|BSE: 532893||Sector: Industrials|
|NSE: VTMLTD||ISIN Code: INE222F01029|
|BSE LIVE 13:24 | 13 Dec||30.80||
|NSE 00:00 | 29 Jan||Stock Is Not Traded.|
|Mkt Cap.(Rs cr)||124|
|Mkt Cap.(Rs cr)||123.82|
VTM Ltd. (VTMLTD) - Director Report
Company director report
To the Members of VTM Limited
Your Directors have pleasure in presenting their 68th Annual Report along with theAudited statement of accounts for the year ended 31st March 2015.
OPERATING & FINANCIAL PERFORMANCE
PROFITS DIVIDENDS & RETENTION
Rs. in Lakhs.
The year under review witnessed a fall in profits on account of drop in demand fortextile products. Textile exports witnessed a fall especially to China as a result of aserious slowdown in their economy. Indian markets continue to be sluggish as growth in therural segment of the economy seems quite low. The year under review also witnessed a fallin cotton prices and consequently the unit value realisation of company's products wereimpacted negatively. Against this backdrop your company's performance must be consideredas satisfactory.
Appropriation to General Reserve:
Considering the profitability and the available surplus the Board of Directors desiresto appropriate a sum of Rs.500 lakhs to General Reserve.
The Board of Directors are pleased to recommend a dividend of Re.0.63/- per share i.e.63% on Equity Shares of Re. 1/- each. The dividend together with dividend tax will entaila cash outflow of Rs.306 lakhs (previous year Rs.330 lakhs). If this is approved at theforthcoming Annual General Meeting dividend will be deposited with the bank within thetime prescribed and dividend will be paid to those who are Members of the Company as onrecord date specified in this regard. The Book Closure period being 5th June 2015 to 17thJune 2015 (Both days inclusive) in respect of shares held electronically dividend will bepaid on the basis of beneficial ownership as per details furnished by the depositories.
Extract of Annual Return:
The Extract of Annual Return is furnished in Form MGT-9 as per Annexure III.
M/s. Colour Yams Limited is an Associate Company and the investments are held only forinvestment purposes.
Change in the Nature of Business:
There is no change in the nature of the business of the Company.
Orders by Regulators or Courts:
There were no significant and material orders passed by regulators or courts ortribunals impacting the going concern status and Company's operations in future.
Material Changes Affecting the Financials:
There were no material changes and commitments affecting the financial position of theCompany occurring between March 31 2015 and the date of this Report of the Directors.
Internal Control System:
The Company has in place an established internal control system designed to ensureproper recording of financial and operational information and compliance of variousinternal controls and other regulatory and statutory compliances. Code on Internal Controlwhich require that the Directors review the effectiveness of internal controls andcompliance controls financial and operational risks risk assessment and managementsystems and related party transactions have been complied with. Self certificationexercises are also conducted by which senior management certify effectiveness of theinternal control system their adherence to Code of Conduct and Company's policies forwhich they are responsible financial or commercial transactions if any where they havepersonal interest or potential conflict of interest. Internal Audit has been conducted onperiodical basis.
Company's Policies on Corporate Social Responsibility Remuneration Employee Concern(Whistle Blowing) and also the Code of Conduct applicable to Directors and Employees ofthe Company have been complied with. These Policies and the Code of Conduct are availableon the Company's website www.vtmill.com
The Company's factory at Sulakarai Virudhunagar Tamil Nadu has been certified ISO forQuality Management Systems Standards.
Segment wise performance:
The Company is primarily a manufacturer of textile products and is managedorganizationally as a single unit. Accordingly the Company is a single business segmentcompany. Geographical (secondary) segment has been identified as domestic sales andexports.
Industry Structure & Developments Opportunities & Threats Outlook Risks& Concerns:
The Indian textile industry has come to occupy a predominant position on the worldscene. India together with its Asian counterparts has become the clothier to the world.The Indian textile industry derives its strength from the availability of home grown rawmaterial together with well developed indigenous technological knowhow and skilled manpower. The industry receives support from the Government in terms of TechnologyUpgradation Fund Scheme interest subsidy and export incentive of about 2%. The industry isanxiously waiting for the new Government to unveil its textile policy. These represent theopportunities that lie ahead of the Indian textile industry and your Company.
The threats to these opportunities come from an unstable economic outlook in theimporting countries trade barriers imposed by them and inflationary pressures on ourinputs. Power is a main ingredient it has doubled in the last eight years. Availabilityof competitively priced uninterrupted power is essential for the stable operations of yourCompany's business. The power situation as it prevailed in Tamil Nadu a few years ago wasextremely precarious. It has now shown improvement though the cost of the power is higherwhen compared to other States of India.
The Company is taking steps for development and implementation of risk managementpolicy. The element of risk that may threaten the company is the uncertainty in theoverseas market on which the company depends for its exports. Further in the domesticmarket there is a risk of competition from a large number of textile units.
Your Directors look forward to the current year with hope and optimism. We expect theexport markets to stabilise and a large crop of Indian cotton is expected to stabilisecotton prices. This will help your Company to improve its business and operate in aprofitable manner.
Board of Directors:
The Board consists of Eight Directors of whom four are independent Directors threenon-executive Directors and one Woman Director.
The Companies Act 2013 requires that a Woman Director should be a member of the Boardof Directors for a listed company. Dr.(Smt.) Uma Kannan Wife of Sri T.Kannan Promoter ofthe Company has been recommended both by the Nomination and Remuneration Committee and bythe Board of Directors to be the Woman Director of the Company. Approval for herappointment has been sought from the Members of the Company through electronic voting forwhich Agenda is included in the Annual General Meeting. If approved Dr.(Smt.) Uma Kannanwill join the Board of Directors as a Woman Director effective from 17th June 2015 andshe will be liable to retire by rotation.
Dr.(Smt.) Uma Kannan aged 53 years is a Director in two Public Limited companies. Sheis Vice President & Secretary of Thiagarajar College a leading educationalinstitution in Madurai. She is Convenor of INTACH (Indian National Trust for Art Cultureand Heritage) in Madurai. She is a Senate Member in Madurai Kamaraj University.
The details of number and dates of meetings held by the Board and its Committeesattendance of Directors and remuneration paid to them is given separately in the attachedCorporate Governance Report.
The sitting fees paid to the Directors are within the limits prescribed under theCompanies Act 2013 and Rules thereon.
Retirement of Directors by Rotation:
Mr.PL. Subbiah Director of the Company retires by rotation at the ensuing AnnualGeneral Meeting and being eligible has offered himself for reappointment as a Director ofthe Company. Being eligible he is proposed to be re-appointed as Director of the Company.
The Independent Directors have confirmed and declared that they are not disqualified toact as an independent Director in compliance with the provisions of section 149 of theCompanies Act 2013 and the Board is also of the opinion that the Independent Directorsfulfill all the conditions specified in the Companies Act 2013 making them eligible toact as Independent Directors. The Independent Directors have convened a meeting on 14thJanuary 2015.
Code of Conduct:
All Directors Key Managerial Personnel and Senior Management of the Company haveconfirmed compliance with the Code of Conduct applicable to the Directors and employees ofthe Company. The Code of Conduct is available on the Company's website www.vtmill.com AllDirectors have confirmed compliance with provisions of section 164 of the Companies Act2013.
Directors' Responsibility Statement:
The Board of Directors acknowledges the responsibility for ensuring compliance with theprovisions of section 134(3)c read with section 134(5) of the Companies Act 2013 andClause 49(III)(D)(4)(a) of the listing agreement with Stock Exchanges in the preparationof the annual accounts for the year ended on 31st March 2015 and state that:
i. in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;
ii. the Directors have 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 and ofthe profit of the Company for that period;
iii. the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
iv the Directors have prepared the annual accounts on a going concern basis;
v. the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively and the Company has adopted proper policies and procedures for ensuringorderly and efficient conducting of the business:
a) the adherence of companys policies have been disclosed in the Annual Report.
b) the Company has carried on physical verification of fixed assets periodically andregularly.
c) the compliance in respect of prevention of frauds and errors has been ensured by theInternal and Statutory Audit.
d) the accuracy and completeness of accounting records have been certified by theStatutory Auditor.
e) the financial information have been prepared and circulated within a reasonabletime.
vi. the directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.
Key Managerial Personnel:
The following person was formally appointed as Key Managerial Personnel of the Companyeffective from April 1 2014 in compliance with the provisions of section 203 of theCompanies Act 2013:
a) Mr. S. Paramashivan Company Secretary
b) The Company is in the process of appointing the Managing Director/Whole TimeDirector and Chief Financial Officer in the ensuing financial year.
The Company has in place the SEBI guidelines pertaining to Corporate Governance. Duringthe year under consideration the Company had an Eight member Board of Directors consistingof One Chairman and Director Four non-executive independent directors Threenon-executive directors of which one is a Woman Director.
The Corporate Governance Report giving the details as required under Clause 49 of thelisting agreement with the Stock Exchanges is given separately as Annexure I and formspart of this Report of the Directors. The Corporate Governance Certificate for the yearended on March 31 2015 issued by M/s. Peri Thiagaraj & Co. Auditors of the Companyis also attached as Annexure I and forms a part of this Report of the Directors.
The Company has in place an Insider Trading Code for compliance with the Securities andExchange Board of India (Prohibition of Insider Trading) Regulations 1992. Mr S.Paramashivan Company Secretary is the Compliance Officer responsible for compliance withthe Insider Trading procedures. Details of securities transaction by insiders are placedbefore the Board of Directors of the Company and also notified to the Stock Exchanges.
Sri T. Kannan Chairman of the Company has given his certificate under Clause 49(IX) ofthe listing agreement with Stock Exchanges regarding the annual financial statements forthe year ended on 31st March 2015 to the Board of Directors. The Chairman has given hiscertificate under Clause 49(II)(E) of the listing agreement with Stock Exchanges regardingcompliance with the Code of Conduct of the Company for the year ended March 31 2015which is attached as Annexure IX and forms a part of this Report of the Directors.
The Audit Committee was reconstituted on 11.01.2011. The existing committee consists ofthree independent Directors and satisfies the provisions of Section 177(2) of theCompanies Act 2013. The Committee now comprises Mr. RM. Somasundaram as Chairman and MrA. Mariappan and Mr. L.N.V. Subramanian who are all Independent Directors. The CompanySecretary is the Secretary of the Committee. The details of all related party transactionsare placed periodically before the Audit Committee. During the year there were noinstances where the Board had not accepted the recommendations of the Audit Committee. TheCompany has in place a vigil mechanism details of which are available on the Company'swebsite www.vtmill.com
The Audit Committee has also been delegated the responsibility for monitoring andreviewing risk management assessment and minimization procedures implementing andmonitoring the risk management plan and identifying reviewing and mitigating all elementsof risks which the Company may be exposed to.
The details of terms of reference of the Audit Committee number and dates of meetingsheld attendance of the Directors and remuneration paid to them are given separately inthe attached Corporate Governance Report.
Evaluation of the Board of its own performance Committees of the Board and IndividualDirectors:
The Board reviewed and evaluated its own performance from the following angles:
Strategy and Implementation
Performance of the Individual Directors
Performance of the Committees viz. Audit Committee Nomination and RemunerationCommittee Stakeholders Relationship Committee and Corporate Social ResponsibilityCommittee.
The Board also evaluated the performance of the above referred Committees and concludedthat the Committees continued to operate effectively with full participation from allmembers and executive management of the Company. The Board upon evaluation considered thatthe Board is well balanced in terms of diversity of experience. The Board noted that allDirectors have understood the opportunities and risks to the Company's strategy and aresupportive of the direction articulated by the management team towards improvement.Corporate responsibility ethics and compliance are taken seriously and there is a goodbalance between the core values of the Company and the interests of shareholders.
The Directors also expressed their satisfaction in all the above areas considering theCompany's performance in all fronts viz. New Product Development Sales and MarketingInternational business Employee relations and compliance with statutory requirements.
Related Party Transactions:
During the year the company has entered into contracts or arrangements with suchnumber of related parties with the approval by the Board of Directors in respect of thefollowing:
1. Sale purchase or supply of any goods or materials
2. Selling or otherwise disposing of or buying property of any kind
3. Leasing of property of any kind
4. Availing or rendering of any services
The details in respect of the material contracts or arrangements or transactions onarm's length basis carried on with the related parties have been furnished in ANNEXURE V.A Corporate Social Responsibility Committee was constituted on April 24 2014 with Sri T.Kannan as Chairman and M/s. K. Thiagarajan and RM. Somasundaram Directors of the Companyas Members.
The Committee met once during the year on 25th March 2015 to finalise the CorporateSocial Responsibility Policy. The Policy was approved by the Board on the same day at itsmeeting. The CSR policy is available on the Company's website www.vtmill.com.
The terms of reference of the Corporate Social Responsibility Committee number anddates of meetings held attendance of the Directors and remuneration paid to them aregiven separately in the attached Corporate Governance Report.
The Committee considered the social activities as referred in Schedule VII to theCompanies Act and recognizes that its operations impact a wide community of the public forimparting education for uplifting the social status of the public. In structuring itsapproach to the various aspects of Corporate Social Responsibility the Company takesaccount of guidelines and statements issued by various regulatory bodies. Socialenvironment and ethical matters are reviewed by the Board including the impact suchmatters may have on the Company's management of risk.
The Company has finalized the manner of implementation of the CSR Policy andcontributed a sum of Rs.27.00 Lakhs to a leading educational institution for developmentof infrastructure facilities in the Institution. The details of the project amount ofestimates and the contribution to the implementing agency has been shown in Annexure VII.
Nomination and Remuneration Committee:
A Nomination and Remuneration Committee was constituted on April 24 2014 with Sri RM.Somasundaram as Chairman and M/s. T. Kannan and A. Mariappan as Members. This constitutionsatisfies the provisions of Section 178 of the Companies Act 2013. The Company Secretaryis the Secretary of this Committee.
The Company's Remuneration Policy is available on the Company's website www.vtmill.comand is attached as Annexure VIII and forms a part of this Report of the Directors. Thedetails of terms of reference of the Nomination and Remuneration Committee number anddates of meetings held attendance of the Directors and remuneration paid to them aregiven separately in the attached Corporate Governance Report.
The Shareholders and Investors Grievance Committee was constituted earlier on26.06.2004. To comply with the requirements of the Companies Act 2013 and the listingagreements with Stock Exchanges the name of the Committee was changed to StakeholdersRelationship Committee effective from April 25 2014. The Members of the Committee are SriT. Kannan as Chairman and Sri L.N.V. Subramanian as Member. The Company Secretary is theSecretary of the Committee. The Committee has delegated the responsibility for sharetransfers and other routine share maintenance work to the Company Secretary and to M/s.Karvy Computer Share Private Limited the Registrars and Share Transfer Agents of theCompany. All requests for dematerialisation and rematerialisation of shares transfer ortransmission of shares and other share maintenance matters are completed within 30 days ofreceipt of valid and complete documents. The Committee approved all activities throughCircular Resolutions and all those Circular Resolutions were placed and discussed at theBoard meetings. The Committee also reports to the Board on matters relating to theshareholding pattern shareholding of major shareholders insider trading compliancesmovement of share prices redressal of complaints Reports on SCORES of SEBI and allcompliances under the Companies Act 2013 and the listing agreement with Stock Exchanges.The shares of the Company are listed on the Bombay Stock Exchange. The Company's sharesare compulsorily traded in the dematerialized form. The ISIN number allotted isINE222F01029. The details of shareholding pattern distribution of shareholding and shareprices are mentioned separately in the attached Corporate Governance Report.
M/s Peri Thiagaraj & Co. Chartered Accountants hold office as Auditors of theCompany till the conclusion of the ensuing Annual General Meeting and being eligibleoffer themselves for reappointment. Pursuant to the provisions of section 139 of theCompanies Act 2013 the Auditors are proposed to be reappointed for a term of one yearsubject to ratification by the Members at the ensuing Annual General Meeting. There are noqualifications or observations or remarks made by the Auditors in their Report.
A Secretarial Audit was conducted during the year by the Secretarial Auditor Mr.M.K.Bashyam Practicing Company Secretary in accordance with the provisions of section 204 ofthe Companies Act 2013. The Secretarial Auditor's Report is attached as Annexure II andforms a part of this Report of the Directors. There are no qualifications or observationsor remarks made by the Secretarial Auditor in his Report.
The Company has not accepted any deposits from the public and as such there are nooutstanding deposits in terms of the Companies (Acceptance of Deposits) Rules 2014.
The company does not have any deposit which are not in compliance with the CompaniesAct 2013.
Loans Guarantees and Investments:
The Company has not granted any inter-corporate loan given guarantee or providedsecurity for availing loan by any other company. However the company has invested itsfunds in such number of companies in such no. of shares in other bodies corporate asreferred to in Notes No. 12 and 14 of the Balance Sheet.
In compliance with section 186 of the Companies Act 2013 loans to employees bearinterest at applicable rates.
Conservation of Energy Technology Absorption and Foreign Exchange Earningsand Outgo:
The prescribed particulars of Conservation of Energy Technology Absorption and ForeignExchange Earnings and Outgo required under section 134(3)(m) read with Rule 8(3) of theCompanies (Accounts) Rules 2014 is attached as Annexure IV and forms a part of thisReport of the Directors.
Particulars of Employees:
The prescribed particulars of Employees required under section 134(3)(q) read with Rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isattached as Annexure VI and forms a part of this Report of the Directors.
Annexures forming a part of this Report of the Directors:
The Annexures referred to in this Report and other information which are required to bedisclosed are annexed herewith and form a part of this Report of the Directors:
I. Corporate Governance Report along with Certificate on Corporate Governance by theAuditor of the Company.
II. Secretarial Audit Report
III. Extract of the Annual Return in Form MGT-9
IV. Particulars on Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo
V. Form AOC-2 for material contracts with Related Parties
VI Ratio of remuneration and Particulars of Employees
VII. CSR Policy and Annual Report on CSR spending
VIII Remuneration Policy of the Company
IX. Chairman Certificate under Clause 49(II)(E) of Listing Agreement on compliance ofCode of Conduct.
Your Directors record their sincere appreciation of the dedication and commitment ofall employees in achieving and sustaining excellence in all areas of the business. YourDirectors thank the Shareholders customers suppliers and bankers and other stakeholdersfor their continuous support to the Company.
For and on behalf of the Board of Directors
April 30 2015. Chairman
ANNEXURE-IV TO THE DIRECTORS' REPORT
Particulars furnished pursuant to the Companies (Accounts) Rules 2014.
1. STEPS TAKEN FOR CONSERVATION OF ENERGY:
a) Air Leakage Audit:
During the year the Company conducted Air Leakage Audit to check the leakages of AirCompressor in order to save the energy by arresting the major leakages. The traditional GIpipelines have been removed and new technological Aluminium Pipelines were laid to avoidair leakages.
b) Power Factor:
The Company laid separate Dedicated Feeder to obtain uninterrupted power supply.
The Company has installed invertors (VFD) to harmonise the power consumption inHumidification Plant and Autoconers installed in the manufacturing facility.
2. STEPS TAKEN FOR ALTERNATE SOURCES OF ENERGY & CAPITAL INVESTMENT ON ENERGYCONSERVATION EQUIPMENTS:
a) The company has constantly taken efforts for Green Energy by installation of 4 Nos.Wind Turbine Generator at a Capital Outlay of Rs.2325 Lakhs during the last ten yearswhich saves substantial power cost.
b) The Company has made an investment of Rs.57.00 Lakhs by installation of HighEfficiency and Low Loss Transformers and LED lamps in the place of Fluorescent lamps.
A. POWER AND FUEL CONSUMPTION
B. CONSUMPTION PER UNIT OF PRODUCTION OF CLOTH:
Note: 1. No standard rate of consumption is available.
2. As the company is producing numerous varieties or sorts of cloth separate detailsfor each variety or sort are not given.
II. TECHNOLOGY ABSORPTION AND RESEARCH AND DEVELOPMENT:
1. The Company has installed new Drier Systems in compressors which improves theefficiency of looms by arresting water leakages.
2. The installation of new ALMAC inspection machines derive the benefit of reduction inprocess of folding.
III. FOREIGN EXCHANGE EARNINGS AND OUTGO:
The company has earned during the year under report foreign exchange equivalent toRs.2725 Lakhs (FOB value of exports) through direct exports.
The foreign exchange outgo during the period is Rs.40.27 Lakhs.
The company is striving to expand the export market segment by broadening itsgeographical sweep.