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Sri Ramakrishna Mills (Coimbatore) Ltd.

BSE: 521178 Sector: Industrials
NSE: N.A. ISIN Code: INE306D01017
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OPEN 15.50
PREVIOUS CLOSE 16.00
VOLUME 245
52-Week high 23.40
52-Week low 14.70
P/E
Mkt Cap.(Rs cr) 11
Buy Price 15.50
Buy Qty 445.00
Sell Price 16.00
Sell Qty 90.00
OPEN 15.50
CLOSE 16.00
VOLUME 245
52-Week high 23.40
52-Week low 14.70
P/E
Mkt Cap.(Rs cr) 11
Buy Price 15.50
Buy Qty 445.00
Sell Price 16.00
Sell Qty 90.00

Sri Ramakrishna Mills (Coimbatore) Ltd. (SRIRAMAKRMILL) - Director Report

Company director report

TO

THE SHAREHOLDERS

Dear Shareholders

Your Directors submit the following Report on the working of the Company for the yearended 31.03.2016.

After meeting all working expenses interest repairs to machinery and buildings theworking result of the company for the year 2015-16 is given below :-

Financial results:

Year Ended

31.03.2016 31.03.2015
Rs. Rs.
(Loss) before Interest and Depreciation (14280294) (27443316)
Less : Interest (31159857) (44904680)
Depreciation (8021409) (12338637)
(Loss) before Exceptional items (53461560) (84686633)
Exceptional Item: Surplus on conversion of land into Stock-in-Trade - 68242005
(Loss) after Exceptional Item (53461560) (16444628)
(DEFICIT) carried over to Balance Sheet (53461560) (16444628)

Performance:

The turnover of the Company marginally increased to Rs.18.62 crores from Rs.16.25crores and the company has incurred a loss of Rs.5.35 crores after charging interest anddepreciation. This is mainly due to increase in raw material cost and sub-optimalutilization of capacity.

The volatility in cotton price continues to hurt the industry very much and there is nomatching price increase in yarn prices. Further the demand has also not picked upsignificantly. Add to this higher interest rate has affected the performance.

Future:

Given the strong urban consumption boosted by Pay Commission dole outs and favourablemonsoon the demand is expected to pick up considerably. Further the Government hasrecently announced a slew of measures for Textile Sector to generate 10 million jobsboost exports and improve competitiveness and to achieve economy of scales. The companyintends to operate its plant in a healthier environment utilizing the available power tothe maximum 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.

Board Meetings:

During the year Four (4) Board Meetings were convened and held the details of whichare given in the Corporate Governance Report. The intervening period between twoconsecutive meetings was within the period prescribed under the Act.

Meeting of Indepndent 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.

Board Evaluation

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.

Remuneration Policy:

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.

Audit Committee:

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.

Statutory Auditors:

The Auditors of the Company M/s.M.S.Jagannathan & Visvanathan were appointed at thelast AGM to hold Office till the conclusion of 69th Annual General Meeting. Pursuant tothe provisions of the Companies Act 2013 and Rules framed thereunder and on the basis ofrecommendation of the Audit Committee subject to approval of Members at the ensuingAnnual General Meeting they can be re-appointed. Necessary resolution is included in theAgenda of the ensuing Annual General Meeting for Members’ consideration.

Cost Audit:

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 theCompany’s turnover is less than the prescribed limit the company is exempt frommaintenance of Cost Records and Audit thereof.

Secretarial Audit:

Smt.C.Jayanthi Practising Company Secretary was appointed to conduct the SecretarialAudit of the Company for the Financial year 2015-16 as required under Sec.204 of the Actand Rules made thereunder. The Secretarial Audit Report for the Financial Year 2015-16forms 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 2016-17.

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 of the annual accounts the applicable accounting standardshad been followed alongwith proper explanation relating to material departures.

b. that the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year (i.e)31st March 2016 and of the loss of the company for that period.

c. that the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.

d. that the directors had prepared the annual accounts on a "going concern"basis.

e. that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

f. that the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

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 onarm’s length 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 Contacts / 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.

Fixed Deposits:

The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Rules framed thereunder. Further all the deposits prior tothe commencement of the Companies Act 2013 were fully repaid and as on 31.03.2016 therewas no Fixed Deposit lying with the Company.

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.

Corporate Governance

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. OtherDisclosures:

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 providedpursuant to Reg. 22 and Reg.46(2)e of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015. It also provides for adequate safeguard againstvictimization of Directors / Employees who avail of the mechanism and also provide fordirect access to the Chairman of the Audit Committee in exceptional cases. The policy isalso disclosed in the Company’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 Fblicy 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 on26.05.2016.

i. Pursuant to Sec.134(3)(l) of the Act there was no significant material changes andcommitments affecting the financial position of the Company has taken place between theend of the financial year of the company and the date of Directors’ Report.

Real Estate Development:

Company has entered into a Development Agreement.

Necessary building plans have been submitted to the Town Planning Authority and theirapproval is expected shortly and the project will be launched immediately.

General:

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 Officers Staff and the employeesof the Company.

We pray for the Grace of Almighty Sri Jaganatha Fferumal for the prosperity of theCompany.

For and on behalf of the Board of Directors
of Sri Ramakrishna Mills (Coimbatore) Limited
Place : Coimbatore D. LAKSHMINARAYANASWAMY
Date : 28.07.2016 Chairman of the meeting
(DIN : 00028118)

ANNEXURE-I TO DIRECTORS’ REPORT

Particulars pursuant to provisions of section 134 of the Companies Act 2013 read withcompanies (Accounts) Rules 2014.

A. Conservation of Energy:

a) Energy Conservation measures taken : None

b) Additional investments and proposals being implemented for reduction of consumptionand consequent impact on cost of production: Proposed to replace the existing motors withenergy efficient motors attached to various machinery.

c) Impact of measures (a) and (b) for reduction of energy consumption and consequentimpact on cost of production:

The proposals implemented in the earlier years are closely monitored.

d) Total energy consumption and energy consumption per unit of production as prescribedin Form-A.

Year Ended
31.03.2016 31.03.2015
(A) Pbwer and Fuel Consumption:
1. Electricity:
a) Purchased:
Units (in lakhs) 50.22 62.16
Total amount (Rs.in lakhs) 356.67 398.93
Rate per Unit (Rs.) 7.10 6.41
b) Own Generation:
i) Through Diesel Generator
Units (in lakhs) -- --
Units per litre of Diesel Oil -- --
Cost/Unit (Rs.) -- --
ii) Through Steam turbine/Generator Nil Nil
2. Coal Not used Not used
3. Furnace Oil Not used Not used
4. Other/internal generation Nil Nil
(B) Consumption per unit of production: Electricity - Units per kg. of yarn 5.15 5.16

B. Technology Absorption:

Efforts made in Technology absorption as per Form B:

The company used indigenous technology only. Being a member of South India TextileResearch Association the company is able to get the benefits of the latest technologyavailable for textile industry.

C. Foreign Exchange earnings and Outgo:

Activities relating to exports initiatives taken to increase exports development ofnew export market for products and services and export plans:

Steps are being taken to export yarn and to explore new markets. i. Total foreignexchange earned and used:

Earned : Export of yarn - in Foreign Exchange (FOB) : NIL

Used : Expenditure in Foreign Currency on account of Travelling : Rs. 253114 /-

For and on behalf of the Board of Directors
of Sri Ramakrishna Mills (Coimbatore) Limited
Place: Coimbatore D. LAKSHMINARAYANASWAMY
Date : 28.07.2016 Chairman of the meeting
(DIN : 00028118)

ANNEXURE - II

DISCLOSURE PURSUANT TO SEC.197(12) OF THE COMPANIES ACT 2013 READ WITH RULE 5(1) OFCHAPTER XIII COMPANIES (APPOINTMENT & REMUNERATION OF MANAGERIAL PERSONNEL) RULES2014

Name / Designation Remuneration for the year ended
31.03.2016 31.03.2015
Rs. Rs. % increase Ratio of remuneration to Median remuneration
1. D.Lakshminarayanaswamy Managing Director 3016500 3016500 --- 24.8
2. L. Nagaswarna Whole Time Director 1979991 1826419 8.4 16.4
3. Median Remuneration 120999 110844 9.2 ---
4. Total number of permanent Employees 152 Nos. 153 Nos.

5. Average increase in remuneration is about 9.8% and this is minimal and in keepingwith market trend.

COMPARISON OF REMUNERATION OF KEY MANAGEMENT PERSONNEL

Name / Designation Remuneration for the year ended Increase or Decrease %
31.03.2016 31.03.2015
Rs. Rs.
6. S.A. Subramanian 573379 494226 16.0
Company Secretary
G. Krishnakumar 432487 331774 30.3
CFO
7. Performance of the Company :
i) Revenue (in M) 197.70 163.63 20.8
ii) Loss (in M) 53.46 16.44 -
iii) Market Capitalisation (in M) 104.64 112.47 (6.96)
iv) P/E ratio -ve -ve
v) Market quotation per share 14.70 15.80 (6.96)

8. i) Average percentile increase in the Salaries of employees and the averagepercentile increase in the remuneration of Managerial Personnel is the same about 9.8%

ii) There is no exceptional circumstances for the increase in the Managerialremuneration.

9. Against the Company’s performance the remunerations to Key ManagementPersonnel are reasonable and market linked.

10. There is no variable component of remuneration availed by the Directors.

11. No employee received remuneration in excess of the highest paid Director.

12. Remuneration received by the employees is as per the Remuneration Policy of theCompany.

13. No employee was in receipt of a remuneration of Rs.60.00 lakhs or more per annum ifemployed throughout the year or Rs.5.00 lakhs or more per month if employed for a part ofthe year.

14. No employee was in receipt of remuneration in the year which is in excess of thatdrawn by Managing Director or Whole Time Director and holding not less than two percent ofthe Equity Share Capital of the Company.