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Ambika Cotton Mills Ltd.

BSE: 531978 Sector: Industrials
NSE: AMBIKCO ISIN Code: INE540G01014
BSE LIVE 15:40 | 09 Dec 1058.50 7.75
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NSE LIVE 15:31 | 09 Dec 1056.45 6.30
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OPEN 1045.00
PREVIOUS CLOSE 1050.75
VOLUME 1198
52-Week high 1094.60
52-Week low 735.00
P/E 12.67
Mkt Cap.(Rs cr) 622.40
Buy Price 0.00
Buy Qty 0.00
Sell Price 1058.00
Sell Qty 1.00
OPEN 1045.00
CLOSE 1050.75
VOLUME 1198
52-Week high 1094.60
52-Week low 735.00
P/E 12.67
Mkt Cap.(Rs cr) 622.40
Buy Price 0.00
Buy Qty 0.00
Sell Price 1058.00
Sell Qty 1.00

Ambika Cotton Mills Ltd. (AMBIKCO) - Director Report

Company director report

Your directors have great pleasure in submitting the Twenty Eighth Annual Reporttogether with the audited accounts for the year ended 31st March 2016.

FINANCIAL RESULTS

The Financial results for the year ended 31st March 2016 are furnished below:

(Rs. in Lakhs)
CURRENT YEAR PREVIOUS YEAR
2015-16 2014-15
Sales & Other Income 49408.24 49583.20
Profit Before Finance Cost and Depreciation 9409.20 9941.02
Less: Finance Cost 521.53 631.24
Gross Profit For the Year 8887.67 9309.78
Less : Depreciation 2991.96 2933.33
Profit before Tax 5895.71 6376.45
Less : Tax Expense 1450.19 1258.90
Profit after Tax 4445.52 5117.55
Add: Surplus in Statement of Profit and Loss 13881.02 10753.41
18326.54 15870.96
Less: Appropriation
Transfer to General Reserve 1000.00 1000.00
Interim Dividend 881.25 0.00
Dividend Tax on Interim Dividend 179.40 0.00
Proposed Dividend on Equity Shares 0.00 822.50
Dividend Tax 0.00 167.44
Prior Period Dividend & Dividend Tax 1.21 0.00
Surplus Carried over in Statement of Profit and Loss 16264.68 13881.02

PERFORMANCE AND STATE OF AFFAIRS

The Company's Total Income and Gross profit amounted to Rs.49408.24 Lakhs (Previousyear Rs. 49583.20 Lakhs) and Rs.8887.67 Lakhs (Previous year Rs.9309.78 Lakhs). Thisrepresents a marginal decline in total income of 0.35% as compared to 3.93% growth in theprevious year and decline in Gross Profit of 4.53% as against growth of 1.99% in theprevious year.

For the year Company's Direct Export Turnover amounted to Rs. 25960.52 Lakhs ascompared to Rs. 28532.30 Lakhs in the previous year representing a decline of 9.01 %(Previous Year decline of 3.55%) . In terms of percentage the export turnover constituted53.71% of the net sales as against 58.98% in the previous year. This subtle change is onaccount of better margin realization in the domestic market and in line with the company'spolicy to protect its margin and the flexibility of operations to switch between thebroader markets.

The Company has clear focus and continued its operations in making of speciality cottonyarn and has strong demand for its products .The Company's products always command premiumover the competitors. Its product profile enables the Company to suit its manufacturingplan according to the varied needs of the customer. The performance for the year wasprimarily affected on account of cost escalation of power due to lack of evacuation ofwind power generated and low wind and consequent to that compulsion of use of out sourcedpower at a higher cost.

During the year the Company has invested Rs.1843.82 Lakhs towards upgradation oftechnology of its manufacturing operations and so far during the current year has furtherinvested Rs.525.80 Lakhs .This total investment of Rs.2369.62 Lakhs was fully met out ofinternal accruals.

It is pertinent to note that the company has achieved one of its objective of fullyretiring the long term debt.

The Company is implementing the Knitting facility at an estimated cost of Rs.834.92Lakhs fully funded out of internal accruals this is part of the scheme earlier envisagedalong with the spinning unit. This facility is expected to be operational from October2016 onwards.

The implementation of spinning phase is still pending due to appropriate land clearancefrom the Government. As and when clearance is obtained the project will be initiated.However the Company has initiated production augmenting measures in the existing plantsitself by investing in Plant and Machinery at an estimated cost of Rs.12.00 crores tobe met out of internal accruals.

TRANSFER TO RESERVES

The Company proposes to transfer Rs.10.00 Crores to the General Reserve out of theamount available for appropriation.

DIVIDEND

The details of Dividend are as under

(Rs. in Lakhs)

Particulars FY 2015-16 FY 2014-15
Interim Dividend 881.25 --
Dividend tax on Interim Dividend 179.40 --
Final Dividend -- 822.50
Dividend tax on Final Dividend -- 167.44
Total Out Flow 1060.65 989.94
Dividend on Equity Shares of Rs. 10/- each Rs.15/- per share Rs.14/- per share
Rate of Dividend 150% 140%

The payout ratio for the year works out to 19.82% as compared to 16.07% (exclusive ofDividend Tax) on the basis of PAT of FY 2015-16 & FY 2014-15.

In view of payment of interim dividend at Rs. 15/- per share ( 150 % ) no finaldividend is recommended for FY 2015-16.

DIRECTORS

In terms of requirement of Section 149 of the Companies Act 2013 the IndependentDirectors of the company are Sri. K. N. Sreedharan Dr K. Venkatachalam and Sri R.Soundararaja Perumal.

Sri.P.V.Chandran Chairman and Managing Director is re-appointed for a period of 5years to hold the office with effect from 01.04.2017 to 31.03.2022.

Pursuant to the provisions of Section 152 of the Companies Act 2013 Mrs.VidyaJyothish Pillai (DIN 05215930) Director who retires by rotation and being eligibleoffers herself for reappointment.

DIRECTORS' RESPONSIBILITY STATEMENT

In terms of Section 134 (3) (c) of the Companies Act 2013 your directors state that: -

i. In the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures;

ii. Accounting policies selected have been applied consistently. Reasonable and prudentjudgments have been made so as to give a true and fair view of the state of affairs of theCompany as at the end of 31st March 2016 and of the profit of the Company for the yearended on that date;

iii. Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities;

iv. The annual accounts have been prepared on a going concern basis;

v. Internal financial controls have been laid down to be followed by the Company andsuch internal financial controls are adequate and operating effectively;

vi. Systems to ensure compliance with the provisions of all applicable laws are inplace and were adequate and operating effectively.

MEETINGS OF THE BOARD

The Board held five meetings during the Financial Year 2015- 16 namely May 26 2015August 8 2015 November 7 2015 February 6 2016 and March 12 2016.

DECLARATION BY INDEPENDENT DIRECTORS

The Independent Directors have submitted the Declaration of Independence as requiredpursuant to Section 149(7) of the Companies Act2013 stating that they meet the criteriaof independence as provided in sub-section(6).

DEPOSITS

The Company has not accepted any deposits from the public and therefore furnishing ofdetails in terms of Rule 8(v) &(vi) of Companies (Accounts) Rules 2014 does notarise.

AUDITORS

The Auditors M/s L.Venkatasubbu & Co. Chartered Accountants hold office untilthe conclusion of the ensuing Annual General Meeting. As per the provisions of theCompanies Act 2013 they are eligible to be appointed for a maximum further period of oneyear only. Certificate from the Auditors has been received to the effect that they areeligible to act as auditors of the Company under Section 141 of the Companies Act 2013and further submitted the Peer Review Certificate dt: 13.11.2013 issued to them byInstitute of Chartered Accountants of India (ICAI). The Board recommends the appointmentof L.Venkatasubbu & Co Chartered Accountants as auditors of the Company from theconclusion of the ensuing AGM until the conclusion of the next AGM.

AUDITORS' REPORT

The Auditors' Report to the Shareholders does not contain any reservationqualification or adverse remark.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act2013 and the Companies( Appointment and Remuneration of Managerial Personnel ) Rules 2014 the Company hasappointed Sri.S.R.BalaajiPractising Company Secretary to undertake the Secretarial Auditof the Company.

The Secretarial Audit Report for the financial year ended March 31 2016 is annexedherewith marked as Annexure A to this Report. The Secretarial Audit Report does notcontain any qualification reservation or adverse remark.

COST AUDITOR AND COST AUDIT REPORT

Pursuant to Section 148 of the Companies Act2013 read with the Companies (Cost Recordsand Audit ) Amendment Rules 2014 cost audit records are maintained by the Company. Asrequired under Companies Act2013 a resolution seeking approval of the members in thisregard is included in the Notice convening the Annual General Meeting.

Cost Audit Report for the year ended 31st March 2016 will be submitted in the duecourse .

INTERNAL FINANCIAL CONTROLS

The Company has in place internal financial controls systems commensurate with thesize and nature of its operations to ensure proper recording of financial and operationalinformation and compliance of various internal controls and other regulatory and statutorycompliances.

AUDIT COMMITTEE

The Audit Committee was constituted by the Board at its meeting held on 31.01.2001. TheCommittee now comprises of Directors Sri. K.N.Sreedharan Dr .K.Venkatachalam andSri.R.Soundararajaperumal and all of them are Independent Directors.

VIGIL MECHANISM /WHISTLE BLOWER POLICY

The Company has in place a vigil mechanism/Whistle Blower Policy for Directors andEmployees to report genuine concerns about any wrongful conduct with respect to theCompany of its business or affairs. The details of the Vigil Mechanism/whistle BlowerPolicy are available on the Company's website www.acmills.in

CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE

The Corporate Social Responsibility Committee consists of Directors Sri. P.V.ChandranDr. K. Venkatachalam and Sri.R.Soundararajaperumal as members of the committee. TheCommittee has formulated and recommended to the Board a Corporate Social ResponsibilityPolicy (CSR Policy) indicating the activities to be undertaken by the Company as specifiedin Schedule VII of the Companies Act 2013 which has been approved by the Board thedetails of the same are made available on the Company's website www.acmills.in.

NOMINATION AND REMUNERATION COMMITTEE

Nomination and Remuneration Committee presently consists of Directors Dr.K.Venkatachalam Sri . R. Soundararajaperumal and Mrs. Bhavya Chandran.

The Company has formulated the policy in this regard prescribing the criteria fordetermining qualifications positive attributes and independence of a director and the mainattribute focused on is positive value creation and contribution in respect of ongoingactivities of the Company and its value enhancement with adequate qualifications andindependence. Details of the policy are made available in the Corporate Governance Reportand on the Company's website www.acmills.in.

RISK MANAGEMENT POLICY

The Risk Management Committee consists of Directors Sri. P.V. ChandranDr.K.Venkatachalam and Mrs. Vidya Jyothish Pillai. The company has developed and adopted adetailed Enterprise Risk Management Policy to sustain the operations of the Company andthe same is disclosed in the website of the Company www.acmills.in.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders relationship committee was constituted consisting of DirectorsSri.R.Soundararajaperumal Mrs. Vidya Jyothish Pillai and Mrs. Bhavya Chandran. TheCompany has formulated policy for early resolution of stakeholders' grievances and thesame is made available in the company's website www.acmills.in.

APPOINTMENT OF KEY MANAGERIAL PERSONNEL

There is no appointment of Key Managerial personnel during the year.

SUBSIDIARIES

The company does not have any subsidiaries.

SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no Significant Material Orders passed by the Regulators /Courts which wouldimpact the going concern status of the Company and its future operations.

LOANS GUARANTEES AND INVESTMENTS

The Company has not made any investments or given any loans or guarantees or providedany security in connection with a loan to any person or body corporate as defined underSection 186 of the Companies Act 2013.

RELATED PARTY TRANSACTIONS

The Company does not have any related party transactions as defined in Section 188 ofthe Companies Act 2013 hence Form AOC-2 is not enclosed.

MATERIAL CHANGES AND COMMITMENTS

There were no Material changes and Commitments affecting the financial position of theCompany that have occurred between the end of the financial year March 312016 to whichthe financial statements relate and the date of this report.

CHANGE IN THE NATURE OF BUSINESS

There were no changes in the nature of business during the year under review asprescribed in Rule 8(ii) of the Companies (Accounts) Rules 2014.

BOARD EVALUATION

The independent Directors at their Meeting held on 12.03.2016 have carried out reviewof performance of non- independent directors and the Board as a whole performance of theChairperson and further made an assessment of quality quantity and timelines of flow ofinformation between the Company management and the Board for effective and reasonableperformance of its duties.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexedherewith as Annexure - I.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNING AND OUT GO

Particulars relating to Conservation of Energy Technology absorption Foreign ExchangeEarning and outgo as required to be disclosed under the Act are set out in Annexure - IIto this report.

CSR EXPENDITURE

The requirement to spend in this regard is Rs.109.38 Lakhs( Previous year Rs.88.31Lakhs) @ 2% of 3 years average net profit of the Company and the Company has spentRs.116.55 Lakhs(Previous year Rs.91.00 Lakhs) on various CSR activities which are into (i)Rural Development (ii) Animal Protection (iii) Medical Support (iv) Relief to Poor(including Chennai Flood )and the details of expenditure are furnished in Annexure -III tothis report.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is enclosed in Annexure IV to this report.

ADDITIONAL DISCLOSURES PURSUANT TO SEBI REGULATIONS

The additional disclosures pursuant to Regulation 34 (3) and 53 ( f ) of the SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015 in respect (i)Management Discussion and Analysis (ii) Corporate Governance Report (iii) Related PartyDisclosures for the year under review are given as a separate statement in the AnnualReport.

By order of the Board
Sd/-
(P.V.CHANDRAN)
DATE : 06/08/2016 Chairman and Managing Director
PLACE : Coimbatore (DIN : 00628479)

ANNEXURE - II

Information as required under Rule 8(3) of the Companies (Accounts) Rules2014.

A. CONSERVATION OF ENERGY

i) the steps taken or impact on conservation of energy.

Usage of Energy is constantly monitored and the need to conserve the same isemphasized.

ii) the steps taken by the Company for utilizing alternative sources of energy.

The Company has installed 27.4 MW of wind energy capacity for captive consumption. Thiswould meet 100% power requirement of the spinning segment.

iii) the capital investment on energy conservation equipments. : Nil

B. TECHNOLOGY ABSORPTION

i) the efforts made towards technology absorption :- Indigenous Technology alone isused.

ii) the benefits derived like product improvement cost reduction product developmentor import substitution :- Certain plant & machinery such as auto coner and compactsystems are imported to facilitate for product improvement & development which hasfacilitated exports of products.

iii) In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year)

a) the details of technology imported : Know- how for special type of yarn
b) the year of import : 2012-13
c) Whether the technology been fully absorbed : Yes
d) if not fully absorbed areas where absorption has not taken place and the reasons there of ; and : NA
iv) the expenditure incurred on Research and Development : Not quantified

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign Exchange earned and outgo in terms of actual inflows and outflows duringthe year.

[Rs in Lakhs]
Foreign Exchange earned (inflow) 25960.52
Foreign Exchange used (outflow) 23876.74

ANNEXURE - III

Information as required under Rule 8(1) of the Companies (Corporate SocialResponsibility Policy) Rules 2014.

ANNUAL REPORT ON CSR ACTIVITIES

i. A brief outline of the company's CSR policy including overview of projects orprograms proposed to be undertaken and a reference to the web-link to the CSR policy andprojects or programs:

The CSR policy of the Company is to undertake and implement the projects /programs asspecified in Schedule- VII of the Companies Act 2013.The details of the CSR policy of theCompany are made available in the Company's weblink :www.acmills.in/wp-content/uploads/2016/08/csrpol.pdf.

ii. The composition of the CSR committee:

The committee consists of Directors

1. Sri. P.V.Chandran Chairman and Managing Director
2. Dr. K. Venkatachalam Independent Director
3. Sri. R. Soundararajaperumal Independent Director
iii. Average net profit of the company for last three financial years (Amount Rs in Lakhs) : 5469.15
iv. Prescribed CSR Expenditure (two percent. of the amount as in item 3 above) (Amount Rs in Lakhs) : 109.38
v. Details of CSR spent during the financial year.
(1) The amount to be spent for the F.Y 2015-16 (Amount Rs in Lakhs) : 109.38
(2) Amount unspent if any (Amount Rs in Lakhs) : 0.00

(3) Manner in which the amount spent during the financial year is detailed below

(Rs. in Lakhs)

(1) (2) (3) (4) (5) (6) (7) (8)
S.No CSR Project or activity identified Sector in which the project is covered Projects or Programs 1. Local Area or Other 2. Specify The State And District Where Projects Or Programs Were Undertaken Amount outlay (budget) project or programs wise Amount spent on projects or programs sub-heads 1. Direct expenditure on projects or programs. 2. Overheads Cumulative expenditure up to the reporting period *Amount Spent : Direct or through implementing agency
1. Public Toilets Rural Development Local area Dindigul Tamilnadu 35.10
2 Animal Protection Animal Protection Local area Dindigul Tamilnadu 6.04 Direct
3 Relief to Poor Relief to Poor Local area Dindigul Tamilnadu 59.68
4 Relief to Poor Relief to Poor Chennai Flood Chennai Tamilnadu 109.38 Direct expenditure on projects 9.73
5 Medical Support Medical Support Kangra District Himachal Pradesh and Coimbatore Tamilnadu 4.50 Through Chinmaya Mission Ashram and Kovai Medical Centre and Hospital Limited
6 Relief to Poor Relief to Poor Coimbatore Tamilnadu 1.50 Through Indian Red Cross Society
Total 109.38 116.55

*Details of implementing Agency

vi. In case the Company fails to spend the 2% of the Average Net Profit (INR) of thelast 3 financial years the reasons for not spending the amount shall be stated in theBoard report. - NA

vii. Responsibility statement of the CSR Committee that the implementation andmonitoring of CSR Policy is in compliance with CSR objectives and Policy of the Companyduly signed by Director and Chairperson of the CSR Committee.

It is confirmed that the CSR projects are implemented in accordance with CSR objectiveand policy of the Company.

Sd/- Sd/- Sd/-
P.V. Chandran Dr. K. Venkatachalam R. Soundararaja Perumal
Chairman and Managing Director Independent Director Independent Director
(DIN : 00628479) (DIN : 01062171) (DIN : 02087219)
Date : 06/08/2016
Place : Coimbatore

ANNEXURE - IV

Statement as per Rule 5(1) of the Companies(Appointment and Remuneration of ManagerialPersonnel) Rules 2014 .

(i) The percentage increase in remuneration of each Director Company Secretary andChief Financial Officer (CFO) ratio of the remuneration of each director to the medianremuneration of the employees of the Company for the financial year 2015-16.

(ii) The percentage increase in the median remuneration of the employees in thefinancial year : 26.49 %.

(iii) The number of permanent employees on the rolls of Company: 1792

S.No Name of the Director/ KMP and Designation Remuneration of Director/ KMP for financial year 2015-16 % increase in Remuneration in the Financial year 2015-16 Ratio of Remuneration of each Director to median remuneration of employees
(Rs. in Lakhs)
1 Sri.P.V.Chandran Chairman and Managing Director 24.75 -- 38.51:1
2 Sri. K.N.Sreedharan Non- Executive - Independent 1.35 -- 2.10:1
3 Dr.K.Venkatachalam Non- Executive - Independent 1.35 -- 2.10:1
4 Sri.R.Soundararajaperumal Non- Executive - Independent 1.05 -- 1.63:1
5 Mrs.Bhavya Chandran Non- Executive - Promoter group 0.75 -- 1.17:1
6 Mrs.Vidya Jyothish Pillai Non- Executive - Promoter group 0.75 -- 1.17:1
7 Sri. Radheshyam Padia Company Secretary 6.00 -- 9.34:1
8 Sri. M.Vijayakumar CFO 4.42 -- 6.88:1

(iv) The explanation on the relationship between average increase in remuneration andcompany performance: The Profit after Tax for FY 2015-16 amounted to Rs. 4445.52 Lakhs ascompared to Rs. 5117.55 Lakhs for FY 2014-15 an increase of – 13.13% whereasincrease in employees' remuneration is 6.65%.

(v) Comparison of remuneration of the Key Managerial Personnel against the performanceof the Company : The Profit after Tax for FY 2015-16 increased –13.13% as compared toFY 2014-15 whereas increase in Key Managerial Personnel remuneration is –78.10%.

(vi) Variations in the market capitalization of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year :

Particulars 31.03.2016 31.03.2015
Market capitalization of the Company (Rs. in Crores) 471.47 460.31
Issued Capital ( in Nos) 5875000 5875000
Closing Price at NSE ( in Rs. ) 802.50 783.50
Price Earnings Ratio at the closing date 10.61 8.99

(vii) Percentage increase in the salaries of employees other than the Key ManagerialPersonnel ( KMP ) as compared to percentage increase in the KMP remuneration in the lastfinancial year i.e 2015-16 : The increase in remuneration is 6.61% for employees otherthan KMP while it is –78.10 % for KMP .

(viii) The Key parameters for any variable component of the remuneration availed by theDirectors: There are no variable component in the Managerial Remuneration.

(ix) The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year :- None

(x) Affirmation that the remuneration is as per the remuneration policy of the Company:Yes .

Note :

Percentage Increase over decrease in market quotations of the shares of the companywith the last public offer : The last offer for sale of shares was made in the year 1996and hence not comparable .

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