.30 |
0.10% |
3.20% |
Company Secretary |
12.00 |
11.14* |
7.72 |
10.19 |
0.06% |
2.00% |
Mr. D.Niranjan |
18.00 |
18.00 |
NIL |
15.28 |
0.09% |
3.00% |
Kumar, CFO |
||||||
Mr. J.Sakthivel - CTO |
18.00 |
18.00 |
NIL |
15.28 |
0.09% |
3.00% |
âPrevious Company Secretary was employed for part of the year |
Name of Non-executive Directors |
# Sitting fees in 2017-18 Rs. lakhs |
# Sitting fees in 2016-17 Rs. lakhs |
% increase / (% decrease) in 2017-18 Sitting fees |
Mr. D.Sudharsan, -Smt. S.Abirami - |
1.05 1.05 |
0.75 0.75 |
N.A* (lllb) N.A* (lllb) |
Name of Independent Directors |
# Sitting fees in 2017-18 Rs. lakhs |
# Sitting fees in 2016-17 Rs. lakhs |
% increase / (% decrease) in 2017-18 Sitting fees |
Dr. R.Ramarathnam |
2.80 |
NA |
# |
Dr. V.Sekar |
3.05 |
0.15 |
# |
Mr. D.Balasundaram |
2.80 |
NA |
# |
Mr. S.Gnanasekharan |
3.05 |
2.80 |
8.92% |
Mr. Kameshwar M Bhat |
3.20 |
2.95 |
8.47% |
Dr. V.Gopalan |
0.55 |
3.10 |
# |
Mr. N.Asoka |
0.55 |
3.10 |
# |
# Only sitting fees is payable to Non-executive and Independent Directors for the meetings of the Committee or of the Board attended by them.
(iii) Percentage increase in the remuneration of employees in 2017-18 : 5%
(a) No increase in the sitting fees of Directors.
(b) Variation in the sitting fees paid to Directors depends on their attendance at the Board / Committee Meetings.
(iv) Number of permanent employees on the rolls of the Company : 896
(v) No variable component of the remuneration availed by any director.
4 AUDITORS
The audit firm, M/s.R.Sundararajan & Associates, Chartered Accountants, (firm Reg.No 008282S) have confirmed their eligibility and willingness to accept office, if appointed. On the recommendation of the Audit Committee, your Company''s Board is placing the Resolution u/s 139(2) of the Company''s Act 2013 for appointing him as the Statutory Auditors of the Company from the financial year 2018-19 to 2021-22.
5 CAUTIONARY NOTE
Statements in the Board''s report and the management discussion and analysis describing the Company''s objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results might differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other related factors such as litigation and industrial relations.
6 VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has an established vigil mechanism for Directors / Employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of directors/ employees who avail of the mechanism. The Company affirms that no personnel have been denied access to the audit committee. The Company has formulated a Policy on Vigil Mechanism and has established a mechanism that any personnel may raise Reportable Matter after becoming aware of the same. All suspected violations and Reportable Matters are reported to an Independent Director and member of the Audit Committee at his email id [email protected]. The key directions/actions are informed to the Managing Director of the Company.
The Company has adopted Whistle Blower Policy in line with the provisions of Section 177(9) of the Companies Act 2013 which can be accessed on the Company''s Website under the web link http://[email protected]
7 AUDIT COMMITTEE :
Details of Composition of Audit committee are covered under corporate governance report annexed with this report and forms part of this report. Further, during this year all the recommendations of the Audit committee have been accepted by the Board.
8 REPORTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS
Reports of the Statutory Auditors and the Secretarial Auditors for the year under review are free from any qualification, reservation or adverse remark or disclaimer. Secretarial Audit Report in Form MR-3 is attached, which forms part of this report - refer Annexure VI. Applicable Secretarial standards ,ie SS1 and SS2 ,relating to âMeeting of the board of directors â and âGeneral meeting ârespectively ,have been duly complied with by the company
9 EXTRACT OF ANNUAL RETURN
Extract of Annual Return in Form MGT-9 pursuant to Section 92(3) of the Companies Act 2013 is also attached, which forms part of this report - refer Annexure VII.
10 TRANSFER OF UNPAID AND UNCLAIMED DIVIDEND AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND ACCOUNT :
Pursuant to the provisions of section 124 of the Companies Act, 2013, which came in to effect from 07.09.2016 ,the declared dividends which remained unpaid or unclaimed for a period of seven years, has to be transferred by the company to the Investor Education and Protection Fund (IEPF) established by the Central Government. During the year 2017-18, transfer of Unclaimed Dividend of the year 2010-11 was applicable since the interim dividend was declared for the year 10-11..
However, shareholders are requested to take note that as per IEPF rules, the company is required to transfer unpaid dividend and underlying shares also in respect of which final dividend was not claimed /paid of the year 10-11, to IEPF authority. Shareholders who have not claimed their final dividend of the year 10-11 can write to the Company or Registrar and transfer agent M/s Cameo Corporate Services Limited, at ''Subramanian Building'', No.1, Club House Road, Chennai - 600 002 who are the Registrars and Share Transfer Agents (RTA) of the Company for further details and for claiming unclaimed dividend lying unpaid. In case no valid claim is received ,the shares in respect of which the dividend are lying unpaid /unclaimed will be transferred to IEPF authority on the due date Further in terms of rule 6(3) of the IEPF rules ,statement containing the details of shareholders who have not claimed dividend for previous years ,and his folio number /DP-ID /client ID is made available on company''s website www.sambandam.com for information and necessary action by shareholder. In case, the concerned shareholder wish to claim the shares after transfer to IEPF, an application has to be made to the IEPF authority in form IEPF- 5 online and submit the hard copy of such form IEPF -5 along with necessary documents to the company as prescribed under the rules and the same is available at IEPF website (ie) www.iepf .gov. in.
Dividend year |
Date of declaration of dividend |
Due date for transfer to IEPF |
10-11 |
Final dividend dt 12.08.2011 |
12.09.2018 |
11-12 |
Dividend not declared |
Not applicable |
12-13 |
Dividend not declared |
Not applicable |
13-14 |
28.09.2014 |
27.10.2021 |
14-15 |
27.09.2015 |
26.10.2022 |
15-16 |
06.08.2016 |
05.09.2023 |
16-17 |
12.08.2017 |
11.09.2024 |
11 ACKNOWLEDGEMENT
Your directors thank the Company''s customers, vendors and investors for their continued support during the year. Your directors place on record their appreciation for the contribution made by the employees at all levels. Your Company''s consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.
Your directors thank State Bank of India, Karnataka Bank Limited, Canara Bank, Axis Bank Limited and IDBI Bank Limited and the State and Central Government departments for their support, and look forward to their continued support in future.
Salem S. Devarajan
May 27, 2018 Chairman & Managing Director
Mar 31, 2017
The directors have pleasure in presenting the 43rd Annual Report together with the Audited Accounts for the year ended March 31, 2017 (the year).
1 Performance highlights |
2016 - 17 |
2015 - 16 |
Revenue from Operations |
(Rupees in Lakhs) |
|
Direct exports |
381 |
316 |
Merchandise exports |
580 |
3713 |
Domestic Sales |
19736 |
16383 |
Total Yarn and Process Waste Sales |
20697 |
20412 |
Wind Turbine Generator Power sold to third party |
159 |
97 |
Other Revenue |
40 |
33 |
Total Revenue from Operations |
20896 |
20542 |
Profit |
||
Gross profit [Profit before interest, depreciation & Tax] |
3459 |
2331 |
Cash profit [Profit before depreciation & Tax] |
2348 |
1194 |
Profit before tax [PBT] |
1290 |
126 |
Less : Provision for Current Tax |
438 |
45 |
Provision for Deferred Tax |
38 |
39 |
Profit after tax [PAT] |
814 |
42 |
Profit carried from previous year |
12 |
107 |
Profit available for appropriation |
826 |
149 |
APPROPRIATION OF PROFIT : |
||
Transfer to General Reserve |
465 |
35 |
Proposed Dividend on Equity Shares |
170 |
85 |
Tax on proposed equity dividend |
35 |
17 |
Surplus profit carried to Balance Sheet |
156 |
12 |
826 |
149 |
2 DIVIDEND
With a view to maintain the dividend payment track record of the Company, your directors decided to recommend payment of Dividend at 40% for the year, subject to the approval of the bankers of the Company.
3 AUDITORS
As per companies act of 2013, there is requirement for rotation of statutory auditors firm after completion of three years from the expiry of two term of five years each (which expired with audit of FY 13-14 accounts)for the existing statutory auditors firm M.S. Krishnaswami & Rajan. Accordingly a new auditor has to be appointed for the company for audit of accounts for the year FY 17-18 .The new audit firm,M/s.R.Sundarrajan & associates, Chartered Accountants, (firm Reg No 008282S) have confirmed their eligibility and willingness to accept office, if appointed. On the recommendation of the Audit Committee, your Companyâs Board is placing the Resolution u/s 139(2) of the Companyâs Act 2013 for appointing him as the Statutory Auditors of the Company for the current financial year - 2017-18.
4 CAUTIONARY NOTE
Statements in the Boardâs report and the management discussion and analysis describing the Companyâs objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results might differ materially from those expressed in the statement. Important factors that could influence the Companyâs operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other related factors such as litigation and industrial relations.
5 VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has an established vigil mechanism for Directors / Employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of directors/ employees who avail of the mechanism. The Company affirms that no personnel have been denied access to the audit committee. The Company has formulated a Policy on Vigil Mechanism and has established a mechanism that any personnel may raise Reportable Matter after becoming aware of the same. All suspected violations and Reportable Matters are reported to an Independent Director and member of the Audit Committee at his e-mail id [email protected]. The key directions/actions are informed to the Managing Director of the Company.
The Company has adopted Whistle Blower Policy in line with the provisions of Section 177(9) of the Companies Act 2013 which can be accessed on the Companyâs Website under the web link http://[email protected]
6 AUDIT COMMITTEE:
Details of Composition of Audit committee are covered under corporate governance report annexed with this report and forms part of this report. Further, during this year all the recommendations of the Audit committee have been accepted by the Board.
7 REPORTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS
Reports of the Statutory Auditors and the Secretarial Auditors for the year under review are free from any qualification, reservation or adverse remark or disclaimer. Secretarial Audit Report in Form MR-3 is attached, which forms part of this report - refer Annexure VI.
8 EXTRACT OF ANNUAL RETURN
Extract of Annual Return in Form MGT-9 pursuant to Section 92(3) of the Companies Act 2013 is also attached, which forms part of this report - refer Annexure VII.
9 TRANSFER OF UNPAID AND UNCLAIMED DIVIDEND AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND ACCOUNT :
Pursuant to the provisions of section 124 of the Companies Act, 2013, which came in to effect from 07.09.2016 ,the declared dividends which remained unpaid or unclaimed for a period of seven years, has to be transferred by the company to the Investor Education and Protection Fund (IEPF) established by the Central Government. During the year 2016-17, transfer of Unclaimed Dividend of the year 2009-10 was not applicable since the dividend was not declared for the year 09-10.
However shareholders are requested to take note that as per IEPF rules, the company is required to transfer unpaid dividend and underlying shares also in respect of which dividend was not claimed /paid for the year 10-11, to IEPF authority. Shareholders who have not claimed their dividend for the year 10-11 can write to the Company or Registrar and transfer agent M/s Cameo Corporate Services Limited, at âSubramanian Buildingâ, No.1, Club House Road, Chennai - 600 002 who are the Registrars and Share Transfer Agents (RTA) of the Company for further details and for claiming unclaimed dividend lying unpaid. In case no valid claim is received ,the shares in respect of which the dividend are lying unpaid /unclaimed will be transferred to IEPF authority on the due date Further in terms of rule 6(3) of the IEPF rules ,statement containing the details of shareholders who have not claimed dividend for previous years ,and his folio number /DP-ID /client ID is made available on companyâs website www.sambandam.comfor information and necessary action by shareholder .In case , the concerned shareholder wish to claim the shares after transfer to IEPF , an application has to be made to the IEPF authority in form IEPF- 5 online and submit the hard copy of such form IEPF -5 along with necessary documents to the company as prescribed under the rules and the same is available at IEPF website (ie) www.iepf .gov.in.
Dividend year |
Date of declaration of dividend |
Due date for transfer to IEPF |
10-11 |
Interim dividend dt 05.02.2011 |
05.03..2018 |
10-11 |
Final dividend dt 12.08.2011 |
12.09.2018 |
11-12 |
Dividend not declared |
Not applicable |
12-13 |
Dividend not declared |
Not applicable |
13-14 |
28.09.2014 |
27.10.2021 |
14-15 |
27.09.2015 |
26.10.2022 |
15-16 |
06.08.2016 |
05.09.2023 |
10 ACKNOWLEDGEMENT
Your directors thank the Companyâs customers, vendors and investors for their continued support during the year. Your directors place on record their appreciation for the contribution made by the employees at all levels. Your Companyâs consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.
Your directors thank State Bank of India, Karnataka Bank Limited, Canara Bank, Axis Bank Limited and IDBI Bank Limited and the State and Central Government departments for their support, and look forward to their continued support in future.
Salem S. Devarajan
May 6, 2017 Chairman & Managing Director
Mar 31, 2016
The directors have pleasure in presenting the 42nd Annual Report together with the Audited Accounts for the year ended March 31, 2016 (the year).
1 Performance highlights |
2015 - 16 |
2014 - 15 |
(Rupees in Lakhs) |
||
Revenue from Operations |
||
Direct exports .. .. |
316 |
530 |
Merchandise exports .. .. |
3713 |
5227 |
Domestic Sales .. .. |
16383 |
18304 |
Total Yarn and Process Waste Sales |
20412 |
24061 |
Wind Turbine Generator Power sold to third party |
97 |
120 |
Other Revenue .. .. |
33 |
52 |
Total Revenue from Operations |
20542 |
24233 |
Profit |
||
Gross profit [Profit before interest, depreciation & Tax] |
2331 |
2767 |
Cash profit [Profit before depreciation & Tax] |
1194 |
1593 |
Profit before tax [PBT] .. .. |
126 |
508 |
Less : Provision for Current Tax .. .. |
45 |
0 |
Provision for Deferred Tax .. .. |
39 |
163 |
Profit after tax [PAT] .. .. |
42 |
345 |
Profit carried from previous year .. .. |
107 |
85 |
Profit available for appropriation .. .. |
149 |
430 |
APPROPRIATION OF PROFIT : |
||
Transfer to General Reserve .. .. |
35 |
195 |
Adjustment relating to Fixed Assets .. .. |
- |
26 |
Proposed Dividend on Equity Shares .. .. |
85 |
85 |
Tax on proposed equity dividend .. .. |
17 |
17 |
Surplus profit carried to Balance Sheet .. .. |
12 |
107 |
149 |
430 |
2 DIVIDEND
With a view to maintain the dividend payment track record of the Company, your directors decided to recommend payment of Dividend at 20% for the year, same as the previous year, subject to the approval of the bankers of the Company.
3 MANAGEMENT DISCUSSION AND ANALYSIS
Core business of the company is manufacture and sale of cotton yarn. The management discussion and analysis given below discusses the key issues of the Industry with specific reference to the cotton yarn spinning sector.
a) INDUSTRY PERFORMANCE
The year 2015-16 has been a year of major challenges faced by the spinning industry, which faced almost year long downtrend in Selling prices, coupled with wide fluctuations in cotton prices. The power situation was also bad in the first few months but got stabilized in the subsequent period. Market demand for yarn was also continuously subdued which forced many units to reduce the working days and lower their production for export orders from global retail giants. On the other hand, the marketing challenges are forcing established players to move away from traditional market to develop new markets where the quality, efficiency and productivity play a major part. In addition, those with latest sophisticated machinery have an edge, as they could shift between various products within a short production cycle time. The major challenge for the leading players is to be prepared for adapting to changes in the market and cater to smaller market lots and shorter cycle time of order to cash. This required rearrangement of their existing production facilities to adapt to market dynamics and improve their capability to cater to wider variety of markets.
Since Spinning is feeder industry to weaving and knitting sectors, its fortunes mainly depend upon the dynamics of those sectors. The weakest link in the Indian Industry has been weaving, knitting and finishing as compared to global leaders such as China, Italy, Germany and Turkey. Even the developing countries like Indonesia, Vietnam and Philippines have become our competitors due to lot of subsidies available in their respective countries. To strengthen the spinning, weaving and knitting sectors, a major thrust has been exerted by the consolidated efforts of the Indian Textile Machinery Manufactures Association, end users and the Government to undertake a moons hot and come up with alternative technologies suited to Indian textile environment affordable to these sector. This should be feasible in the coming years, if dedicated efforts are undertaken with the financial support for R & D by the Government through its various schemes, such as Textile Modernization Fund and ''Make-In-India'' campaigns. This will naturally have a cascading effect on the spinning sector, which feed the weaving and knitting sectors.
b) COMPANY''S PERFORMANCE
(i) During the year under review, your Company''s turnover reduced to Rs.205.92 crores as against Rs.243.20 crores recorded in the previous year mainly due to subdued market conditions. Your Company''s performance was adversely affected due to steep fall in the price of yarn both in the export market and domestic market. Export orders were much lower coupled with uneconomic price due to competition from other developing countries like Indonesia, Vietnam, Bangladesh and Philippines. In order to cope-up with the market conditions, production was reduced and several cost reduction measures were adopted by the Company such as tie-up with Private Power Producers to get the required power at a price lesser than the TANGEDCO Power, securing dedicated power supply from EB Substation to all the three units of the Company and minimum use of diesel Gensets, supported by your Company''s Wind Turbine generated power. These measures helped to achieve improved level of plant utilization to maintain production and quality of the product and achieve reasonable profit after tax of Rs.42 lakhs as against Rs.345 lakhs recorded in the previous year.
(ii) Your Company''s Wind Turbine Generators (WTGs) recorded generation of electric power of the value of Rs.860 lakhs during the year (Rs.920 lakhs in 2014-15). Loss of Rs.595 lakhs in wind power generation during the year under review (as against Rs.1455 lakhs recorded during the year 201213) was on account of TANGEDCO imposing back-outing (not allowing full generation and not accounting fully the Wind Turbine generated power) during the high wind season which resulted in loss of possible generation of about 110 lakh units during the year.
(iii) Even though Bank interest rates remained high during the year, Management''s conscious decision to exercise strict control on inventory levels helped to reduce the working capital requirement resulting in considerable saving up to Rs.37.31 lakhs in the finance cost during the year.
c) OUTLOOK FOR 2016-17
Industry expects improvement during the current financial year as cotton prices are stabilizing and yarn prices have started improving from the first quarter of the financial year 2016-17. Considering the present market demand for products like Viscose, Modal, Linen Fiber and value added products like Gassed and Mercerized Yarn, your Company has planned to produce these new products in addition to the existing products Viz., Combed, Carded and Compact Yarn. The Company also started converting its yarn into fabric as a measure of value addition.
During the year 2016-17, power generated by the Company''s Wind Turbine Generators are expected to be fully fed through its Grid by TANGEDCO (without back-out) which would result in securing full benefit of the Company''s Wind Turbine Generators. In order to gain maximum benefit from the Wind Turbine generated power and the group captive power purchased from private power producers even during the power cut and load shedding period, dedicated feeder line connection from the E.B substation to all the three units of your Company has been secured. This will ensure uninterrupted power supply to the spinning mills of your company which will reduce the dependence on diesel generated power and also maximize production throughout the day. Further, life of the electrical components could be enhanced due to avoidance of down time during frequent power cuts and thereby quality of the product could be maintained / improved further. As part of future plans, the deferred expansion project at Unit III will be taken up for implementation, at the appropriate time.
d) RISKS AND CONCERNS
Your Company has devised risk management policy which involves identification of the risks associated with the business risks as well as the financial risks, its evaluation, monitoring, reporting and mitigation measures. Audit Committee and the Board of Directors of the Company periodically review the risk management policy of the Company so that the management controls the risk through properly defined network. Heads of departments are responsible for implementation of the risk management system as may be applicable to their respective areas of functioning and report to the Board and the Audit Committee. Details of the risk management mechanism and key risks faced by the Company are enumerated in the risk management policy.
Risk Management Policy adopted pursuant to the provisions of Section 134 (3) (n) of the Companies Act 2013 is hosted on the website of the Company under the web link http://[email protected]
e) ENVIRONMENT PROTECTION, HEALTH AND SAFETY (EHS)
EHS continues to receive the highest priority in all operational and functional areas at all locations of your Company. Systematic process safety analysis, audits, periodic safety inspections are carried out by expert agencies and suitable control measures adopted for ensuring safe operations at the site. Various processes as required for Pollution Control and Environmental Protection are strictly adhered to.
f) INTERNAL CONTROL AND SYSTEMS
Your company has in place well established internal control procedures covering various areas such as procurement of raw materials, production planning, quality control, maintenance planning, marketing, cost control and debt servicing. Steps are taken without loss of time, whenever any weakness is observed, to correct the same.
Your Company is certified ISO 9001, ISO14001 and OHSAS18001 for the systems. Further, your Company''s laboratory is also certified by NABL.
g) HUMAN RESOURCES MANAGEMENT
Employees are your Company''s most valuable resource. Your Company continues to create a favourable environment at work place. Your Company has formulated and implemented various welfare measures for the employees. The Company also recognizes the importance of training and consequently deputes its work force in various work related courses/seminars including important issues like Total Quality Management (TQM), behavioral skills, soft skills, etc. Because of these labour welfare and improvement measures, your Company is able to attract and retain well trained and dedicated workforce.
The fact that relationship with the employees continues to be cordial is testimony to the Company''s ability to retain high quality workforce. In view of the aforesaid relationship no man days were lost during the year under report.
h) DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Work place (Prevention, Prohibition and Redressal) Act 2013. Management of the Company has set up an Internal Complaints Committee (ICC) to redress any complaint received regarding sexual harassment. All the employees of the Company are covered under this policy. Out of 773 permanent employees on the rolls of the Company, 146 are women and 627 are men. No complaint on sexual harassment has been received from any employee during the year and no complaint is pending at the end of the year.
.i.) COST AUDIT
In accordance with the provisions of the Companies Act 2013 and the Rules framed there under, Cost Audit for the Company was not applicable for the year 2014-15. However, it is applicable for the financial year commencing from 1st April 2015. On the recommendation of the Audit Committee, Board of Directors of the Company approved the appointment of M/s. S.MAHADEVAN & CO., Cost Accountants, Chennai, for audit of Cost Accounts of the Company for the years 2015-16 and 2016-17and the resolution for ratification of the remuneration payable to the Cost Auditor for the year 201617 will be placed before the members for their ratification at the 42nd Annual General Meeting of the Company scheduled to be held on 6.8.2016.
In view of the Company maintaining the cost records continuously and in order to provide the comparable audited figures for the year 2014-15 in the Cost Audit Report for the year 2015-16, your directors decided to continue the Cost Audit for the year 2014-15 on a voluntary basis. The Cost Auditor will submit to the Board of Directors his report for the year 2015-16 after duly certifying the cost records. Cost Audit Report for the year 2015-16 will be submitted in XBRL format well before the due date.
j) BOARD MEETINGS :
During the year under review five board meetings were held and the intervening gap between any two board meetings did not exceed 120 days. Dates of the board meetings and details of directors'' attendance at the meetings are furnished in the Corporate Governance report at Annexure - VI.
k) DIRECTORS
At the 40th Annual General Meeting of the Company held on 28.9.2014 members had appointed Sri P.S.Ananthanarayanan, Dr.V.Gopalan, Sri N.Asoka, Sri S.Gnanasekharan and Sri Kameshwar M Bhat, as Independent Directors of the Company for a term of five consecutive years from the date of that AGM till the conclusion of the 45th AGM of the Company. Since all the five Independent Directors are not liable to retire by rotation, out of the remaining five non-independent directors, Sri S.Dinakaran opted to retire by rotation at the ensuing 42nd Annual General Meeting. However, he is eligible for reappointment by members at the 42nd AGM of the Company.
The Chairman and Managing Director (CMD) and the two Joint Managing Directors (JMDs) were appointed by members at the 41st AGM of the Company held on 27.9.2015 for a term of 3 years from 1.10.2015 to 30.09.2018 in accordance with the recommendation of the Nomination and Remuneration Committee and the Board of Directors of the Company and the revised (increased) remuneration payable to them during that period was also approved by members by passing Special Resolution at the 41st AGM. However, the CMD and the two JMDs have not availed the increased remuneration till 31.3.2016 in view of the Company''s sub-due performance.
l) DIRECTORS'' RESPONSIBILITY STATEMENT AS PER SECTION 134(5) OF THE COMPANIES ACT, 2013
Pursuant to the requirement of Section 134(5) of the Act, and based on the representations received from the management, the directors hereby confirm that:
i. in the preparation of the annual accounts for the financial year 2015-16, the applicable accounting standards have been followed and there are no material departures;
ii. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year;
iii. they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Act. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. they have prepared the annual accounts on a going concern basis;
v. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating properly; and
vi. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
m) SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under view no significant material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and the operations of the Company.
n) PARTICULARS OF EMPLOYEES - information pursuant to Rule 5 (2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
None of the employees or directors of the Company has drawn remuneration exceeding Rs.5 lakhs per month or Rs.60 lakhs per annum during the year.
o) BOARD EVALUATION
Board of Directors carried out annual evaluation of its own performance and that of the Committees and the individual directors pursuant to the provisions of Section 134(3)(p) of the Companies Act 2013, and the corporate Governance requirements prescribed in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015. Performance of the Board was evaluated after seeking input from the Directors on the basis of the criteria such as the Board Composition, effectiveness of board process, information flow and functioning of the Board. Performance of the Committees was evaluated by the Board after seeking inputs from the Committee Members on the basis of the criteria such as composition of the Committees, effectiveness of the Committee meetings, etc. and it was observed that the performance of the Board as well as the Committees was adequate.
Performance of the non-independent Directors were evaluated by the Independent directors at the meeting of the Independent directors on the basis of six criteria, viz. attendance and participation; Qualification, knowledge, skill and enterprise; updating of skill and knowledge; individual contribution; adherence to Company''s policies and procedures and benefits derived by the Company. On the basis of the above criteria performance of all the non-independent directors were found to be adequate. As regards the performance of the Chairman & Managing Director, after taking into consideration the views of the Executive Directors and the non-executive directors the Independent Directors were of the unanimous view that the Chairman & Managing Director is not only well informed and knowledgeable about the Industry but also has the requisite experience to execute his duties as Chairman and Chief Executive of the Company. His insight and forward looking policies have elevated the status of the Company in the eyes of the stakeholders and the wholesome performance of the Company is in his safe hands and the future of the Company is bright.
Board''s evaluation of the independent directors was recorded by the entire board excluding the director being evaluated.
p) FAMILIARIZATION PROGRAMME OF THE INDEPENDENT DIRECTORS
Periodic presentations are made by Senior Management and Internal Auditors at the Board meetings and Committee meetings on the business and performance updates of the Company, global business environment, business risks and its mitigation strategy, impact of regulatory changes on strategy etc. Updates on relevant statutory changes encompassing important laws are regularly intimated to all the Directors including the Independent Directors.
q) DEPOSITS
Following are the details of deposits covered under Chapter V of the Companies Act 2013 :
i. Deposits Accepted from shareholders during the year (2015-16) : Rs. 303.65 lakhs
ii. Deposits remaining unpaid or unclaimed as at the end of the year : NIL
iii. Any default in repayment of deposits or payment of interest thereon during the year : NIL
iv. Total Deposits outstanding at the end of the year - - : Rs. 516.70 lakhs Company has duly complied with the provisions of Section 73 of the Companies Act, 2013 read with relevant rules with respect to fixed deposits.
r) INDUSTRY ASSOCIATIONS
Sri S.Dinakaran, Joint Managing Director of the Company is a member of the Committee of Administration and Chairman of the Yarn Committee of the Cotton Textiles Export Promotion Council (TEXPROCIL), Mumbai and the Confederation of Indian Textile Industry (CITI), Delhi. By virtue of the offices he holds, Sri Dinakaran has been representing to the Industries and Finance Ministries at the appropriate time to get relief to the ailing Textile Industry.
s) REPORT ON PERFORMANCE OF THE ASSOCIATE COMPANIES :
There are two associate Companies -
SPMM Health Care Services Pvt. Ltd. - 49.75% investment in the share capital
This Company has recorded total revenue of Rs.3,18,59,942 and profit after tax (PAT) of Rs.47,29,843 during the year ended 31.3.2016 as against Rs.3,92,43,571 Revenue and Rs.43,63,920 PAT recorded in the previous year.
Salem IVF Centre Pvt. Ltd. - 34.70% investment in the share capital of that Company.
This Company incorporated on 17th November 2014 has recorded total revenue of Rs.1,81,97,704 and Loss of Rs.93,31,265 during the second year (first full year) of its operations as against the revenue of Rs.22,47,925 and loss of Rs45,00,915 recorded in the Previous Year (Period from 17.11.2014 to 31.3.2016).
t) CHANGES OR COMMITMENTS AFTER THE YEAR END ON 31.3.2016
No material change or commitment affecting the financial position of the Company has occurred between the close of the financial year on 31.3.2016 and the date of this report.
Information pursuant to section 197 (12) of the Act read with Rule 5(1) & 5(2) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 :
(i) Ratio of the remuneration of each Director, Company Secretary, Chief Financial Officer and Chief Technical Officer to the median remuneration of the employees of the Company; AND
(ii) Percentage increase in their remuneration in 2015-16 as compared to the previous year (2014-15): (Median Remuneration : Rs.62,260 in 2015-16)
Name of whole-time Directors and KMP |
Remuneration in 2015-16 Rs. lakhs |
Remuneration in 2014-15 Rs. lakhs |
% increase in 2015-16 Remn. |
Ratio to Median Remn. |
Ratio of 2015-16 Remuneration to |
|
Revenue |
Net Profit |
|||||
Mr.S.Devarajan, CMD |
36.00 |
36.00 |
NIL |
57.82 |
0.17 % |
86.62 % |
Mr.S.Jegarajan, JMD |
30.00 |
30.00 |
NIL |
48.19 |
0.15 % |
72.18 % |
Mr.S.Dinakaran, JMD |
6.00 |
6.00 |
NIL |
9.64 |
0.03 % |
14.44 % |
Mr.R.S.Shanmugam Company Secretary |
6.60 |
6.50 |
1.54 |
10.60 |
0.03 % |
15.88 % |
Mr. D.Niranjan Kumar, CFO |
18.00 |
18.00 |
NIL |
28.91 |
0.09 % |
43.31 % |
Mr.J.Sakthivel - CTO |
18.00 |
18.00 |
NIL |
28.91 |
0.09 % |
43.31 % |
Name of Non-executive Directors |
# Remuneration in 2015-16 Rs. lakhs |
# Remuneration in 2014-15 Rs. lakhs |
% increase / (% decrease) in 2015-16 Remuneration |
Ratio to Median Remuneration in 2015-16 |
Mr.D.Sudharsan, |
- 0.75 |
0.80 |
(6.25 %) |
1.20 |
Smt.S.Abirami |
- 0.75 |
0.151 |
N.A |
1.20 |
Name of Independent Directors |
# Remuneration in 2015-16 Rs. lakhs |
# Remuneration in 2014-15 Rs. lakhs |
% increase / (% decrease) in 2015-16 Remuneration |
Ratio to Median Remuneration in 2015-16 |
Mr.P.S.Ananthanarayanan |
2.65 |
2.70 |
(1.85%) |
4.26 |
Dr. V.Gopalan |
2.65 |
2.70 |
(1.85%) |
4.26 |
Mr.N.Asoka |
2.65 |
2.15 |
23.26% |
4.26 |
Mr.S.Gnanasekharan |
2.50 |
2.45 |
2.04% |
4.02 |
Mr.Kameshwar M Bhat |
2.50 |
0.55* |
N.A |
4.02 |
# Only sitting fees is payable to Non-executive and Independent Directors for the meetings of the Committee or of the Board attended by them.
(iv) Number of permanent employees on the rolls of the Company : 773
(v) Explanation on the relationship between average increase in the remuneration of the employees and Key Managerial Personnel (KMP) as against the Company performance is not applicable due to above reference (iii) (a).
(vi) No employee of the Company is in receipt of remuneration in excess of the highest paid remuneration of the director during the year.
(vii) Variations in the Market Capitalization & Price Earnings Ratio as at the close of the Financial Year on 31.3.2015 and 31.3.2016 and percentage increase or decrease in the market quotation of the shares :
Paid-up Capital : Rs.4,26,46,000 - 42,64,600 equity shares of Rs.10 each fully paid-up Equity shares of the Company are listed in the Bombay Stock Exchange (BSE)
Equity shares were listed only after the last public issue in 1995.
As such no market quotation at the time of last public issue of the Company''s shares.
Issue price of the equity share in 1995 was rupees fifty including premium of rupees forty per share
Year end date |
Closing market Price per share |
Earnings Per Share |
Price Earnings Ratio |
Market Capitalization (Rupees lakhs) |
31.3.2015 |
Rs.59.90 |
Rs.8.10 |
7.40 |
2554.49 |
31.3.2016 |
Rs.66.50 |
Rs.0.97 |
68.56 |
2835.96 |
Variation % |
11.02 % |
(88.02%) |
826 % |
11.02 % |
(viii) No variable component of the remuneration availed by any director.
(ix) Remuneration payable to the Directors is as per the Remuneration Policy of the Company
23 AUDITORS
Auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants, retire at the ensuing annual general meeting and they have confirmed their eligibility and willingness to accept office, if reappointed. On the recommendation of the Audit Committee your Company''s Board is placing the Resolution u/s 139(2) of the Company''s Act 2013 for appointing him as the Statutory Auditors of the Company for the current financial year - 2016-17.
24 CAUTIONARY NOTE
Statements in the Board''s report and the management discussion and analysis describing the Company''s objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results might differ materially from those expressed in the statement. Important factors that could influence the Company''s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other related factors such as litigation and industrial relations.
25 VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has an established vigil mechanism for Directors / Employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of directors/ employees who avail of the mechanism. The Company affirms that no personnel have been denied access to the audit committee. The Company has formulated a Policy on Vigil Mechanism and has established a mechanism that any personnel may raise Reportable Matter after becoming aware of the same. All suspected violations and Reportable Matters are reported to an Independent Director and member of the Audit Committee at his e-mail id [email protected]. The key directions/actions are informed to the Managing Director of the Company.
The Company has adopted Whistle Blower Policy in line with the provisions of Section 177(9) of the Companies Act 2013 which can be accessed on the Company''s Website under the web link http://[email protected]
26 REPORTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS
Reports of the Statutory Auditors and the Secretarial Auditors for the year under review are free from any qualification, reservation or adverse remark or disclaimer. Secretarial Audit Report in Form MR-3 is attached, which forms part of this report - refer Annexure VII.
27 EXTRACT OF ANNUAL RETURN
Extract of Annual Return in Form MGT-9 pursuant to Section 92(3) of the Companies Act 2013 is also attached, which forms part of this report - refer Annexure VIII.
28 ACKNOWLEDGEMENT
Your directors thank the Company''s customers, vendors and investors for their continued support during the year. Your directors place on record their appreciation for the contribution made by the employees at all levels. Your Company''s consistent growth has been made possible by the hard work, solidarity, cooperation and support of the management team.
Your directors thank State Bank of India, Karnataka Bank Limited, Canara Bank, Axis Bank Limited and IDBI Bank Limited and the State and Central Government departments for their support, and look forward to their continued support in future.
Salem D.Niranjan Kumar R S.Shanmugam S.Dinakaran S. Devarajan
May 21, 2016 Chief Financial Officer Company Secretary Joint Managing Director Chairman
& Managing Director
Mar 31, 2015
Dear Members,
The directors have pleasure in presenting the 41st Annual Report
together with the Audited Accounts for the year ended March 31, 2015
(the year).
Performance highlights
2014-15 2013-14
(Rs. lakhs)
Revenue from Operations
Direct exports .. .. .. 530 600
Merchandise exports .. .. .. 5227 5955
Domestic Sales .. .. .. 18304 18848
Total Yarn and Process Waste Sales 24061 25403
Wind Energy Converter Power
sold to third party 120 136
Other Revenue .. .. .. 52 57
Total Revenue from Operations 24233 25596
Profit
Gross profit [Profit before
interest, depreciation & Tax] 2767 3878
Cash profit [Profit before
depreciation & Tax] 1593 2521
Profit before Exceptional item and Tax 508 1407
Exceptional item - Provision
for diminution in investment - 45
Profit before tax [PBT] .. .. .. .. 508 1362
Less: Provision for tax (deferred tax) 163 425
Profit after tax [PAT] .. .. .. .. 345 937
Profit (loss) carried from
previous year .. .. 85 (452)
Profit available for appropriation 430 485
APPROPRIATION OF PROFIT :
Transfer to General Reserve .. .. .. 195 300
Adjustment relating to Fixed Assets .... 26 -
Proposed Dividend on Equity Shares .. .. 85 85
Taxon proposed equity dividend .. .. 17 15
Surplus profit carried to
Balance Sheet .. .. 107 85
DIVIDEND
Your directors have recommended 20% dividend for the year ended
31.3.2015, subject to the approval of the Consortium of Bankers of the
Company.
LISTING OF SHARES
Your Company's shares are listed presently in Bombay Stock Exchange
Limited. During the year under review, your Company's shares had been
de-listed from the Madras Stock Exchange Limited due to voluntary
closure of the operations of that Exchange.
DEMATERIALISATION OF EQUITY SHARES
As on 31.03.2015, 39,00,694 Equity Shares of rupees ten each - fully
paid up were held in Electronic (Demat) Form, which constituted 91.47%
of total shareholding.
FIXED DEPOSITS
The Company has not invited or accepted any Deposit from the public
during the year under review. All the deposits (except the deposits
from the Directors of the Company) outstanding as on 1.4.2014
(Rs.361.71 lakhs from Public and Rs.Rs.225.40 lakhs from shareholders)
were duly repaid by 31.3.2015 in due compliance with the provisions of
Section 74(1 )(b) of the Companies Act 2013. After passing a resolution
u/s 73 of the Companies Act 2013 at the last Annual General Meeting of
the Company held on 28.9.2014 and after complying with all the
procedural requirements for accepting deposits from Members, Company
accepted fresh deposits from members amounting to Rs.169.55 lakhs in
March 2015.
(a) Deposits from Members Accepted during the year - - Rs. 169.55 lakhs
*
(b) Deposits remaining unpaid or unclaimed as at the end of the year
NIL
(c) Whether there has been any default in repayment of deposits } or
payment of interest thereon during the year and if so, } NIL number of
such cases and the total amount involved: }
i. at the beginning of the year - NIL
ii. maximum during the year - NIL
iii. at the end of the year - NIL
(d) Details of deposits which are not in compliance with the NIL
requirements of Chapter V of the Act
* Rs. 169.55 lakhs represents the deposits accepted from the Members of
the Company in accordance with the circular Inviting deposits from
members (Form DPT-1 approved at the Board Meeting held on 6.2.2015 and
filed with the Registrar of Companies on 10.2.2015). The Circular can
be viewed on the Company's Website under the web link
http://[email protected]
LOANS, GUARANTEES AND INVESTMENTS
The Company has not given any loan or guarntee to any one. Details of
Investments made are given in the notes to the financial statements (
Note No.1.13)
Particulars of employees - information pursuant to Rule 5 (2)
None of the employees or directors of the Company has drawn
remuneration exceeding Rs.5 lakhs per month or Rs.60 lakhs per annum
during the year.
COST AUDIT
In accordance with the provisions of the Companies Act 2013 and the
Rules framed there under, Cost Audit for the Company was not applicable
for the year 2014-15. However, it is applicable for the financial year
commencing from 1st April 2015. On the recommendation of the Audit
Committee, Board of Directors of the Company approved the appointment
of M/s. S.MAHADEVAN & CO., Cost Accountants, Chennai, for audit of Cost
Accounts of the Company for the year 2015-16 and the resolution for
ratification of the remuneration payable to the Cost Auditor will be
placed before the members for their ratification at the 41st Annual
General Meeting of the Company scheduled to be held on 27.9.2015.
Cost Audit Report for the year 2013-14 was submitted on 18.9.2014 to
the Ministry of Corporate Affairs (MCA's Acknowledgement vide SRN :
S31245186 dated 18.9.2014). Due date for submission of that Cost Audit
Report in XBRL format was 27.9.2014.
In view of the Company maintaining the cost records continuously and in
order to provide the comparable audited figures for the year 2014-15 in
the Cost Audit Report for the year 2015-16, your directors decided to
continue the Cost Audit for the year 2014-15 on a voluntary basis. The
Cost Auditor has submitted to the Board of Directors his report for the
year 2014-15 after duly certifying the cost records.
Directors
At the 40th Annual General Meeting (AGM)of the Company held on
28.9.2014 members appointed Sri Kameshwar M. Bhat, Sri
P.S.Ananthanarayanan, Dr.V.Gopalan, Sri N.Asoka and Sri S.Gnanasekharan
as Independent Directors of the Company for a term of five consecutive
years from the date of that AGM till the conclusion of the 45th AGM of
the Company. At the same AGM, Smt. S.Abirami and Sri A.R.Annamalai were
appointed as Non-Executive and Non-Independent Directors liable to
retire by rotation and all the directors accepted their appointment as
on that date. However, Sri A.R.Annamalai resigned from the Board on
19th March 2015 for personal reasons. Board of Directors of the
Company while recording its appreciation for the valuable services
rendered to the Company by Sri Annamalai during the tenure of his
office, decided not to fill the vacancy caused by his resignation.
Company's Code of Conduct applicable to the board has been adopted by
the board and all the directors of the Company have confirmed
compliance with the Code of Conduct.
Since all the five Independent Directors are not liable to retire by
rotation, out of the remaining five non-independent directors, Sri
S.Jegarajan opted to retire by rotation. However, he is eligible for
reappointment by members at the 41st AGM of the Company.
The present term of the Chairman and Managing Director and the two
Joint Managing Directors will conclude on 30th September 2015. On the
Recommendation of the Nomination and Remuneration Committee, Board of
Directors have decided to reappoint all the three whole time directors
for a further term of three years from 1.10.2015, subject to the
approval of the members. Requisite resolutions for reappointment of the
three whole time directors are included in the Notice of the ensuing
AGM of the Company.
BOARD MEETINGS :
During the year under review six board meetings were held and the
intervening gap between any two board meetings did not exceed 120 days.
Dates of the board meetings and details of directors' attendance at
the meetings are furnished in the Corporate Governance report at
Annexure -VI.
DIRECTOR'S RESPONSIBILITY STATEMENT:
In pursuance of section 134 (5) of the Companies Act, 2013, the
Directors hereby confirm that:
The Financial Statements have been prepared in all material respects in
conformity with the applicable Accounting Standards in a consistent
manner, supported by reasonable and prudent judgments and estimates
along with proper explanation relating to material departures; The
directors believe that the financial statements reflect true and fair
view of the financial position as on 31.3.2015 and of the result of
operations for the year ended 31.3.2015.
The Financial Statements have been audited by M/s M.S.Krishnaswami &
Rajan, Chartered Accountants in accordance with generally accepted
auditing standards, which include an assessment of the system of
internal controls and tests of transactions to the extent considered
necessary by them to support their opinion. There is no qualification
or adverse remarks in the Independent Auditors' Report. Similarly in
the Secretarial Auditors' Report u/s 204 of the Act (Annexure IV)
there is no qualification or adverse remarks.
Maintenance of Accounting Records and Internal Controls
The directors had taken proper and sufficient care for maintenance of
adequate accounting records as required by various Statutes. Directors
have overall responsibility for the Company's internal control
system, which is designed to provide a reasonable assurance for
safeguarding of assets, reliability of financial records and for
preventing and detecting fraud and other irregularities. Directors had
laid down internal financial controls to be followed by the Company and
that such controls were adequate and operating effectively.
The internal audit function encompasses the examination and evaluation
of the adequacy and effectiveness of the system of internal control and
quality of performance in carrying out assigned responsibilities.
Internal Audit Department interacts with all levels of management and
the Statutory Auditors and reports significant issues to the Audit
Committee of the Board.
Audit Committee supervises the financial reporting process through
review of accounting and reporting practices, financial and accounting
controls and financial statements. Audit Committee also periodically
interacts with internal and statutory auditors to ensure quality and
veracity of the Company's accounts.
Internal Auditors, Audit Committee and Statutory Auditors have full and
free access to all the information and records as considered necessary
to carry out their responsibilities. All the issues raised by them have
been suitably acted upon and followed up.
GOING CONCERN STATUS
The directors had prepared the annual accounts on a going concern
basis. In the opinion of the Directors, Company will be in a position
to carry on its existing spinning of yarn business.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under view no significant material orders were passed
by the Regulators or Courts or Tribunals impacting the going concern
status and the operations of the Company.
COMPLIANCE WITH THE PROVISIONS OF APPLICABLE LAWS
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.
BOARD EVALUATION
Board of Directors carried out annual evaluation of its own
performance, that of the Committees and the individual directors
pursuant to the provisions of Section 134 (3) (p) of the Companies Act
2013, and the corporate Governance requirement as prescribed by the
Securities and Exchange Board of India (SEBI) under clause 49 of the
Listing Agreement. Performance of the Board was evaluated after seeking
input from the Directors on the basis of the criteria such as the Board
Composition, effectiveness of board process, information flow and
functioning of the Board. Performance of the Committees was evaluated
by the Board after seeking inputs from the Committee Members on the
basis of the criteria such as composition of the Committees,
effectiveness of the Committee meetings, etc. and it was observed that
the performance of the Board as well as the Committees was adequate.
Performance of the non-independent Directors were evaluated by the
Independent directors at the meeting of the Independent directors on
the basis of four criteria, viz. attendance, participation, individual
contribution and benefits derived by the Company.
On the basis of the above criteria performance of all the
non-independent directors were found to be adequate. As regards the
performance of the Chairman & Managing Director, after taking into
consideration the views of the Executive Directors and the
non-executive directors, the Independent Directors were of the
unanimous view that the Chairman & Managing Director is not only well
informed and knowledgeable about the Industry but also has the
requisite experience to execute his duties as Chairman and Chief
Executive of the Company. His insight and forward looking policies have
elevated the status of the Company in the eyes of the stakeholders and
the wholesome performance of the Company is in his safe hands and the
future of the Company is bright.
Board's evaluation of the independent directors was recorded by the
entire board excluding the director being evaluated and the following
is the board's observation on the performance of each one of the
independent directors.
Mr.P.S.ANANTHANARAYANAN
Board assessed that Mr.P.S.Ananthanarayanan has been an Independent
Director of the Company from 10.10.1995. Presently he is the Chairman
of the Audit Committee and also Chairman of the Nomination and
Remuneration Committee and his contribution has been quite significant
for the Company's growth and performance. He having served several
companies in senior position with three decades of experience in the
field of Cost Control and Planning has been guiding the Company in
effective utilization of the Company's resources.
Dr.V.GOPALAN
Board assessed that Dr.V.Gopalan has been an Independent Director of
the Company from 19.1.2004. He is a member of the Audit Committee and
the Nomination and Remuneration Committee. With his experience in ICICI
in Financial Appraisal of the Companies' projects for several years,
coupled with his triple membership (CA, CS & CMA) he has been
participating at all the Board and Committee meetings very actively.
Mr.N.ASOKA
Board assessed that Mr.N.Asoka has been an Independent Director of the
Company from 30.05.2003. He is the Chairman of the Stakeholders
Relationship Committee and member of the Audit Committee and the
Nomination and Remuneration Committee. Being an Engineering graduate
with industrial experience spanning over two decades he has been
guiding the Company's future plans effectively.
Mr.S.GNANASEKHARAN
Board assessed that Mr.S.Gnanasekharan has been an Independent Director
of the Company from 14.02.2014. With his experience in Accounts and
Corporate Finance in India Cements for over two decades he has been
participating in the Audit Committee Meetings and Board Meetings
effectively.
Mr.KAMESHWAR M. BHAT
Board assessed that Mr.Kameshwar M.Bhat joined the Company as an
Independent Director on 28th September 2014 and with his experience in
the Banking, Financial Services and Retail Operations spanning over two
decades, his participation in the Audit Committee and Board Meetings
has been quite effective.
INDUSTRY ASSOCIATIONS
Sri S.Dinakaran, Joint Managing Director of the Company is a member of
the Committee of Administration and Chairman of the Yarn Committee of
the Cotton Textiles Export Promotion Council (TEXPROCIL), Mumbai and
the Confederation of Indian Textile Industry (CITI), Delhi. By virtue
of the offices he holds, Sri Dinakaran has been representing to the
Industries and Finance Ministries at the appropriate time to get relief
to the ailing Textile Industry.
REPORT ON PERFORMANCE OF THE ASSOCIATE COMPANIES :
There are two Associate Companies -
SPMM Health Care Services Pvt. Ltd. - 49.75% investment in the share
capital of that Company.
This Company has recorded total revenue of Rs.3,92,43,571 and profit
after tax (PAT) of Rs.43,63,920 during the year ended 31.3.2015 as
against Rs.3,85,73,790 Revenue and Rs.9,89,354 PAT recorded in the
previous year.
Salem IVF Centre Pvt. Ltd. - 21.79% investment in the share capital of
that Company.
This Company incorporated on 17th November 2014 has recorded total
revenue of Rs.22,47,925 and Loss of Rs.45,00,915 during the first year
of its operations (Period from 17.11.2014 to 31.3.2015)
AUDITORS
Auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants, retire
at the ensuing annual general meeting and they have confirmed their
eligibility and willingness to accept office, if re- appointed. On the
recommendation of the Audit Committee your Company's Board is placing
the Resolution u/s 139(2) of the Company's Act 2013 for appointing
them as Statutory Auditors of the Company for the current financial
year.
CAUTIONARY NOTE
Statements in the Directors' report and the management discussion and
analysis describing the Company's objectives, expectations or
predictions may be forward looking within the meaning of applicable
securities laws and regulations. Actual results might differ materially
from those expressed in the statement. Important factors that could
influence the Company's operations include global and domestic demand
and supply conditions affecting selling prices of finished goods, input
availability and prices, changes in government regulations, tax laws,
economic developments within the country and other related factors such
as litigation and industrial relations.
1. Names of Associates or Joint Ventures which are yet to Commence
Operations : NIL
2. Names of Associates or Joint Ventures which have been liquidated or
Sold during the year : NIL
3. The Company does not have any Joint Venture .
Salem D.Niranjan kumar R.S.Shanmugam S.Dinakaran S.Devarajan
May 28, 2015 C.F.O Company Secretary J.M.D C.M.D
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has an established vigil mechanism for Directors /
Employees to report concerns about unethical behaviour, actual or
suspected fraud, or violation of the code of conduct or ethics policy.
It also provides for adequate safeguards against victimization of
directors/ employees who avail of the mechanism. The Company has
adopted Whistle Blower Policy in line with the provisions of Section
177(9) of the Companies Act 2013 which can be accessed on the
Company's Website under the web link
http://[email protected]
RISK MANAGEMENT
Periodic assessments to identify the risk areas are carried out and
management is briefed on the risks in advance to enable the Company to
control risk through a properly defined plan. The risks are classified
as financial risks, operational risks and market risks. The risks are
taken into account while preparing the annual business plan for the
year. The Board is also periodically informed of the business risks and
the action taken to manage them.
Risk Management Policy adopted pursuant to the provisions of Section
134 (3) (n) of the Companies Act 2013 is hosted on the website of the
Company under the web link http://[email protected]
CHANGES OR COMMITMENTS AFTER THE YEAR END ON 31.3.2015
No material change or commitment affecting the financial position of
the Company has occurred between the close of the financial year on
31.3.2015 and the date of this report.
REPORTS OF STATUTORY AUDITORS AND SECRETARIAL AUDITORS
Reports of the Statutory Auditors and the Secretarial Auditors for the
year under review are free from any qualification or adverse remarks.
ACKNOWLEDGEMENTS
Your directors thank the Company's customers, vendors and investors
for their continued support during the year. Your directors place on
record their appreciation for the contribution made by the employees at
all levels. Your Company's consistent growth has been made possible
by the hard work, solidarity, cooperation and support of the management
team.
Your directors thank State Bank of India, Karnataka Bank Limited,
Canara Bank, Axis Bank Limited, Indian Overseas Bank, Central Bank of
India and IDBI Bank Limited, Government of Tamil Nadu and other
government agencies for their support, and look forward to their
continued support in future.
For and on behalf of the Board
Salem S. Devarajan
August 12, 2015 Chairman and Managing Director
Mar 31, 2014
Dear Members,
The directors have pleasure in presenting the 40th Annual Report
together with the Audited Accounts for the year ended March 31,2014
(the year).
Performance highlights
2013-14 2012-13
(Rs. lakhs)
Revenue from Operations
Direct exports 600 627
Merchandise exports 5955 3097
Domestic Sales 18848 17765
Total Yarn and Process Waste Sales 25403 21489
Wind Energy Converter Power sold to
third party 136 202
Other Revenue 57 58
Total Revenue from Operations 25596 21749
Profit
Gross profit [Profit before interest,
depreciation & Tax] 3878 3893
Cash profit/ [Profit before
depreciation & Tax] 2521 2481
Profit before exceptional item and Tax 1407 1356
Exceptional item - Provision for
diminution in investment 45 --
Profit before tax [PBT] 1362 1356
Profit after tax [PAT] 937 911
Dividend
Your directors have recommended 20% dividend for the year ended
31.3.2014, subject to the approval of the Consortium of Bankers of the
Company.
INDUSTRY ASSOCIATIONS
Sri S.Dinakaran, Joint Managing Director of the Company is a member of
the Committee of Administration and Chairman of the Yarn Committee of
the Cotton Textiles Export Promotion Council (TEXPROCIL), Mumbai and
the Confederation of Indian Textile Industry(CITI), Delhi. By virtue of
the offices he holds, Sri Dinakaran has been representing to the
Industries and Finance Ministries to get relief to the ailing Textile
Industry.
COST AUDIT REPORT
As per the directions of the Cost Audit Branch of the Ministry of
Corporate Affairs, M/s. S.MAHADEVAN & CO., Cost Accountants,
Coimbatore, were appointed Cost Auditors for audit of Cost Accounts of
the Company and their report for the year ended 31st March 2013 was
submitted on 20.9.2013 to the Ministry of Corporate Affairs (VIDE SRN
S22388466 dated 20.9.2013). Due date for submission of that Cost Audit
Report in XBRL fomat was 27.9.2013.
M/s. S. Mahadevan & Co. were again reappointed for Audit of Cost
Accounts of the Company for the year ended 31.3.2014. Their reports for
the year ended 31.3.2014 will be filed before the due date.
Directors
Sri D.Sudharsan, Director, retires by rotation and he is eligible for
reappointment. Sri A.R.Natarajan, Director, also retires by rotation
but he desires not to get reelected. Board recorded its appreciation
for the valuable services rendered by Sri Natarajan to the Company
during the tenure of his office. Sri V. Mahadevan, Independent
Director did not attend the meetings of the Board and the Audit
Committee held during the year on account of his continued illness. He
submitted his resignation which was accepted at the Board Meeting held
on 14.2.2014. Board appointed Sri S. Gnanasekharan a Practising Company
Secretary from Thiruchengode, as an independent director in the place
of Sri V. Mahadevan. Company''s Code of Conduct applicable to the board
has been adopted by the board and all the directors of the Company have
confirmed compliance with the Code of Conduct.
Auditors
Auditors, M/s.M.S.Krishnaswami & Rajan, Chartered Accountants, retire
at the ensuing annual general meeting and they have confirmed their
eligibility and willingness to accept office, if re- appointed. On the
recommendation of the Audit Committee your Company''s Board is placing
the Resolution u/s 139(2) of the Company''s Act 2013 for appointing them
as Statutory Auditors of the Company for the current financial year.
Annexure
Annexure to this report details statement on directors'' responsibility,
conservation of energy, technology absorption, Research and Development
and foreign exchange earnings and outgo. None of the employees of the
Company has drawn remuneration exceeding Rs.5 lakhs per month or Rs.60
lakhs per annum during the year. As such the information required
pursuant to Sec. 217(2A) of the Companies Act, 1956 is not applicable
to the Company.
(i) Directors'' Responsibility Statement as per section 217(2AA) of the
Companies Act, 1956. Responsibility in relation to financial
statements
The financial statements have been prepared in conformity, in all
material respects, with the applicable Accounting Standards in a
consistent manner and supported by reasonable and prudent judgments and
estimates. The Directors believe that the financial statements reflect
true and fair view of the financial position as on 31.3.2014 and of the
result of operations for the year ended 31.3.2014.
The financial statements have been audited by M/s.M.S.Krishnaswami &
Rajan, Chartered Accountants in accordance with generally accepted
auditing standards, which include an assessment of the system of
internal controls and tests of transactions to the extent considered
necessary by them to support their opinion.
Going Concern
In the opinion of the Directors, Company will be in a position to carry
on its existing spinning of yarn business and accordingly it is
considered appropriate to prepare the financial statements on the basis
of going concern.
Maintenance of accounting records and Internal controls
Company has taken proper and sufficient care for maintenance of
adequate accounting records as required by various Statutes.
Directors have overall responsibility for the Company''s internal
control system, which is designed to provide a reasonable assurance for
safeguarding of assets, reliability of financial records and for
preventing and detecting fraud and other irregularities.
The internal audit function encompasses the examination and evaluation
of the adequacy and effectiveness of the system of internal control and
quality of performance in carrying out assigned responsibilities.
Internal Audit Department interacts with all levels of management and
the Statutory Auditors and reports significant issues to the Audit
Committee of the Board.
Audit Committee supervises the financial reporting process through
review of accounting and reporting practices, financial and accounting
controls and financial statements. Audit Committee also periodically
interacts with internal and statutory auditors to ensure quality and
veracity of the Company''s accounts.
Internal Auditors, Audit Committee and Statutory Auditors have full and
free access to all the information and records as considered necessary
to carry out their responsibilities. All the issues raised by them have
been suitably acted upon and followed up.
Acknowledgements
Your directors thank the Company''s customers, vendors and investors for
their continued support during the year. Your directors place on record
their appreciation for the contribution made by employees at all
levels. Your Company''s consistent growth has been made possible by the
hard work, solidarity, cooperation and support of the management team.
Your directors thank State Bank of India, Karnataka Bank Limited,
Canara Bank, Axis Bank Limited, Indian Overseas Bank, Central Bank of
India and IDBI Bank Limited, Government of Tamil Nadu and other
government agencies for their support, and look forward to their
continued support in future.
For and on behalf of the Board
Salem S. Devarajan
May 30, 2014 Chairman and Managing Director
Mar 31, 2013
The directors have pleasure in presenting the 39th Annual Report
together with the Audited Accounts for the year ended March 31,2013
(the year).
Performance Highlights 2012-13 2011-12
Turnover (Rupees lakhs)
Export -Direct 627 579
Merchandise exports 3097 3048
Domestic Sales 17809 14893
Total Yarn Sales 21533 18520
Conversion charges earned 14 32
Wind Energy Converter Power sold
to third party 202 127
Other income 27 44
Total turnover 21776 18723
Profit/(Loss)
Gross profit [Profit before
interest and depreciations Tax] 3893 759
Cash profit/(loss) [profit/(loss)
before depreciation & Tax] 2481 (1043)
Profit/(loss) before tax [PBT] 1356 (2164)
Profit/(loss)aftertax [PAT] 911 (1444)
Dividend
With a view to conserve and improve the resources of the Company, your
directors have not recommended any dividend for the year ended
31.3.2013.
INDUSTRY ASSOCIATIONS
Sri S. Dinakaran, Joint Managing Director of the Company continues to
be the Chairman of the Southern India Mills''Association (SIMA) for
the second year in succession. He is also a member of the Committee of
Administration of the Cotton Textiles Export Promotion
Council(TEXPROCIL), Mumbai and the Confederation of Indian Textile
Industry(CITI), Delhi. By virtue of the offices he holds, Sri Dinakaran
has been representing to the Industries and Finance Ministries to get
relief to the ailing Textile Industry.
COST AUDIT REPORT
As per the directions of the Cost Audit Branch of the Ministry of
Corporate Affairs, M/s.S.MAHADEVAN & CO., Cost Accountants, Coimbatore,
were appointed Cost Auditors for audit of Cost Accounts of the Company
and their report for the year ended 31st March 2012 was submitted on
23.01.2013 to the Ministry of Corporate Affairs (VIDE SRN S 19989235
dated 23.01.2013). Due date for submission of that Cost Audit Report in
XBRLfomat was 31.1.2013.
M/s.S. Mahadevan & Co. were again reappointed for Audit of Cost
Accounts of the Company for the year ended 31.3.2013. Their reports for
the year ended 31.3.2013 will be filed before the due date.
Directors
Sri V. Mahadevan and Dr.V.Gopalan, Directors, retire by rotation and
they are eligible for reappointment. Company''s Code of Conduct
applicable to the board has been adopted by the board and all the
directors of the company have confirmed compliance with the Code of
Conduct.
Auditors
Auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants, retire
at the ensuing annual general meeting and they have confirmed their
eligibility and willingness to accept office, if re-appointed.
Annexure
Annexure to this report details statement on directors''
responsibility, conservation of energy, technology absorption, Research
and Development and foreign exchange earnings and outgo. None of the
employees of the Company has drawn remuneration exceeding Rs.5 lakhs
per month or Rs.60 lakhs per annum during the year. As such the
information required pursuant to Sec. 217(2A) of the Companies Act,
1956 is not applicable to the Company.
Acknowledgements
Your directors thank the Company''s customers, vendors and investors
for their continued support during the year. Your directors place on
record their appreciation for the contribution made by employees at all
levels. Your Company''s consistent growth has been made possible by the
hard work, solidarity, cooperation and support of the management team.
Your directors thank State Bank of India, Karnataka Bank Limited, IDBI
Bank Limited, Axis Bank Limited, Canara Bank, Indian Overseas Bank and
Central Bank of India, Government of Tamil Nadu and other government
agencies for their support, and look forward to their continued support
in future.
For and on behalf of the Board
Salem S. Devarajan
May 27,2013 Chairman and Managing Director
Mar 31, 2012
The directors have pleasure in submitting their 38th Annual Report
together with the Audited Accounts for the year ended March 31, 2012
(the year).
Performance highlights 2011-12 2010-11
(Rupees lakhs)
Turnover:
Direct exports 579 134
Merchandise exports 3048 3690
Domestic Sales 14893 16731
Total Yarn Sales 18520 20555
Conversion charges earned 32 22
Wind Energy Converter Power 127 136
sold to third party
Total turnover 18679 20713
Profit/(loss) :
Profit/(loss) before, interest
and depreciation) 759 4474
Cash profit/(loss) (ie. profit/(loss)
before depreciation) (1044) 3035
Profit/(loss) before tax (2164) 1921
Profit/(loss) after tax (1444) 1256
Dividend
Due to the loss incurred by the Company, your directors have not
recommended any dividend for the year ended 31.3.2012.
INDUSTRY ASSOCIATIONS
During the year, Sri S. Dinakaran, Joint Managing Director of your
Company was elected to be the Chairman of the Southern India Mills'
Association (SIMA). He is also a member of the Committee of
Administration of The Cotton Textiles Export Promotion Council(
TEXPROCIL), Mumbai and the Confederation of Indian Textile Industry
(CITI), Delhi. By virtue of the offices he holds, Mr. Dinakaran has
been representing to the Industries and Finance Ministries to get
relief to the ailing Textile Industry.
COST AUDIT REPORT
As per the directions of the Cost Audit Branch of the Ministry of
Corporate Affairs, M/s.S.MAHADEVAN & CO., Cost Accountants, Coimbatore,
were appointed Cost Auditors for audit of Cost Accounts of the Company
and their report for the year ended 31st March 2011 was submitted on
14.9.2011 to the Ministry of Corporate Affairs (VIDE SRN B 20301420
dated 14.9.2011). Due date for submission of that Cost Audit Report was
27.9.2011.
M/s. S. Mahadevan & Co. were again reappointed for Audit of Cost
Accounts of the Company for the year ended 31.3.2012. Their report for
the year ended 31.3.2012 will be filed before the due date, i.e.
27.9.2012.
Directors
Sri RS. Ananthanarayanan and Sri D. Sudharsan, Directors, retire by
rotation and are eligible for reappointment.
Your Company's Code of Conduct applicable to the board has been adopted
by the board and all the directors of the company have confirmed
compliance with the Code of Conduct.
Auditors
The auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants,
retire at the ensuing annual general meeting and have confirmed their
eligibility and willingness to accept office, if appointed.
Annexure .
Annexure to this report details Statement on directors' responsibility,
conservation of energy, technology absorption, Research and Development
and foreign exchange earnings and outgo. None of the employees of the
Company has drawn remuneration exceeding Rs.5 lakhs per month or Rs.60
lakhs per annum during the year. As such the information required
pursuant to Sec. 217(2A) of the Companies Act, 1956 is not applicable
to the Company.
(i) Directors' Responsibility Statement as per section 217(2AA) of
the Companies Act, 1956 Responsibility in relation to financial
statements
The financial statements have been prepared in conformity, in all
material respects, with the applicable Accounting Standards in a
consistent manner and supported by reasonable and prudent judgments and
estimates. The Directors believe that the financial statements reflect
true and fair view of the financial position as on 31.3.2012 and of the
results of operations for the year ended 31.3.2012.
The financial statements have been audited by M/s M.S. Krishnaswami &
Rajan, Chartered Accountants in accordance with generally accepted
auditing standards, which include an assessment of the system of
internal controls and tests of transactions to the extent considered
necessary by them to support their opinion. .
Going Concern
in the opinion of the Directors, Company will be in a position to carry
on its existing spinning of yarn business and accordingly it is
considered appropriate to prepare the financial statements on the basis
of going concern.
Maintenance of accounting records and Internal controls Company has
taken proper and sufficient care for maintenance of adequate accounting
records as required by various Statutes.
Directors have overall responsibility for the Company's internal
control system, which is designed to provide a reasonable assurance for
safeguarding of assets, reliability of financial records and for
preventing and detecting fraud and other irregularities.
The internal audit function, encompasses the examination and evaluation
of the adequacy and effectiveness of the system of internal control and
quality of performance in carrying out assigned responsibilities.
Internal Audit Department interacts with all levels of management and
the Statutory Auditors, and reports significant issues to the Audit
Committee of the Board.
Audit Committee supervises the financial reporting process through
review of accounting and reporting practices, financial and accounting
controls and financial statements. Audit Committee also periodically
interacts with internal and statutory auditors to ensure quality and
veracity of Company's accounts.
Internal Auditors, Audit Committee and Statutory Auditors have full and
free access to all the information and records as considered necessary
to carry out their responsibilities. All the issues raised by them have
been suitably acted upon and followed up.
Acknowledgements
Your directors thank the Company's Customers, Vendors and Investors for
their continued support during the year. Your directors place on record
their appreciation for the contribution made by the employees at all
levels. Your Company's consistent growth has been made possible by the
hard work, solidarity, cooperation and support of the management team.
Your directors thank State Bank of India, Karnataka Bank Limited, IDBI
Bank Limited, Axis Bank Limited, Canara Bank, Indian Overseas Bank and
Central Bank of India, Government of Tamil Nadu and other government
agencies for their support, and look forward to their continued support
in future.
For and on behalf of the Board
Salem S. Devarajan
May 30,2012 Chairman and Managing Director
Mar 31, 2011
Dear Members,
The directors have pleasure in submitting their 37th Annual Report
together with the Audited Accounts for the year ended March 31st,2011
(the year).
Performance highlights 2010-11 2009-10
(Rupees lakhs)
Turnover - gross
Direct exports 149 82
Merchandise exports 3690 2530
Domestic Sales 17215 11742
Total Yarn Sales 21054 14354
Conversion charges earned 22 24
Wind Energy Converter Power 136 129
sold to third party
21212 14507
Less sales tax and
cess recovery 521 340
Total turnover 20691 14167
Gross profit (ie. profit before
interest and depreciation) 4359 2968
Cash profit (ie. profit before
depreciation) 3035 1739
Profit before tax 1921 646
Profit after tax 1256 469
Earnings per share - Basic Rs. 29.45 11.00
Dividend
Board of Directors of your company declared an Interim Dividend of
Rs.2/- per Equity Share (@ 20% on the paid up Capital) at the Board
Meeting held on 29-01-2011 which has been paid to the Share holders in
February 2011. Further, your directors are pleased to recommend a Final
Dividend of Rs.2/- per Equity Share {@ 20% on the paid up Capital) of
Rs.10 each. The interim and the proposed final dividend will entail a
cash outflow of Rs.1,98,58,643/-
Management discussion and analysis
Core business of the Company is manufacture and sale of cotton yarn.
The management discussion and analysis given below discusses the key
issues of the cotton yarn spinning sector.
(a) Industry performance
Textile Industry performed well during the year and demand for textile
products in the domestic market and overseas market has been quite
encouraging. This robust demand has led to reasonable growth and
stability for the textile Industry.
(b) Company's performance
Improvement in Industry Performance is reflected in your Company's
turnover recording 47% growth over previous year's turnover of Rs.
141.73 crores, crossing the Two hundred crore' - mark.
During the year 2010, 3600 Spindles were added to the capacity in third
unit, thereby increasing the total installed capacity to 89,052
spindles from 85,452 Spindles. Remaining portion of the project
involving 15,600 Spindles and 24 looms would be installed at the
appropriate time.
Your Company's Wind Energy Converters (WEC) generated power of the
value of Rs.939 lakhs as against Rs.1011 lakhs recorded in the
previous year.
(c) Outlook
Even though Cotton Price is highly volatile and speculative at present,
your directors are of opinion that it would stabilize in the next few
months and the industry expects to improve its performance during the
year. Demand for your Company's product is very appreciable both in
international market and in domestic market.
(d) Strategies and Future Plans
As part of future plans the deferred expansion project will be taken up
for implementation, at the appropriate time. This will help to improve
value addition as well as captive consumption of yarn produced by the
Company.
(e) Internal control and systems
Your company has in place well established internal control procedures
covering various areas such as procurement of raw materials, production
planning, quality control, maintenance planning, marketing, cost
control and debt servicing and steps are taken without loss of time,
whenever any weakness is observed, to correct the same.
(f) Human Resources Management
Employees are your Company's most valuable resource. Your Company
continues to create a favourable environment at work place. Your
Company has various welfare measures both government sponsored and
privately envisaged. The Company also recognises the importance of
training and consequently deputes its work force in various work
related courses/seminars including important issues like Total Quality
Management (TQM). Because of these, your Company is able to. attract
and retain well trained and dedicated workforce. The fact that
relationship with the employees continued to be cordial is testimony to
the Company's ability to retain high quality workforce. In view of the
aforesaid relationship no man days were lost during the year under
report.
(g) Corporate Social Responsibility
Your Company's main activity may be centered around making quality yarn
but its concern reaches out beyond the above stated business, to the
welfare of your Company's employees and to the society at large to
which your Company owes its growth. With this avowed initiative your
Company has been imparting comprehensive training to the new entrants
to the Company's fold as well as part of continuing technical education
to the existing staff and workforce. Your Company, along with your
group's associate Company Kandagiri Spinning Mills Limited, is
collaborating with two multi specialty hospitals in Salem which, apart
from rendering medical service to your Company's employees and their
families are also offering medical relief to the public at large at
subsidized rates.
(h) Cautionary note
Statements in the Directors' report and the management discussion and
analysis describing the Company's objectives, expectations or
predictions may be forward looking within the meaning of applicable
securities laws and regulations. Actual results might differ materially
from those expressed in the statement. Important factors that could
influence the Company's operations include global and domestic demand
and supply conditions affecting selling prices of finished goods, input
availability and prices, changes in government regulations, tax laws,
economic developments within the country and other related factors such
as litigation and industrial relations.
Homage to Founder Director and Former Chairman
Your Directors note with deep regret the sad demise of Sri S.R Ratnam,
founder director and former Chairman of the Company, on January 21,
2011, Your Directors place on record their deep sense of appreciation
for the valuable services rendered by him to the Company during the
tenure of his office.
Directors
Sri N. Asoka retires by rotation and is eligible for reappointment.
Sri A. G. Venkatesan also retires by rotation but he desires not to be
re-elected. Board records its appreciation for the valuable services
rendered by him to the Company during the tenure of his office.
The Company's Code of Conduct applicable to the Board has been adopted
by the Board and all directors of the Company have confirmed compliance
with the Code of Conduct.
Auditors
The auditors, M/s. M.S. Krishnaswami & Rajan, Chartered Accountants,
retire at the ensuing annual general meeting and have confirmed their
eligibility and willingness to accept office, if reappointed.
Annexure
Annexure to this report details Statement on directors' responsibility,
conservation of energy, technology absorption, Research and development
and foreign exchange earnings and outgo. None of the employees of the
Company has drawn remuneration exceeding Rs.5 lakhs per month or Rs.60
lakhs per annum during the year. As such the information pursuant to
Sec. 217(2A) of the Companies Act, 1956 is not applicable to the
Company.
Acknowledgements
Your directors thank the Company's customers, vendors and investors for
their continued support during the year. Your directors place on record
their appreciation of the contribution made by employees at all levels.
Your Company's consistent growth was made possible by the hard work,
solidarity, cooperation and support of the management team.
Your directors thank State Bank of India, Karnataka Bank Limited, IDBI
Bank Limited, Axis Bank Limited, Canara Bank, Indian Overseas Bank, and
Central Bank of India, and the Government of Tamil Nadu and other
government agencies for their support, and look forward to their
continued support in future.
For and on behalf of the Board
S. Devarajan
Chairman and Managing Director
Salem
May 23, 2011
Mar 31, 2010
The directors have pleasure in submitting their 36th Annual Report
together with the Audited Accounts for the
year ended March 31, 2010 (the year).
Performance highlights 2009-10 2008-09
(Rs. lakhs)
Turnover - gross
Direct exports 82 63
Merchandise exports 2530 2509
2612 2572
Domestic Sales 11742 9350
Conversion and testing
charges earned 24 37
14378 11959
Less sales tax and cess recovery 340 266
Total turnover 14038 11693
Gross profit (ie. profit before
interest and depreciation) 2968 1796
Cash profit (ie, profit before depreciation) 1739 466
Profit/floss) before tax 646 (538)
ProfiV(loss) after tax 469 (382)
Earnings per share - Basic Rs. 11.00 (8.96)
Dividend
With a view to conserving the reserves and also to meet the increase in
requirements of working capital, your directors do not recommend any
dividend for the year ended March 31, 2010.
Management discussion and analysis
The core business of the Company is manufacture and sale of cotton
yarn. The management discussion and analysis given below discusses the
key issues of the cotton yarn spinning sector.
(a) Industry performance
The initial worries associated with economic slowdown endured at the
beginning of the year have been replaced with cautious optimism for the
Indian market as the demand and price for yarn picked up from the
middle of the year 2009. The fiscal and other initiatives taken by the
Government of India have eased the pressures in the economy leading to
a revival of textile industry. However the high raw material cost and
the continuing power cut and restrictions on power supply during peak
hour affected the performance of textile industry in Tamilnadu.
(b) Companys performance
Despite the above said adverse factors, the turnover of your Company
increased to Rs. 14,038 lakhs as against Rs. 11,693 lakhs, an
improvement of 20% due to buoyant yarn selling price combined with good
demand for yarn in the domestic market. In spite of a record cotton
crop, prices continued to rule abnormally high on account of
Governments decision allowing exports of cotton. Consequently the
operating profit increased to Rs.2968 lakhs from Rs.l 796 lakhs.
Your Comp jnys Wind Energy Converters (WEC) generated power of the
value of Rs. 1011 lakhs as against Rs.859 lakhs in the previous year.
During the year also, your Company earned an income of Rs. 107 lakhs
from carbon credits as against Rs. 166 lakhs in the previous year.
(c) Outlook
The cotton price continues to be high in spite of expected record
production of cotton crop and restrictions on export of cotton.
Correspondingly the yarn prices are also ruling high, while the demand
for yarn in the domestic market is encouraging. However the divergent
interests of different sectors of the textile industry need to be
property balanced and the timely intervention by the Central Government
continues to oe necessary. Barring unforeseen circumstances, your
directors are confident that during the current year also your Company
will be able to increase its productivity and profitability
significantly.
(d) Strategies and Future plans
As parr of future plans the deferred expansion will be taken up for
implementation, provided the present situation continues to improve.
The Company also is actively examining the entry into weaving sector.
This will help to improve value addition as well as captive consumption
of yarn.
(e) Risks and concerns
(1) Inaustry risk
The main twin risks in this industry, especially in the cotton yarn
spinning sector, are the procurement prices for quality cotton and the
fluctuation in yarn realization. Raw material prices, as is common with
every industry, are conditioned by their supply position in the market.
This problem invariably gets compounded by the impact of import duty on
cotton which sometimes renders the prices uneconomical and unrestricted
export of cotton.
In the case of marketing of yarn, the price realisation depends on the
demand from garment manufacturers and power loom sector. In recent
times the competition from the emerging economies in the neighbouring
countries such as Sri Lanka, China and Pakistan with their comfortable
status engendered by the preferential treatment in USA and EU markets
pose a real challenge to the textile yarn spinning units.
The vagaries in the power situation in Tamilnadu, accentuated by the
monsoon playing truant, affects the smooth flow of production resulting
in higher cost without corresponding increase in the realisation.
(2) Currency risk
Your Company is taking the requisite ongoing steps to closely monitor
the exchange rate movements by proper hedging against various
associated risks.
(3) Quality concern
Quality of yarn manufactured is the single most important factor that
will take a Company forward in its success story. Your Company has been
aware of the said importance from its inception and the progress that
it has made through the years was mainly because of the strict
adherence to the quality of its yarn which has resulted in the Company
reaping the best possible price for its yarn, both in the Internal and
international markets. The award of ISO 9001:2000 accreditation to the
Company and Organic cotton standards certificate of the Control Union
Certifications, Netherlands and ECO certificate from Shirley
Technologies Limited, UK are fitting testimony of the efforts taken by
the Company in this regard.
(4) Research and development
Your Companys Research and development activities have been taken care
of by a separate wing called Sambandam Research and Development
Foundation. On the strength of its research and development efforts
under the said foundation, the National Accreditation Board for Testing
and Calibratic Laboratories, New Delhi, has granted accreditation.
(f) Internal control and systems
The Company has in place well established internal control procedures
covering various areas such as procurement of raw materials, production
planning, quality control, maintenance planning, marketing, cost
control and debt servicing. Necessary checks and balances have been
instituted for timeiy corrO. Tion.
(g) Human resources management
Employees are your Companys most valuable resource. Your Company
continues to create a favourable environment at work place. Your
Company has various welfare measures both government sponsored and
privately envisaged. The Company also recognises the importance of
training and consequently deputes its work force to various work
related courses/seminars including important issues like Total Quality
Management (TQM). Because of these, your Company is able to attract and
retain well trained and dedicated workforce. The fact that the
relationship with the employees continued to be cordial is testimony to
the Companys ability to retain high quality workforce. In view of the
aforesaid relationship no man days were lost during the year under
report.
(h) Corporate Social Responsibility
Your Companys main activity may be centered around making quality yarn
but its concerns reach out beyond the above stated business, to the
welfare of your Companys employees and to the society at large to
which your Company owes its growth. With this initiative, your Company
has been imparting comprehensive training to the new entrants to the
Companys fold, simultaneously continuing technical education to the
existing staff and workforce. Your Company, along with your groups
associate Company Kandagiri Spinning Mills Limited, is collaborating
with two multi speciality hospitals in Salem which, apart from
rendering medical service to your Companys employees and their
families are also offering medical relief to the public at large at
subsidized rates.
(i) Cautionary Note
Statements in the Directors report and the management discussion and
analysis describing the Companys objectives, expectations or
predictions may be forward looking within the meaning of applicable
securities laws and regulations. Actual results might differ materially
from those either expressed or implied in the statement. Important
factors that could influence the Companys operations include global
and domestic demand and supply conditions affecting selling prices of
finished goods, input availability and prices, changes in government
regulations, tax laws, economic developments within the country and
other related factors such as litigation and industrial relations.
Directors
Sri V. Mahadevan and Sri V. Gopalan retire by rotation and are eligible
for reappointment.
Sri D. Sudharsan, Whole time Director, whose period of appointment
expired on March 31, 2010 was not willing for reappointment as Whole
time Director in view of his preoccupation with other Companies.
However he continues to be a Director of the Company.
The Companys Code of Conduct applicable to the board has been adopted
by the board and all the directors of the Company have confirmed
compliance with the Code of Conduct.
Auditors
The auditors, M.S. Krishnaswaml & Rajan, Chartered Accountants, retire
at the ensuing annual general meeting and have confirmed their
eligibility and willingness to accept office, if appointed.
Annexure
Annexure to this report details Statement on directors responsibility,
conservation of energy, technology absorption, Research and Development
and foreign exchange earnings and outgo.
Appreciation
Your directors record their sincere appreciation of the dedication and
commitment of all employees in achieving and sustaining excellence in
all areas of the business. Your directors thank the Shareholders,
customers, suppliers and bankers and other stakeholders for their
continued support during the year. Your Companys consistent growth has
been made possible by the hard work, solidarity, cooperation and
support of the management team.
Your directors thank State Bank of India, Karnataka Bank Limited, IDBI
Bank Limited, Axis Bank Limited, Canara Bank, Indian Overseas Bank and
Central Bank of India the Government of Tamil Nadu and other government
agencies for their support, and look forward to their continued support
in future.
For and on behalf of the Board
Salem S. Devarajan
May 29, 2010 Chairman and Managing Director
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