SRI JAYALAKSHMI SPINNING MILLS LIMITED
ANNUAL REPORT 2003-2004
Your Directors have pleasure in presenting the Tenth Annual Report together
with the Audited Statements of Accounts for the 15 months period ended
30th June 2004.
1. FINANCIAL RESULTS (Rs.in Lakhs)
Sales including other income 2805.318
Profit for the year before interest,
Less :Interest 14.59
Net Profit 185.05
Under report (i.e., 15 months) the Company could produce 17.26 Lakhs Kgs of
Cotton Yarn as against a quantity of 15.05 Lakhs Kgs in the previous year
of 12 months. During the year, the Company has exported to an extent of Rs.
121.71 Lakhs compared with Rs. 508.10 Lakhs during the previous year. The
performance during the year has resulted in the net profit of Rs. 185.05
As a result of economic purchase of raw materials and austerity measures
undertaken by the Company, the Company has turn round and earned profit.
Further, the local demand for finer counts has been increased and the
company is able to sale its finer counts yarn at remunerative price.
During the year under report the company could export cotton yarn to a tune
of 0.93 Lakhs Kgs and earned a foreign currency equivalent to Rs.121.71
Sri R.Sambashiva Rao and Sri G.Kanakaiah retire by rotation in the ensuing
Annual General Meeting and being eligible they offer themselves for re-
The Company Auditor Sri G. V. Suryanarayana Murthi, Chartered Accountant
will retire at the ensuing Annual General Meeting of the Company and being
eligible offers himself for re-appointment.
6. COST AUDITORS
Sri.S.P.Sarma, Cost Auditor, Hyderabad has been proposed to be appointed as
Cost Auditor for the year 2003-04 as per Section 233 (B) of the Companies
7. Corporate Governance
Your Company has complied with the provisions of the Corporate Governance
Code as per Clause 49 of the Listing Agreement with the Stock Exchanges.
A report on the implementation of the Corporate Governance Code of the
Listing Agreement by the Company is furnished below
i) Board of Directors
The Board consists of 2 Executive Directors, 3 Non-Executive Directors and
Four Independent Directors : The constitution of Board as follows:
Director Executive/Non- No.of other
Sri.R.Sambashiva Rao Chairman, Executive Director # 7
Sri G Kanakaiah Vice-Chairman, Executive # 7
Dr.R.Srinivas Non-Executive Director # 7
Sri.R.Gopalakrishna Non-Executive Director # 7
Sri.R.Hanumantharao Non-Executive Director # 6
Sri.D.Seetharam Independent Director -
Sri.G.Rambabu Independent Director -
Sri M Anil Kumar Independent Director -
Sri Ch Sridhar Independent Director -
* An Independent Director is a director who does not have any material
pecuniary relationship or transactions with the Company, with its promoters
or its management or with its subsidiaries, which in the judgment of the.
Board may affect the Independence of judgment.
# This includes directorships held in Public Limited Companies and excludes
directorships held in Private Limited Companies.
ii) Meetings of the Board of Directors.
During the year 2003-04 the Board of Directors met 12 times on the
following dates : 30.04.2003, 03.05.2003, 31.07.2003, 11.08.2003,
31.10.2003, 05.11.2003, 06.12.2004, 24.01.2004, 31.01.2004.
iii) Audit Committee
As a measure of good Corporate Governance and to provide assistance to the
Board of Directors in fulfilling the Board's responsibilities as per
provisions of the Companies Act 1956 and as per clause 49 of the Listing
Agreement with Stock Exchanges, an Audit Committee has been constituted
with one Non-executive Director along with two independent Directors. The
functions of the Audit Committee include:
* Reviewing the adequacy of internal control systems and the Internal Audit
Report, and their compliance thereof.
* Overseeing of the Company's financial reporting process and the
disclosure of its financial information to ensure that the financial
statements are correct, sufficient and credible.
* Recommending the appointment of external auditors and fixation of their
audit fee, and also approval for payment for any other services.
* Reviewing with management the quarterly and annual financial statements
before submission to the Board.
iv) Composition and other Details
The Audit Committee of the Company was constituted with two 'Independent
Directors along with one non-executive Director, and Chief Executive as
1. Sri.R.Gopalakrishna - Non Executive Director Chairman
2. Sri.D.Seetharam - Independent Director Member
3. Sri.G.Rambabu - Independent Director Member
4. Sri R.Ranga Rao - Chief Executive Member
During the year under review, the Audit Committee met 6 times i.e., on
30.04.2003, 31.07.2003, 31.10.2003, 06.12.2003, 30.04.2004 and 06.12.2004.
The meetings of the Audit Committee were attended by the head of Finance,
Internal Auditor and Statutory Auditor as invitees. Members held
discussions with Statutory Auditors during the meetings of the Committee
and the quarterly and annual audited financial statements of the Company
were reviewed by the Audit Committee before consideration and approval by
the Board of Directors.
v) Investor's Grievance Committee:
The Board has constituted an Investors Grievance Committee, which looks
into shareholders and investors grievances. The following are the members
of the Committee.
1. Sri.R.Gopalakrishna - Non Executive Director
2. Dr.D.Seetharam - Independent Director
3. Sri.R.Ranga Rao, - Chief Executive
The committee focuses on strengthening the investors relations.
a) Compliance Officer :
Sri.R.Ranga Rao - Chief Executive
b) Details of complaints received during the year 2003-04
c) There are no valid requests pending for share transfers as at the year
d) M/s. Aarthi Consultants Pvt. Ltd., are the Registrars attending to the
vi) Venue and time of the last Three Annual General Meetings
Year Date & Time Venue
1999-2000 27th September,2000 at 11.00 a.m. Regd.Office
2000-2001 27th September,2001 at 11.00 a.m. Regd.Office
2001-2002 26th September,2002 at 11.00 a.m. Regd.Office
2002-2003 27th September,2003 at 04.00 p.m. Regd.Office
The resolutions were passed on show of hands with requisite majority. The
venue of the Annual General Meeting of the Company is the Registered Office
of the Company, Tobacco Colony, Guntur which is centrally located.
There are no materially significant related party transactions i.e.,
transactions, material in nature with it promoters, the Directors or the
Management their subsidiaries or relatives etc., having potential conflict
with the interests of the Company at large.
There has not been any non-compliance by the Company and no penalties or
strictures imposed on the Company by the Stock Exchanges or SEBI or any
statutory authority, on any matter related to capital markets, during the
last three years.
The audited financial results of the company are generally published in
Indian Express, the English newspaper and in the Andhra Prabha, the
vernacular (Telugu) newspaper.
viii) General Shareholders information
a) As indicated in the notice to our shareholders, the 10th Annual General
Meeting of the Company will be held on Monday, the 27th September, 2004 at
11.00 a.m. at Registered Office of the Company.
b) Tentative calendar of events for the financial year 2004-05 (April
March) as given below
i) Publication of Un-audited financial results for :
First Quarter July, 2004
Second Quarter October, 2004
Third Quarter January, 2006
Fourth Quarter April, 2006
c) Book Closure :
From 21.09.2004 to 27.09.2004 (both days inclusive) for the purpose of
Annual General Meeting.
d) (i) The shares of the Company are listed on :
Stock Exchange, Mumbai and Chennai Stock Exchanges.
e) The listing fee for the year 2004-05 is being paid to all the stock
exchanges where the Company's shares are listed.
f) Stock Code :
g) Market Data :
The monthly high and,low stock quotations during the last financial year.
The Scrips are not actively traded.
ix) Share Transfer Agents
The share transfers, transmissions, investors grievances will be taken care
of by share transfer Agents i.e.,
M/s. Aarthi Consultants Pvt. Ltd.,
(Cat-1) Registrar & Share Transfer Agents,
Hyderabad - 500 029
x) Corporate Governance Certificate
Auditors Report regarding the compliance of Corporate Governance is
separately enclosed during the year under report.
xi) Corporate Governance in Directors Report
The Company has complied with the mandatory provisions of Corporate
Governance as prescribed in the Listing Agreement with the Stock Exchanges.
Auditors Report on Corporate Governance is separately enclosed.
No employee of the Company is Covered under the provisions of Section 217
(2A) of the Companies Act, 1956 for disclosure in this report.
10. Fixed Deposits
The Company has not accepted any fixed deposits from the public during the
11. Qualification to any adverse remarks in the Auditors Report
There are no adverse remarks in the Auditors Report dated 02.08.2004.
12. Conservation of Energy
Particulars relating to Conservation of Energy, technology absorption,
foreign exchange earnings and out go pursuant to the companies (Disclosure
of particulars in the report of the Board of Directors) Rules 1988 are
appended separately and it forms part of this Report.
13. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirements under Section 217 (2AA) of the companies Act,
1956, with respect to Directors' Responsibility statement, it is hereby
(i) That in the preparation of the accounts for the financial year ended
30th June, 2004, the applicable accounting standards have been followed
along with proper explanation relating to material departures;
(ii) That the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that were 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 loss of the Company
for the year under review;
(iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities.
(iv) That the Directors have prepared the accounts for the financial year
ended 30th June, 2003 on a "going concern" basis.
The Directors would like to express their appreciation for the assistance
and cooperation extended by ICICI and Indian Overseas Bank Ltd., to meet
the financial needs of the Company. The Directors appreciate the services
rendered by the officers, staff and workers of the Company and expect the
same in future also.
FOR AND ON BEHALF OF THE BOARD
RAYAPATI SAMBASHIVA RAO
Place : Guntur
Date : 02.08.2004
Annexure - A
A. CONSERVATION OF ENERGY:
a. A Study on Energy conservation is being conducted at all the
manufacturing levels and the proposals which are accepted after evaluation
will be implemented.
b. The consumption of Energy has been closely monitored and where ever
possible the wastage is avoided.
c. The energy consumption per unit of the production is mentioned below.
POWER AND FUEL CONSUMPTION
1. ELECTRICITY 30.06.2004 31.03.2003
a. Purchased from APSEB and Others
(Units in Lakhs) 114.61
Total amount Paid (Rupees in Lakhs) 502.96 421.68
Rate per unit (Rs) 3.68
b. Own Generation through Diesel Generator 14.33
Diesel oil consumed (in litres) 442531
Units generated per each Ltr of diesel oil 3.1
Cost of diesel (Rs) 5950220
Cost per litre (Rs) 13.45
2. COAL Nil Nil
3. FURNACE OIL Nil Nil
4. OTHER GENERATION Nil Nil
B. CONSUMPTION PER UNIT OF PRODUCTION
Electricity - Units per Kg of Yarn 0.00 7.93
C. TECHNOLOGY ABSORPTION
As the unit is new and all the machines erected are new and from
internationally reputed suppliers, no efforts are made in Technology
D. FOREIGN EXCHANGE EARNINGS & OUT GO
a. Efforts are being made to initiate and increase the Exports and
development of new Export Martkets.
b. Total Foreign Exchange earned and used 30.06.2004 31.03.2003
1. Export of Yarn 12331688 50809805
II. Expenditure in Foreign Currency
on account of:
a. Commission on Sales 239061 1069171
b. Travels 24375
III. Value of imports calculated on CIF basis Components & Spares
FOR AND ON BEHALF OF THE BOARD
PLACE : GUNTUR Rayapati Sambashiva Rao
DATE : 02.08.2004 Chairman
Auditors' Certificate on compliance of conditions of Corporate Governance
as per Clause 49 of the Listing Agreement with Stock Exchanges
To the Members of
Sri Jayalakshmi Spinning Mills Limited
I have examined the procedure for compliance with the provisions of Clause
49 regarding Corporate Governance of the Listing Agreement with the Stock
The compliance of conditions of Corporate Governance is responsibility of
the Management. My examination has been limited to a review of the
procedures and implementation thereof adopted by the Company for ensuring
compliance with the conditions of the certificate of Corporate Governance
as stipulated in the said Clause. It is neither an audit nor an expression
of opinion on the financial statements of the Company.
No investor grievance(s) are pending for a period exceeding one month
against the Company as per the records maintained by the Company.
In my opinion and to the best of my information and according to the
explanations given to me and the representations made by the Directors and
the management, I certify that the Company has complied with the conditions
of Corporate Governance as stipulated in Clause 49 of the above mentioned
I further state that such compliance is neither an assurance as to the
future viability of the Company nor of the efficiency or effectiveness with
which the Management has conducted the affairs of the company.
Place : Guntur G. V. Suryanarayana Murthi
Date : 02.08.2004 Chartered Accountant