AMARJOTHI SPINNING MILLS LIMITED
ANNUAL REPORT 2011-2012
THE MEMBERS OF
AMARJOTHI SPINNING MILLS LIMITED
Your Directors have pleasure in presenting the Twenty Fourth Annual Report
together with the audited accounts of your Company for the year ended 31st
(Rupees in lacs)
Sales 12956.48 12399.36
Gross Profit 2951.29 3838.25
Less: Depreciation 1322.28 1193.91
Finance costs 1207.31 1097.07
Provision for taxation
tax for current year) 91.62 2621.21 566.95 2857.93
Profit for the year 330.08 980.32
Add: Balance in
Profit & Loss A/c 2918.54 2192.69
for appropriation 3248.62 3173.01
(Including Dividend Tax) 117.68 156.90
to earlier years 0.00 -0.47
Transfer to General Reserve 33.01 98.04
Balance carried to
Balance Sheet 3097.93 2918.54
Total 3248.62 3173.01
Your Directors are glad to recommend payment of dividend of 15% on the
Equity Capital. The dividend will be free of tax in the hands of
shareholders since the company will be paying the Dividend Distribution Tax
at the prescribed rate.
The company's sales increased by 4.5% to Rs. 12956.48 Lacs during the year
under review as against Rs. 12399.36 Lacs in the previous year.
Your Directors inform you that in spite of the increase in raw material
prices and the power-cut imposed by the Tamil Nadu Electricity Board, the
profitability of the yarn Division has not been affected much.
The performance of the Processing unit has improved and problems arising
from the effluent Treatment plants are being sorted out.
The Total Capacity of Wind Mills as on date remains at 17.60 MW, the same
as in the Previous year.
Your Directors are happy to inform you that the Company's Clean Development
Mechanism (CDM) Project, involving the Company's Wind Mills, for the period
from 2007 to 2010 has been approved by the United Nations Frame work
Convention on climate change (UNFCCC) and the Company has been given credit
for 44342 Numbers of Certified Emission Reductions (CERs).
During the year under review the Company has:-
a) Availed Fresh Long term loans aggregating to Rs.275 lacs for funding the
purchase of Machineries and Construction of Building and Fresh Short Term
Loans aggregating to Rs. 1750 lacs for Raw Material procurement.
b) Discharged Long Term loans in full aggregating to Rs.90 lacs and short
term loans in full aggregating to Rs.4600 lacs.
The Particulars of such availement and discharges were duly filed with the
Your Company has not accepted any deposits from the Public.
Sri N. Rajan and Dr. V. Subramaniam retire by rotation at this Annual
General Meeting and are eligible for re-appointment.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the provisions of Sec. 217(2AA) of the Companies Act, 1956,
your Directors wish to state that:
i) In the preparation of the Annual Accounts for the year, all applicable
accounting standards have been followed.
ii) Your Directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at 31st March 2012 and of the profit of the Company for the year
ended on that date.
iii) The Directors had taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities.
iv) The Directors had prepared the Annual Accounts on a 'Going Concern'
Sri V. Narayanaswami, M.A., F.C.A., Chartered Accountant, the Auditor of
your company, retires at the conclusion of this Annual General Meeting and
is eligible for re-appointment.
There are no employees of the Company who come under the purview of Sec.
217(2A) of the Companies Act, 1956.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
The particulars required to be furnished in terms of Section 217(1)(e) of
the Companies Act, 1956 with regard to conservation of energy, technology
absorption, foreign exchange earnings and outgo are given in Annexure-I.
The industrial relations have been extremely cordial and the Management
thanks all the employees for their continued contribution towards the
growth of the organisation.
Report on Corporate Governance is furnished in the section on Corporate
Governance in the Annual Report.
A certificate from the Auditor of the company regarding compliance with the
conditions of corporate governance as stipulated under clause 49 of the
Listing Agreement is furnished in the section on Corporate Governance.
MANAGEMENT'S ANALYTICAL REPORT:
Management's Analytical Report as required by the listing agreement is
furnished in the section on Corporate Governance.
Your Directors would like to express their grateful appreciation for
assistance and co-operation received from the bankers M/s. Bank of Baroda,
Karur Vysya Bank Ltd, Punjab National Bank, State Bank of India, State Bank
of Travancore, Bank of India and Axis Bank Ltd during the year under
Your Directors wish to place on record their deep sense of appreciation for
the devoted services of the staff and workers of the Company for its
The Company extends its thanks to the Central and State Government
authorities for their continued co-operation and assistance.
MAY LORD VENKATESWARA SHOWER HIS BLESSINGS FOR THE CONTINUED PROSPERITY OF
For and on behalf of the Board of Directors
Place: Tirupur N. RAJAN
Date : 17.08.2012 Chairman
ANNEXURE-1 TO DIRECTOR'S REPORT:
The information required under Section 217(i)(e) of the Companies Act, 1956
read with the Companies (Disclosure of Particulars in the Report of the
Board of the Directors) Rules, 1988 are as follows:
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS
A. CONSERVATION OF ENERGY
a. Measures taken:
i) Continuous monitoring of energy consumption.
ii) Optimization of power parameters.
iii) Improving power factor.
b. Proposed measures:
Shall continue to do as stated in (a) above.
c. Total energy consumption and energy consumption as per Form 'A' is given
1. POWER CONSUMPTION (SPINNING AND PROCESSING UNITS)
Current Year Previous Year
a) Purchased from TNEB:
Units (KWH) 18406324 20907318
Total amount (Rs.) 95797941 97656523
Rate per unit (Rs.) 5.20 4.67
b) Own Generation:
i) Through Diesel Generator
Units (KWH) 2076818 1909864
Units per Itr. Of Diesel oil 3.16 3.19
Total amount (Rs.) 28099764 24231189
Rate per unit (Rs.) 13.53 12.69
ii) Through Wind Mills
Units (KWH) 32509591 30681814
Current Year Previous Year
2. PRODUCTION OF YARN IN KGS. 5115304 5643589
3. POWER COST PER KG. OF YARN (Rs.) 6.10 4.15
(Includes power cost of Processing Unit and power generated by wind mills)
B. RESEARCH AND DEVELOPMENT:
The Company is a member of SITRA (South India Textile Research Association)
and is being benefited from their R&D activities. Significant improvements
have been made in the quality of the melange yarn.
C. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION:
a. The latest technology has been/is being adopted in various stages for
improving productivity and product quality and reducing consumption of
b. Imported Technology: None
D. FOREIGN EXCHANGE EARNINGS AND OUTGO:
Foreign Exchange earnings : Rs. 382.52 Lakhs
Foreign Exchange outgo : Rs. 316.42 Lakhs
MANAGEMENT DISCUSSION AND ANALYSIS
1. COMPANY'S BUSINESS:
The Company's main business is manufacturing and marketing of Melange Yarn.
2. INDUSTRY STRUCTURE AND DEVELOPMENT:
Textile industry contributes significantly to the country's total exports.
The Government of India has suspended the concessional rate of interest
under TUF scheme for a part of the year 2007-08 and later extended the
scheme till 2013. The Government has also allowed formation of textile
parks in many parts of the country. Substantial capacity expansion has
taken place in the textile sector. The quantitative ceiling on export of
cotton yarn to non-quota countries has been removed. TEXPROCIL endorsement
for export of cotton yarn has been dispensed with import of consumable
spares and purchase of machineries under the EPCGC scheme.
3. OPPORTUNITIES AND THREATS:
The size of the Indian Textile industry is on the threshold of an
accelerated rate of growth with the dismantling of the quota system. Due to
the implementation of WTO recommendations on free trade policies, the
volume of export from Tirupur is expected to increase three-fold. This
Company being a major supplier of melange yarn to the Tirupur market with
its local presence, there is good scope for improved turnover and
profitability. The Company has been improving its share of value added yarn
in the market in the form of Dyed fibre yarn, Dyed cotton yarn, PC yarn,
etc. The market for these products is very good and will increase over the
years. The company offers competitive price due to low power cost through
windmills, low interest cost, low processing cost, etc. The Company has
obtained ISO 9001:2000 Certification, MGMT.SYS RVA C 215 Certification for
quality management and systems and OEKO TEX STANDARD-100 Certification for
not using harmful substances in the product. The OEKO TEXT STANDARD-100
certification is a pre-requisite in the global market as the supplies are
made to exporters. This will increase the trade/export opportunities to the
Though presently there is a certain lack of clarity in the general market
conditions, no unit - specific threat to the operations and performance of
the company is perceived in the long run. However any major changes in
export/import policies related to cotton and yarn and foreign fluctuations
will have their impact on textile sector. Current Price fluctuations in
yarn will affect the Market of our product in the forthcoming period. More
over we are facing Labour scarcity and it will have impact on our
production. The lack of clear-cut government policy and parameters in
respect of pollution control is delaying the benefits that the company
planned from the processing unit.
4. SEGMENT-WISE PERFORMANCE:
The company operates only in one segment and the operational results are
mentioned elsewhere in this report.
The company will continue to perform well in the domestic market. The ISO
Certification is expected to improve the export potential also. The
processing unit is expected to add value to the product and contribute to
increased turnover and profitability. Further, the company is in the
process of implementing several cost saving measures, which will make the
product more competitive.
6. RISKS AND CONCERNS:
Availability of quality raw material and at competitive prices continuous
to be a major factor of concern because India is basically an agrarian
economy depending mostly on natural resources like water for its crops. The
rising interest rates, increasing fuel prices, power shortage are causes of
the concern for the industry as a whole. The effluent treatment related
problem faced by the Processing Division and the non-drawal of wind mill
generated power by the TNEB are company-specific causes of concern.
7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The company has adequate internal control systems and procedures
commensurate with its size and nature of its business for the purchase of
raw materials, plant and machinery, components and other items and for sale
of goods. The adequacy of the internal control system is also periodically
reviewed by the Audit Committee.
8. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:
The financial performance of the company has been discussed at length in
the directors' report to the members.
9. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT:
The Company has required number of skilled/semi-skilled persons and places
emphasis on training for improving quality and productivity.
10. HEALTH AND SAFETY MEASURES:
The company has taken medical insurance cover for all workers. Adequate
safety measures have been taken in all our plants for prevention of any
11. CAUTIONARY STATEMENT:
Statements made in this report regarding the company's objectives,
projections, expectations and predictions may be forward looking statements
under the applicable securities law and regulations. Actual results could
differ materially from those expressed or implied. Some of the important
factors that could make a difference to the company's operations include
global and domestic demand-supply conditions, finished goods prices, raw
material costs and availability, interest rates, fuel prices, fluctuations
in exchange rates, changes in government regulations and tax structure,
economic developments in the domestic and overseas market and other
For the Board of Directors
Place: Tirupur N. RAJAN
Date : 17.08.2012 Chairman