Your Directors submit the following Report on the working of the Company for the yearended 31.03.2017.
After meeting all working expenses interest repairs to machinery and buildings theworking result of the company for the year 2016-17 is given below :-
| ||Year Ended |
| ||31.03.2017 ||31.03.2016 |
| ||Rs. ||Rs. |
|(Loss) before Interest and Depreciation ||(16130503) ||(17681946) |
|Less : Interest ||(26009270) ||(27758205) |
|Depreciation ||(6432231) ||(8021409) |
|(Loss) before Exceptional items ||(48572004) ||(53461560) |
|Exceptional Item: Surplus on conversion of land into Stock-in-Trade ||51472807 || |
|Surplus/(Loss) after Exceptional Item ||2900803 ||(53461560) |
|Surplus/(Deficit) carried over to Balance Sheet ||2900803 ||(53461560) |
The turnover of the Company declined to Rs.10.84 crores from Rs.18.62 crores and thecompany has incurred a loss of Rs.4.86 crores after charging interest and depreciation.After taking into account the surplus arising on conversion of land into Stock-in-trade ofRs.5.15 crores there is a surplus of Rs.29.00 lakhs carried over to Balance Sheet.Textile Industry has been facing a lot of challenges like raw material pricesmoving northward and yarn prices not moving in tandem high interest rates rigid andoutdated labour laws and unabated state level taxes and duties. Consequently there wassub-optimal utilization of the capacity. Add to this the demand also has not picked upsignificantly owing to the demonetization of currency and other attendant factors.
Being a basic necessity product the Indian Textile Industry can benefit a lot fromgrowth in demand for textile products in India and at global level. Equally theGovernments policy emphasis to modernize and develop various segments of textile valuechain has presented the Indian Spinning Industry with opportunities to grow further.
Further the 5 percent GST rate on Cotton Textiles is a progressive decision and onethat would give impetus to the growth and development of the entire textile value chain.The Company intends to take advantage of the favourable environment present in the Indianeconomy and thereby improve its performance.
Management Discussion and Analysis
In terms of the provisions of Regulation 34(3) and Schedule-V of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Management Discussion andAnalysis is set out in this report. It contains an analysis on the performance of theindustry the Company Internal Control System and Risk management policy.
Board of Directors:
The composition of the Board of Directors of the Company is furnished in the CorporateGovernance Report annexed to this report. The Company has issued letters of appointment toall the independent directors and the terms and conditions of their appointment have beendisclosed on the website of the company. In terms of Section 149 of the Companies Act2013 (Act) Sri.N.Jothikumar (DIN:00028025) Sri.R.Narayanamurthy (DIN:00028158) andSri.R.Radhakrishnan (DIN:00028190) Independent Directors were appointed by theShareholders at the 67th Annual General Meeting (AGM) held on September 29 2014 for aperiod of five years to hold Office upto September 28 2019. All the independent directorshave affirmed that they satisfy the criteria laid down under Sec.149(6) of the Act andRegulation 16(b) of SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 Further the Company's Code of Conduct suitably incorporates the duties ofindependent directors as laid down in the Act.
Retirement by rotation:
Smt.L.Nagaswarna (DIN: 00051610) who has been appointed as a Whole time Directorretires by rotation at the ensuing Annual General Meeting of the Company as per the termsof her appointment. The place so vacated by her has to be filled up at the same meeting.The retiring Director is eligible for re-appointment at the ensuing Annual GeneralMeeting. Accordingly a resolution to this effect is included in the Agenda forconsideration of members at the ensuing Annual General Meeting of the Company.
During the year Six (6) Board Meetings were convened and held the details of which aregiven in the Corporate Governance Report. The intervening period between two consecutivemeetings was within the period prescribed under the Act.
Meeting of Independent Directors:
During the year one separate meeting of independent directors was held. All theindependent directors were present at this meeting. In the said meeting the independentdirectors assessed the quality quantity and timeliness of flow of information between themanagement and the Board and expressed that the current flow of information and contentswere adequate for the Board to effectively perform its duties.
The evaluation of all the Directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board. The evaluation process has been framed by theNomination and Remuneration Committee and approved by the Board. A questionnaireconsisting of certain criteria is adopted for reviewing the functioning and effectivenessof the Board and for identifying possible areas for improvement. Each Board member isrequested to evaluate the effectiveness of the Board dynamics and relationshipsinformation flow decision making of the Directors relationship to Stakeholders Companyperformance company strategy and effectiveness of the whole Board and its variouscommittees on a scale of one to five.
Necessary feed back is provided for improvement in the performance of the Directors andthe functioning of the overall Board and the various committees.
Familiarisation Programme for Independent Directors :
The Company has put in place required programme for independent directors to getfamiliarized with the Organisation and also about their duties and responsibilities.
Key Managerial Personnel:
Sri.D.Lakshminarayanaswamy (DIN:00028118) Managing Director Smt.L.NagaswarnaWholetime Director (DIN:00051610) Sri.S.A.Subramanian and Sri.G.Krishnakumar as CompanySecretary and Chief Financial Officer respectively constitute Key Managerial Personnel ofthe Company.
The policy on appointment remuneration and evaluation criteria for Directors andSenior Management is as per the recommendation of the Nomination and RemunerationCommittee of the Board. The Company recognized that Compensation Policy is an importantand strategic tool in the achievement of vision and goals of the company. It is in keepingwith the performance of the individuals internal equity market trends and industrypractices legal requirements and appropriate governance standards.
The Nomination and Remuneration Committee recommends the remuneration of Directors andSenior Management personnel which is approved by the Board of Directors subject to theapproval of shareholders where necessary.
In terms of the provisions of Section 177 of the Act and Regulation 18 of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Audit Committee of theBoard was reconstituted to act in accordance with the terms of reference prescribedtherein. Detailed disclosure on composition terms of reference and meetings of the AuditCommittee are furnished in the Corporate Governance Report.
The Auditors of the Company M/s.M.S.Jagannathan & Visvanathan were appointed at thelast AGM to hold Office till the conclusion of 70th Annual General Meeting. The presentAuditors have completed their term of appointment at the conclusion of the 70th AnnualGeneral Meeting. Pursuant to the provisions of the Companies Act 2013 and Rules framedthereunder and on the basis of recommendation of the Audit Committee subject to approvalof Members at the ensuing Annual General Meeting. M/s.C.S.K.Prabhu & Co CharteredAccountants Coimbatore have been appointed. Necessary resolution is included in theAgenda of the ensuing Annual General Meeting for Members' consideration.
Ministry of Corporate Affairs (MCA) has vide Notification dated 31st December 2014amended the Companies (Cost Records and Audit) Rules 2014. Accordingly the rules apply tothe Companies which have turnover exceeding the prescribed limits. Since the Company'sturnover is less than the prescribed limit the company is exempt from maintenance of CostRecords and Audit thereof.
Smt.C.Jayanthi Practising Company Secretary was appointed to conduct the SecretarialAudit of the Company for the Financial year 2016-17 as required under Sec.204 of the Actand Rules made thereunder. The Secretarial Audit Report for the Financial Year 2016-17forms part of the Annual Report as annexure to the Board's Report.
The Board has appointed Smt.C.Jayanthi Practising Company Secretary as SecretarialAuditor of the Company for the Financial Year 2017-18.
Internal Auditor :
The Company continues to engage Smt.Sasirekha Vengatesh Chartered Accountants asInternal Auditors of the Company. The scope of work includes review of processes forsafeguarding the assets of the company review of operational efficiency effectiveness ofsystems and processes and assessing the strength and weaknesses of internal control.Internal Auditors' reports are placed before the Audit Committee on a regular basis fortaking suitable action for improvement wherever required.
Directors' Responsibility Statement:
As required under section 134 of the Act it is stated a. that in the preparation ofthe annual accounts the applicable accounting standards had been followed alongwithproper explanation relating to material departures. b. that the Directors had selectedsuch accounting policies and applied them consistently and made judgements and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the company at the end of the financial year (i.e) 31st March 2017 and of the profit ofthe company for that period. c. that the directors had taken proper and sufficient carefor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities. d. that the directors had prepared the annualaccounts on a "going concern" basis. e. that the Directors had laid downinternal financial controls to be followed by the Company and that such internal financialcontrols are adequate and were operating effectively. f. that the directors had devisedproper systems to ensure compliance with the provisions of all applicable laws and thatsuch systems were adequate and operating effectively.
Related Party Transactions:
All contracts / arrangements / transactions entered into by the company during theFinancial Year with related parties were in the ordinary course of business and on arm'slength basis. During the year the company had not entered into any contracts /arrangements / transactions with related parties which could be considered material inaccordance with the policy of the company on materiality of related party transactions.Statement giving details of the Contracts / arrangements / transactions with relatedparties is placed before the Audit Committee and the Board of Directors for their approvalon quarterly basis.
Corporate Social Responsibility :
Pursuant to Sec.135 of the Act the Company does not satisfy the eligibility criteriawith regard to networth turnover and net profit and hence the company is not required tocomply with the provisions relating to CSR.
Subsidiary and Associate Companies:
The Company does not have any Subsidiary or Associate Companies. Accordinglyfurnishing the details as required in Form AOC-1 pursuant to Section 129 of the CompaniesAct 2013 in respect of above does not arise.
The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Rules framed thereunder.
Energy Conservation Technology Absorption and Foreign Exchange earnings & outgo :
The information on the above stipulated under Sec.134(3)(m) of the Act read with Rule 8of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure-I.
Particulars of Directors Key Management Personnel and Employees:
The information required pursuant to Sec.197 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of DirectorsKey Management Personnel and employees of the Company are provided in the Annual Report.
Sri. D. Lakshminarayanaswamy was appointed as the Managing Director of the Company fora period of three years from 01.04.2014 upto 31.03.2017. The Board of Directors on therecommendation of Nomination and Remuneration Committee has reappointed him as theManaging Director of the Company for a further period of three years from 01.04.2017subject to the approval of the members of the company.
Smt. L. Nagaswarna was appointed as Wholetime Director of the Company for a period ofthree years from 14.02.2014 upto 13.08.2017. The Board of Directors on the recommendationof Nomination and Remuneration Committee has reappointed her as Wholetime Director of theCompany for a further period of three years from 14.08.2017 subject to the approval ofthe Members of the company.
Necessary resolutions in respect of above are included in the Agenda for considerationof members at the ensuing Annual General Meeting of the Company.
A separate Report on Corporate Governance is attached to this report. A certificatefrom the Auditors of the company confirming compliance with the conditions of CorporateGovernance as stipulated under Regulation 27 and Part-E of Schedule-II of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 is attached to this report.
a. Details of loans guarantees and investments under the provisions of Sec.186 of theAct are given as Annexure.
b. The internal control systems and its adequacy are discussed in the ManagementDiscussion and Analysis annexed to the Directors' Report.
c. There was no significant material order passed by the Regulators / Courts whichwould impact the going concern status of the company and its future operations.
d. The details forming part of the extract of the Annual Return in Form MGT-9 isannexed to the Directors' Report.
e. The Company has adopted the Whistle Blower Policy for Directors and Employees of theCompany to report concerns about the unethical behaviour actual or suspected fraud orviolation of the Company's Code of Conduct and ethics. The policy is provided pursuant toReg. 22 and Reg.46(2)e of SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. It also provides for adequate safeguard against victimization ofDirectors / Employees who avail of the mechanism and also provide for direct access to theChairman of the Audit Committee in exceptional cases. The policy is also disclosed in theCompany's Website.
f. The Company has adopted a code of conduct for the Board of Directors and SeniorManagement of the company and all of them have affirmed compliance of the same.
g. The Company has in place an Anti Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. Necessary mechanism has been put across the company in thisregard to cover all the women employees in the company.
h. As contemplated under Regulation 17(8) of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 certificate from MD/CEO Sri.D.Lakshminarayanaswamy &CFO Sri.G.Krishnakumar was placed before the Board of Directors at the meeting held on30.05.2017.
i. Pursuant to Sec.134(3)(l) of the Act there was no significant material changes andcommitments affecting the financial position of the Company that has taken place betweenthe end of the financial year of the company and the date of Directors' Report.
Real Estate Development:
Company has entered into a Development Agreement and the necessary building plans areapproved by the Town Planning Authority and the project has been launched. We expect avery good response to the above project which is only Villas. The project is expected tobe completed by August 2019 in full.
Our thanks are due to The South Indian Bank Ltd. for their support and assistance tomeet our business needs. The Directors appreciate the services rendered by the OfficersStaff and the employees of the Company. We pray for the Grace of Almighty Sri JaganathaPerumal for the prosperity of the Company.
| ||For and on behalf of the Board of Directors |
| ||of Sri Ramakrishna Mills (Coimbatore) Limited |
|Place : Coimbatore ||D. LAKSHMINARAYANASWAMY |
|Date : 27.07.2017 ||Chairman of the meeting |
| ||(DIN : 00028118) |