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Sri Lakshmi Saraswathi (Arni) Ltd.

BSE: 521161 Sector: Industrials
NSE: N.A. ISIN Code: INE456D01010
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OPEN 27.35
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VOLUME 200
52-Week high 57.90
52-Week low 25.25
P/E
Mkt Cap.(Rs cr) 9
Buy Price 27.35
Buy Qty 100.00
Sell Price 0.00
Sell Qty 0.00

Sri Lakshmi Saraswathi (Arni) Ltd. (SRILAKSARARNI) - Director Report

Company director report

Ladies and Gentlemen

Your Directors present the Fifty Second Annual Report of the Company alongwith theaudited statement of accounts for the year ended 31st March 2016.

1. WORKING RESULTS

Details Rs.
Loss from business operation before 11681448
Financial Expenses and Depreciation
Add :-
1) Financial Expenses 10505696
2) Depreciation 16577494
27083190
Loss before Tax 38764638
Add:- Provision for Tax
- For Current Tax Nil
- Deferred Tax Liability Written off Nil
- Provision for tax for earlier years 1161478
Current year Loss After Tax 39926116
Loss carried forward from previous year 31051422
Loss carried forward 70977538

2. PRODUCTION AND SALES

Production of yarn during the year was 60.24 lakhs kgs as against 58.90 lakhs kgs inthe previous year. The sale value during the year was Rs.108.90crores as against Rs.115.08crores of previous year.

3. DIVIDEND

Due to loss your Directors do not recommend Dividend.

4. TRADE PROSPECT AND OUTLOOK

The performance of the company was strained due to market conditions. The cost of rawmaterial and cost of conversion remained high. The yarn sales realization was notsatisfactory. The production was affected by non availability of sufficient man power.

5. CURRENT YEAR

The market conditions during the current year are favourably improving. Your Directorsare doing their best to improve the performance to a reasonable level.

6. DIRECTORS

Ms.Sivarani J was co-opted as an additional Director of the company by the Board ofDirectors at its meeting held on March 2 2016. Pursuant to Section 161 of Companies Act2013 Ms.Sivarani J vacates office at the forthcoming Annual General Meeting. The Companyhas received a Notice in writing from a Member under Section 160 of the Companies Act2013 proposing the appointment of Ms.Sivarani J as a Director of the Company.

Sri R.Padmanaban retires by rotation and is eligible for reappointment.

7. Extract of Annual Return

An extract of Annual Return in Form MGT 9 is given in ANNEXURE 1.

8.Details of Board Meetings held during 2015-16.

There were eight Board meetings held during the year 2015-16. The details andattendance record of Directors at the Board Meetings are as under.

Date of Meeting Board Strength (on the date of meeting) No.of Directors Present
01.04.2015 4 4
26.05.2015 4 4
11.08.2015 4 4
14.11.2015 4 4
14.12.2015 4 3
09.02.2016 4 4
02.03.2016 5 5
28.03.2016 5 5

9. DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of Section 134(5) of the Companies Act 2013 the Directors state that –

1. In the preparation of Annual Accounts for the year ended 31st March 2016 theapplicable accounting standards had been followed along with proper explanation relatingto material departures.

2. The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year ended31st March 2016 and of the profit/ loss of the company for that period.

3. The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities.

4. The Directors had prepared the annual accounts on a going concern basis.

5. The Directors had laid down Internal Financial Controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

6. The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

10. Independent Directors a) The Board of Directors state that declarations were givenby Sri J M Grover Sri R.Sambasivan and Ms.Sivarani J Independent Directors under subsection (6) of 149 of Companies Act 2013.

b) Terms and conditions of appointment of Independent Directors can be viewed at thecompany Website: www.slstindia.com

11. Remuneration Policy

The Remuneration Policy was recommended by Nomination and Remuneration Committee at itsmeeting held on February 11 2015 and adopted by the Board of Directors at its meetingheld on the same day and the policy can be viewed at the company website www.slstindia.com

12. Explanation to observations of Secretarial Auditors.

The Board of Directors wish to state that:

a) Chief Financial Officer has been appointed on 9th February 2016 and

b) Regarding the other matters of non-compliances reported by the Secretarial Auditorsthe company has complied with the requirement on 2nd March 2016.

13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186

The Company has not given any Loans guarantees or Investments covered under Sec 186 ofCompanies Act 2013.

14. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SEC 188(1)COMPANIES ACT 2013

(a) Disclosure of details of Related Parties under employment of the company.

Related Parties Name of Director to whom related Nature of relation ship with Key Management persons Salary Allowance and Bonus PF Medical Benefit Total
Rs. Rs. Rs. Rs.
Mr.R.Thirumalai R.Padmanaban Brother 1044000 71280 0 1115280
Mr.R.Rajagopal R.Padmanaban Brother 414000 28512 0 442512
Mr.Srish Jayender Balakrishna Balakrishna S Son 414000 28512 7152 449664

(b) Disclosure of particulars of contracts/arrangements entered into by the companywith related parties referred to in sub-section (1) of section 188 of the Companies Act2013 in Form No. AOC 2 is provided in Annexure – 2.

15. Material Changes

There are no material changes affecting the financial position of the company whichoccurred between the end of the financial year of the company to which the financialstatements relate and the date of this report.

16. DETAILS TO BE DISCLOSED UNDER RULE 8(3) OF COMPANIES (ACCOUNTS) RULES 2014.

The information to be disclosed under RULE 8(3) OF COMPANIES (ACCOUNTS) RULES 2014 isgiven in ANNEXURE – 3.

17. Risk Management Policy

At present risk management is handled by the Wholetime Directors and the riskmanagement policy is yet to be framed.

18. Corporate Social Responsibility

As the company’s networth turnover and net profit are below the threshold limitsprescribed under the Companies Act 2013 the company is yet to form a Corporate SocialResponsibility Committee.

19. Evaluation of Board

The performance of Board its Committee and individual directors are evaluated by No.ofmeetings held time spent in each meeting deliberating the issues quality of information/ data provided to the member the time given to them to study the details before eachmeeting quality of the deliberation in each meeting contribution of each director thedetails of decision taken and measures adopted in implementing the decision and monitoringthe continuous implementation of the decision and feed back to the Board.

20. DETAILS TO BE DISCLOSED UNDER RULE 8(5) OF COMPANIES (ACCOUNTS) RULES 2014.

The information to be disclosed under RULE 8(5) OF COMPANIES (ACCOUNTS) RULES 2014 isgiven in ANNEXURE – 4.

21. DISCLOSURE ON AUDIT COMMITTEE

a) The composition of the Audit Committee is as below:

Member & Chairman Sri J M Grover
Member Sri R.Sambasivan
Member Ms.Sivarani J

All the members have wide exposure in the relevant areas.

b) The Board of Directors has accepted all recommendations of Audit Committee.

22. Establishment of Whistle Blower Policy and Vigil Mechanism

A Whistle Blower Policy and Vigil Mechanism was adopted by the Board of Directors atits meeting held on March 9 2015. The policy can be viewed at the company websitewww.slstindia.com.

23. Secretarial Audit Report

The Secretarial Audit Report for the year 2015-16 is provided in ANNEXURE - 5.

24. DETAILS TO BE DISCLOSED UNDER RULE 5(1) OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014

The required disclosures are provided in ANNEXURE - 6.

25. DETAILS TO BE DISCLOSED UNDER RULE 5(2) OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014.

As none of the employees was in receipt of remuneration in excess of the prescribedlimit there is no report under Rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014.

26. INFORMATION REQUIRED UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE(PREVENTION PROHIBITION & REDRESSAL) ACT 2014.

The company has in place a system to redress complaints received regarding sexualharassment in line with the requirements of the Sexual Harassment of women at theworkplace (Prevention Prohibition & Redressal) Act 2013

All employees (permanent contractual temporary apprentices and trainees) are coveredunder this policy.

The following is a summary of sexual harassment complaints received and disposed offduring the year 2015-16.

- No of complaints received - Nil
- No of complaints disposed off - NA

27. FINANCE

The Board of Directors thanks Indian Overseas Bank and State Bank of India for theircontinued assistance and co-operation.

28. LABOUR

The relationship with labour continues to be cordial. Your Directors place on recordtheir appreciation of the devoted services of the Officers Members of the Staff andWorkers during the year.

29. COST AUDIT

As per Statutory requirement the costing records are being audited by the Cost Auditorand he will be submitting his report to the Central Government.

30. AUDITORS

The Auditors of the Company M/s. S.Viswanathan LLP retire and are eligible forreappointment. The Audit Committee of the Board of Directors has recommended theirre-appointment. A Certificate under Section 139(1) of the Companies Act 2013 has beenobtained from them.

31. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report is given in Annexure - 7

32. DISCLOSURE REGARDING ACCOUNTING TREATMENT.

In preparation of financial statement the treatment prescribed in all the applicableAccounting Standards are followed and no alternative treatment has been adopted.

33. CORPORATE GOVERNANCE REPORT

Regulation 15 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 does not apply to your company as your company’s equity share capital and networth is below the threshold limit prescribed under the said Regulation and hence theReport on Corporate Governance is not provided.

34. DECLARATION BY CEO AFFIRMING COMPLIANCE WITH CODE OF CONDUCT

Declaration is given in Annexure – 8

35. COMPLIANCE CERTIFICATE REGARDING CORPORATE GOVERNANCE.

The certificate is not applicable as the provisions of Corporate Governance does notapply to your company.

36. Disclosures with respect to demat suspense account/ unclaimed suspense account

There are no shares in demat suspense account or unclaimed suspense account.

37. STATEMENT OF DEVIATION/ VARIATION OF USE OF FUNDS RAISED THROUGH ANY PUBLIC ISSUE.

The company has not raised any fund through public right or preferential issue of anysecurity in recent time. Hence there is no Report on any deviation/ variation of the useof such funds.

By order of the Board
For SRI LAKSHMI SARASWATHI
TEXTILES (ARNI) LIMITED
Place : Chennai (BALAKRISHNA S)
Date : May 25 2016 Chairman & Managing Director

Annexure - 2

Disclosure of particulars of contracts/arrangements entered into by the company withrelated parties referred to in sub-section (1) of section 188 of the Companies Act 2013including certain arm’s length transactions under third proviso thereto

Form AOC – 2

(Pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014

1. Details of contracts or arrangements or transactions not at arm’s length basis
(a) Name(s) of the related party and nature of relationship Nil
(b) Nature of contracts / arrangements / transactions Nil
(c) Duration of the contracts / arrangements/transactions Nil
(d) Salient terms of the contracts or arrangements or transactions including the value if any Nil
(e) Justification for entering into such contracts or arrangements or transactions Nil
(f) date(s) of approval by the Board Nil
(g) Amount paid as advances if any Nil
(h) Date on which the special resolution was passed in general meeting as required under first proviso to section 188 Nil

2. Details of material contracts or arrangement or transactions at arm’s lengthbasis

(a) Name(s) of the related party and nature of relationship:

Related Parties Name of Director to whom related Nature of relation ship Salary & Allowance Rs. * Date of approval by the Board Total Rs.
Mr.R.Thirumalai R.Padmanaban Brother 1115280 30.07.2001/ 29.05.2014 1115280
Mr.R.Rajagopal R.Padmanaban Brother 442512 29.05.2014 442512
Mr.Srish Jayender Balakrishna Balakrishna S Son 449664 29.05.2014 449664

* Dates of appointment and latest revision

(b) Nature of contracts/arrangements/transactions: : Employment
(c) Duration of the contracts / arrangements / transactions : 2015-2016
(d) Salient terms of the contracts or arrangements or transactions including the value if any: : Normal employment terms of the company.

 

By order of the Board
For SRI LAKSHMI SARASWATHI
TEXTILES (ARNI) LIMITED
Place : Chennai (BALAKRISHNA S)
Date : May 25 2016 Chairman & Managing Director

Annexure - 3

DETAILS TO BE DISCLOSED UNDER RULE 8(3) OF COMPANIES (ACCOUNTS) RULES 2014.

Details on Conservation of energy Technology absorption and Foreign exchange earningsand Outgo

Details Disclosure
(A) Conservation of energy- The company conducts periodical energy audit and
(i) the steps taken or impact on conservation of energy; implements the advice given by the energy audit team. In all machines and areas wherever required energy savings equipments / spares/ component are used to conserve energy
(ii) the steps taken by the company for utilising alternate sources of energy; The company as alternate source has installed 1 No. Wind Turbine Generator.
(iii) the capital investment on energy conservation equipments; During the year – Nil.
(B) Technology absorption- Nil

 

(C) Foreign exchange earnings and Outgo The Foreign Exchange earned in terms of actual inflows during the year and the Foreign Exchange outgo during the year in terms of actual outflows.
Earnings/ Inflow Rs.in lakhs
Through Export 1126.52
Expenses / Outgo
i) Raw Materials purchase 31.68
ii) Import of spares and components 3.73
iii) Foreign Travel Expenses 2.57
iv) Selling Expenses 10.05
Total 48.03

 

By order of the Board
For SRI LAKSHMI SARASWATHI
TEXTILES (ARNI) LIMITED
Place : Chennai (BALAKRISHNA S)
Date : May 25 2016 Chairman & Managing Director

DETAILS TO BE DISCLOSED AS PER PROVISION OF RULE 8(5) OF COMPANIES (ACCOUNTS) RULES2014.

(I) The financial summary or highlights; The same has already been discussed in the earlier portion of this report.
(II) The change in the nature of business if any; There is no change
(III) The details of directors or key managerial personnel 1) Sri Balakrishna S was appointed as
who were appointed or have resigned during the year; CEO w.e.f 01.04.2015
2) Sri Balakrishna S ceased to CFO w.e.f 01.04.2015 on his becoming the CEO.
3) Sri R.Padmanaban was appointed as CFO w.e.f 09.02.2016.
(IV) The names of companies which have become or ceased to be its Subsidiaries joint ventures or associate companies during the year; Nil
(V) The details relating to deposits covered under Chapter V of the Act- The company does not accept deposit from public.
(VI) The details of deposits which are not in compliance with the requirements of Chapter V of the Act; No such deposit

 

By order of the Board
For SRI LAKSHMI SARASWATHI
TEXTILES (ARNI) LIMITED
Place : Chennai (BALAKRISHNA S)
Date : May 25 2016 Chairman & Managing Director

ANNEXURE – 5

Annexure A

To

The Members

SRI LAKSHMI SARASWATHI TEXTILES (ARNI) LIMITED

16 Krishnama Road Nungambakkam Chennai - 600034

Our report of even date is to be read along with this letter.

1. Maintenance of Secretarial Records is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial Records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.

4. Wherever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliances of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability ofthe Company nor the efficacy or effectiveness with which the management has conducted theaffairs of the Company.

For A.K.JAIN & ASSOCIATES
Company Secretaries
BALU SRIDHAR
Partner
Place: Chennai M.No. F5869
Date: 09.05.2016 C.P. No. 3550

Annexure – 6

DETAILS DISCLOSED AS PER PROVISION OF RULE 5(1) OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014

Disclose Requirements Disclosure
1. The ratio of the remuneration of each Director to the median remuneration of the Company for 2015-16 the percentage increase in remuneration of each Director Chief Finance Officer Chief Executive Officer and Company Secretary in 2015-16 and the comparison of remuneration of each Key Managerial Personal against the performance of the Company. Name of Director / KMP and Designation Remuneration of Director/ KMP for 2015-16 (Rs.in Lakhs) % increase in the remuneration in 2015-16 Ratio of remuneration of each Director to median Remuneration of employee. Comparison of the remuneration of the KMP against the performance of the company.
Balakrishna S Managing Director and Chief Executive Officer 21.28 1% 26 Net Loss was at Rs.399 lakhs during 2015-16 as against loss of Rs.222 lakhs in 2014-15
R.Padmanaban Joint Managing Director and Chief Financial Officer 14.18 5% 17 Net Loss was at Rs.399 lakhs during 2015-16 as against loss of Rs.222 lakhs in 2014-15 Net Loss was at
Geetha Sundararaghavan Company Secretary 7.47 13% Not Applicable Rs.399 lakhs during 2015-16 as against loss of Rs.222 lakhs in 2014-15
2 The percentage increase in the median remunera- tion of employees in the financial year 7%
3 The number of permanent employees on the rolls of company; 902
4 The explanation on the relationship between average increase in remuneration and company performance; The average increase in remuneration was 7% during 2015-16 whereas the net loss for 2015-16 was Rs.399 lakhs as against Rs.222 lakhs in 2014-15. The increase in loss was due to unfavourable market conditions in line with industrial trend.
5 Comparison of the remuneration of the Key Managerial Personnel against the performance of the company; The increase in remuneration of Key Managerial Personal was 4% during the year.
The turnover and other income decreased by 5% and the loss increased by 0.80 times.
6 Variations in the market capitalisation of the company price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase/ decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public offer in case of listed companies and in case of unlisted companies the variations in the net worth of the company as at the close of the current financial year and previous financial year; a) Market capitalization as on March 31 2016 was Rs.9.38 crores (Rs. 7.92 crores as on March 31 2015)
b) The Price Earning Ratio of the company was negative both as on March 31 2016 and as on March 31 2015.
c) The market quotation as on March 31 2016 was Rs.28.15 per shares as compared to the last public issue price of Rs.40 per share in May 1994. The decrease in market quotation was 30% as on March 31 2016 as compared to the issue price.
7 Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration; The percentage increase of remuneration of employees other than the managerial personal was 7% and whereas that of managerial personnel was 3%.
8 The key parameters for any variable component of remuneration availed by the directors; There is no variable component of remuneration availed by the directors
9 The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year; and There is no such employee in the employment of the company during the year under review.
10 Affirmation that the remuneration is as per the remuneration policy of the company. It is affirmed that the remuneration of all employees including directors is as per the remuneration policy of the company.

 

By order of the Board
For SRI LAKSHMI SARASWATHI
TEXTILES (ARNI) LIMITED
Place : Chennai (BALAKRISHNA S)
Date : May 25 2016 Chairman & Managing Director

Annexure – 7

REPORT ON MANAGEMENT’S DISCUSSION AND ANALYSIS

i. Industry structure and developments

Our company is engaged in the manufacture of all types of yarn used for manufacture ofwoven and knitted fabrics and is sold both in the domestic and international markets.Demand for yarn in the domestic market depends upon demand for fabrics for domesticconsumption and for fabrics for export as such or for manufacture of garments and othertextile products for exports. Thus domestic demand of yarn depends on the level ofdomestic consumption through direct use and capability to sell fabrics and garments andother textile products in the international market. Direct export of yarn is for themanufacture of fabrics in the foreign countries. In India especially in Tamil Naduexcess spinning capacity has been established without corresponding capacity build-up forfabrics production processing capacity and garment manufacture. No effective system hasbeen put in place to scrap obsolete spindle capacity and to ensure a coordinated capacityadditions in all segments of textile industry. Non-availability of power and nonavailability of adequate number of employees have resulted in reduction in production ofyarn. Maintaining good quality increasing the volume optimizing the product mix andcapacity utilization ensuring availability of adequate power at reasonable cost costreduction and taking up down stream value are the ways to progress. Current developmentsand effect of the same in the performance were discussed in the Directors’ Report.

ii. Opportunities and threats

Non availability of adequate power and high cost of all inputs resulted in reductionin capacity utilization of marginal spinning mills and thereby reduction in supply ofyarn. This has provided an opportunity to the established players to strengthen theirposition. Unfavourable policies of Government in the matter of cotton yarn exportwithdrawal of incentives for yarn export non availability and high cost of powershortage of man power and lack of funds for modernization are the threats faced by theindustry.

iii. Segment wise or product wise performance

Since the company is engaged in the production of Textile products only there is nosegment wise or product wise reporting of performance.

iv. Outlook

As discussed in the Directors’ Report the performance during 2016-17 will be at areasonable level.

v. Risks and concerns

Inconsistency in the price and the demand for yarn and highly volatile cotton marketare the two risks associated with spinning mills. Your company plans to face these risksthrough suitable sales efforts optimum product mix prudent purchase of cotton improvingraw material realization ensuring availability of adequate power by purchase from privatepower producers at reasonable cost implementing cost reduction measures and improvingproductivity.

vi. Internal control systems and their adequacy

The company is having an efficient and adequate internal control system commensuratewith size and level of operations of the company.

vii. Discussion on financial performance with respect to operational performance.

This has been discussed in detail in the Directors Report.

viii. Material developments in Human Resources/ Industrial Relations front includingnumber of people employed.

The company’s performance in the industrial relations front continues to be verycordial. Currently the company has 902 employees of all ranks on its rolls.

Annexure – 8

DECLARATION REGARDING COMPLIANCE WITH CODE OF CONDUCT.

All the members of the Board of Directors and Senior Management have affirmedcompliance with the code of conduct laid down by the Board.

for SRI LAKSHMI SARASWATHI
TEXTILES (ARNI) LIMITED
(BALAKRISHNA S)
Place: Chennai MANAGING DIRECTOR &
Date: 25th May 2016 CHIEF EXECUTIVE OFFICER