TO THE MEMBERS OF AMARJOTHI SPINNING MILLS LIMITED
Your Directors have pleasure in presenting the Thirty Second Annual Report togetherwith the audited accounts of your Company for the year ended 31st March 2020.
| ||2019-2020 ||2018-2019 |
| ||Rs. ||Rs. |
|Revenue from Operations ||1825294128.42 ||2121960532.61 |
|Other Income ||26833293.48 ||76075164.95 |
|Total Revenue ||1852127421.90 ||2198035697.56 |
|Less: Total Expenses ||1702143813.37 ||1994387722.11 |
|Profit before Tax ||149983608.53 ||203647975.45 |
|Profit after Tax ||103262608.53 ||144131975.45 |
|Surplus brought forward ||993138396.50 ||881359003.05 |
|Amount available for appropriation ||1096401005.03 ||1025490978.50 |
|Appropriations to : || || |
|General Reserve ||10326000.00 ||14413000.00 |
|Dividend paid including Tax ||16274965.00 ||16248282.00 |
|Previous year Income tax adjusted ||(-)2237343.00 ||1691300.00 |
|Surplus carried to balance sheet ||1072037383.03 ||993138396.50 |
|TOTAL ||1096401005.03 ||1025490978.50 |
STATE OF COMPANY'S AFFAIRS AND FUTURE OUTLOOK:
During the year under review the Company's revenue from operations (net of GST) hasdecreased by Rs.2966.66 lakhs over the previous financial year and recorded a revenue ofRs.18252.94 lakhs for the financial year ended 31st March 2020. The profit after tax hasdecreased by 28.35% compared to the previous financial year.
1) YARN DIVISION
Your Directors inform you that yarn division continues to perform well. We hope that infuture also our performance will improve.
2) PROCESSING UNIT
The Processing unit is fully utilized for the dyeing of material of our spinning unit.In addition to our own dyeing we process our material in outside dyeing also.
The Company will continue to perform well in the domestic market. The Company is in theprocess of implementing several cost saving measures including modernization which willmake the product more competitive.
CHANGE IN NATURE OF BUSINESS IF ANY:
There were no changes in Nature of Business during the year 2019-2020.
The Directors have recommended a dividend of Rs. 2.00 per share (20% on the Face value)for the year ended 31st March 2020 absorbing a sum of Rs.13500000/- for the approval ofthe share holders at the ensuing Annual General Meeting. Pursuant to the Income-tax Act1961 read with the Finance Act 2020. Dividend income is taxable in the hands of theMembers with effect from 1st April 2020 and the Company is required to deduct tax atsource from such dividend at the prescribed rates.
During the year your Company has transferred an amount of Rs. 10326000.00 to theGeneral Reserve.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
The dividend amount remaining unclaimed for the year 201213 is required to betransferred to the Investor Education and Protection Fund established by the CentralGovernment after the conclusion of this Annual General Meeting.
The paid up Equity Share Capital as on March 31 2020 was Rs. 67500000/- comprising6750000 shares of Rs. 10/- each. During the year under review the company has not madeany fresh issue of shares.
DISCLOSURE REGARDING ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS:
The Company has not issued any Equity Shares with Differential Rights during theFinancial Year 2019-2020.
DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS:
The Company has not provided any Stock Option Scheme to the employees during the yearUnder Review.
DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES :
The Company has not issued any Sweat Equity Shares during the year under review.
EXTRACT OF ANNUAL RETURN :
As required pursuant to Section 92 (3) of the Companies Act 2013 and Rule 12 (1) ofthe Companies (Management and Administration) Rules 2014 an extract of Annual Return inthe Form MGT-9 is annexed as a part of this report vide "ANNEXURE VI" andavailable in the Company's Website www.amarjothi.net.
NUMBER OF BOARD MEETINGS:
During the year under review 4 Meetings of the Board of Directors 4 Meetings of theAudit Committee 3 Meetings of the Nomination and Remuneration Committee 1 Meeting of theCorporate Social Responsibility Committee 4 Meetings of the Stakeholders RelationshipCommittee and 10 Meetings of the Share Transfer Committee were held. Further details ofthe same have been enumerated in the Corporate Governance Report annexed herewith.
Date of meetings:
|30.05.2019 ||31.07.2019 ||01.11.2019 ||31.01.2020 |
STATEMENT ON COMPLIANCE WITH SECRETARIAL STANDARDS
The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards and that such systems are adequate and operatingeffectively. The Company is in compliance with the applicable Secretarial Standards issuedby the Institute of Company Secretaries of India and approved by the Central Governmentunder Section 118(10) of the Act.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(3)(c) of the Companies Act 2013 withrespect to the Directors' Responsibility Statement it is hereby confirmed that-
(i) In the preparation of the annual accounts for the year ended 31.03.2020 theapplicable accounting standards have been followed and there are no material departuresfrom those standards;
(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 loss 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 the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother 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 were operatingeffectively; and
(vi) the Directors have devised proper systems to ensure compliance with the provisionsof all the applicable laws and such systems were adequate and operating effectively.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OF THECOMPANIES ACT 2013 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT
There was no instance of fraud identified or reported by the Statutory Auditors duringthe course of their audit to report to the Audit Committee and / or Board pursuant toSection 143(12) of the Companies Act 2013 and rules framed thereunder.
DECLARATION OF INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as stipulated in Section 149(6) ofthe Companies Act 2013 and Regulation 16 (1)(b) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. In the opinion of the Board the IndependentDirectors fulfil the conditions of independence as specified in Section 149(6) of the Actand Regulation 16 (1)(b) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The Independent Directors have also confirmed that they have compliedwith the Company's Code of Business Conduct & Ethics.
Pursuant to Companies (Appointment and Qualification of Directors) Rules 2014 theCertificate of Registration as required from all the Independent Directors of the Companywere taken on note by the Board of Directors of the Company.
Board of Directors have evaluated the Independent Directors appointed / re-appointedduring the year 2019-20 and opined that the integrity expertise and experience (includingproficiency) of the Independent Directors is satisfactory.
NOMINATION AND REMUNERATION COMMITTEE AND POLICY
The composition and attendance of the Nomination and Remuneration Committee ofDirectors of the Company are reported elsewhere in the Annual Report.
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.The Policy broadly lays down the guiding principles philosophy and the basis for paymentof remuneration to the Executive and Non-executive Directors Key Managerial Personnel andSenior Management. The policy also provides the criteria for determining qualificationspositive attributes and Independence of Directors and criteria for appointment of KeyManagerial Personnel / Senior Management and performance evaluation which are consideredby the Nomination and Remuneration Committee and the Board of Directors while makingselection of the candidates. The above policy has been posted on the website of theCompany at www.amarjothi.net/Policies. The abstract of the policy is annexed heretoas Annexure II(i).
PARTICULARS OF LOAN GUARANTEES AND INVESTMENTS UNDER SECTION 186:
The Company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013.
The details of the investments made by the Company are given in the notes to thefinancial statements.
RELATED PARTY TRANSACTIONS:
All transactions entered into by the Company with related parties were in the ordinarycourse of business and on an arm's length basis. The Company did not enter into anymaterial transaction with related parties under Section 188 of the Companies Act 2013during the year. Form AOC-2 as required under Section 134 (3) (h) of the Act read withRule 8 (2) of the Companies (Accounts) Rules 2014 is attached as part of this reportvide Annexure III (i). Further the Company's policy on Related Party Transactions isattached as part of this report vide Annexure III (ii).
EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS:
There are no qualifications reservations or adverse remarks or disclaimers made by theauditors for the year.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTS RELATEAND THE DATE OF THE REPORT:
Due to outbreak of COVID 19 pandemic and based on the directives of the Government ofIndia Government of Tamil Nadu the operations of the Company was suspended on 24th March2020 and resumed on 06th May 2020 in phased manner with minimal workforce by followingrequisite precautions/ guidelines. This has impacted the turnover and profitability of theCompany.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The information relating to Conservation of Energy Foreign Exchange Earning and OutGo Technology Absorption pursuant to section 134(3) (m) of the Act read with rule 8 subrule 3 of the Companies (Accounts) Rules 2014 is attached as ANNEXURE -I which forms partof the report.
RISK MANAGEMENT :
This annual report has got a detailed chapter on management discussion and analysis onrisk management stating about risk management by the Company. It is periodically reviewedby the Board. The Company's business model has Comprehensive and integrated riskmanagement framework that comprises a clear understanding of strategy policy initiativesprudential norms proactive mitigation and structured reporting. In addition the Boardperiodically reviews and discusses all assets with significant risks includingdeliberating on the sector- specific and systemic risks in the business environment. Otherkey variables monitored for risk are market condition and product costing.
EVALUATION OF BOARD'S PERFORMANCE:
On the advice of the Board of Directors the Nomination and Remuneration Committee ofBoard of Directors of the Company have formulated the criteria for the evaluation of theperformance of Board of Individual Directors Board as a whole Committees of DirectorsIndependent Directors Non-Independent Directors and the Chairperson of the Board. Basedon that performance evaluation has been undertaken. The Independent Directors of theCompany have also convened a separate meeting for this purpose. All the results andevaluation has been communicated to the Chairperson of the Board of Directors.
DIRECTORS' & KEY MANAGERIAL PERSONNEL
Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed vide "ANNEXURE VII".
DETAILS OF DIRECTORS CESSATION AND RESIGNATION
1) We deeply mourn the passing away of our Chairman Late Sri N.Rajan who passed away on30.03.2020.
He is the founder and promoter Director of the Amarjothi group of Companies. He servedas a Chairman and Non-Executive Director of the Company since 1991. His leadershippromotes positive image of the Company among the Stakeholders and the industry. His vastexperience in auditing and expertise in various fields of Textile Industry actively andeffectively conducts the Board and Annual General Meetings. His loss is irreparable to us.We express our deep condolences at the untimely and sad demise of Sri N.Rajan.
The Board of Directors placed on record a deep appreciation for the valuable servicesrendered by Sri.N.Rajan during his tenure as a Director of the Company.
The Company has filed necessary forms with ROC with respect to his cessation.
2) Sri.V.Manikandan who was appointed as Non- executive Independent Director witheffect from 05.09.2014 served his valuable services till 29.06.2020.
The Board hereby noted the resignation of Sri.V.Manikandan and recorded his invaluablecontribution made by him during his period of association with the company. The companyhas given intimation to Stock Exchange as per Regulation 30 of SEBI(LODR) Regualtions andfiled his resignation with Registrar of Companies on 06.07.2020.
DETAILS OF DIRECTORS RETIRE BY ROTATION AND INDEPENDENT DIRECTORS
1) Mr. N.Radhakrishnan retires by rotation and being eligible offers himself for re-election.
In accordance with the provisions of Section 152 of the Act and the Articles ofAssociation of the Company Sri . N.Radhakrishnan (DIN: 00390913) Director is liable toretire by rotation at the ensuing Annual General Meeting ("AGM") and beingeligible offers himself for re-appointment. The Board recommends his reappointment on theconsideration of the Members of the Company at the forthcoming Annual General Meeting.
Brief profile of Sri. N.Radhakrishnan (DIN: 00390913) has been given in the Noticeconvening the Annual General Meeting.
2) Based on the recommendation of the Nomination and Remuneration Committee the Boardof Directors at their meeting held on 21st August 2020 has recommended the reappointmentof Smt. M.Amutha (DIN: 07137884) as Independent Director for a second term of 5consecutive years from the ensuing Annual General Meeting by way of passing necessarySpecial Resolution in accordance with the provisions of Section 149 of the Companies Act2013.
The Company has also received declaration from the appointee Independent Director thatshe fulfils the criteria of independence as prescribed under the provisions of Section149(6) of the Companies Act 2013 read with Regulation 16(1)(b) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (including statutoryreenactment thereof for the time being in force).
Your Directors recommend the reappointment of Smt. M.Amutha (DIN: 07137884)Independent Director of the Company.
KEY MANAGERIAL PERSONNEL:
During the year under review Mrs. K.Mohana Priya (ACS- 50102 ) who was appointed asCompany Secretary with effect from 29.05.2017 served her services till 31st January2020. As on 31.03.2020 there was no Company Secretary appointed in the company. FurtherMrs. Mohana Priya .M (ACS- 47463) was appointed as Company Secretary on 28thMay 2020.
Therefore as on 31st March 2020 following persons have been designated as KeyManagerial Personnel of the Company pursuant to Section 2(51) and Section 203 of the Actread with the Rules framed thereunder.
1. Sri. R. Premchander - Managing Director
2. Sri. R. Jaichander - Joint Managing Director and
3. Sri P. Singaravelu - Chief Financial Officer.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES:
The Company has one wholly owned subsidiary company M/s.RPJ Textiles Ltd. in which ourcompany holds 100% of equity shares. The details are mentioned in AOC-1.
The Company has Four Associate Companies Jayanthi Green Energy Private LimitedPremchander Green Energy Private Limited in which our company holds 27% shares and AFCMWind Farms Private Limited AJSM Green Energy Private Limited in which our company holds29 % shares for the purpose of captive consumption of wind power. The details arementioned in AOC-1.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT:
1. INDUSTRY STRUCTURE AND DEVELOPMENT:
Textile industry is India's major industry and one of the age old industry. With themodernization of the industry substantial capacity expansion has taken place in thetextile sector. Industry has gone through rising raw material cost scarcity of powerlabour market fluctuation and fluctuation in currency rates etc.
2. OPPORTUNITIES AND THREATS:
This Company being a major supplier of melange yarn to the Tirupur market with itslocal presence there is good scope for improved turnover and profitability. The Companyhas been improving its share of value added yarn in the market in the form of Dyed fibreyarn Dyed cotton yarn PC yarn etc. The Company offers competitive price due to lowpower cost through windmills low interest cost low processing cost etc. The Company hasobtained ISO 9001:2000 Certification MGMT.SYS RVA C 216 Certification for qualitymanagement and systems and OEKO TEX STANDARD 100 Certification for not using harmfulsubstances in the product.
Though presently there is a certain lack of clarity in the general market conditionsno unit -specific threat to the operations and performance of the Company is perceived inthe long run. However any major changes in export / import policies related to cotton andyarn and foreign currency fluctuations will have their impact on textile sector. CurrentPrice fluctuations in yarn will affect the Market of our product in the forthcomingperiod. More over we are facing Labour scarcity and it will have impact on our production.Power generated by wind mills are not fully utilized by the Electricity Board and due tothis wind mills were kept idle for some times.
3. SEGMENT-WISE PERFORMANCE:
The Company operates only in one segment and the operational results are mentionedelsewhere in this report.
The Company will continue to perform well in the domestic market. The Company is in theprocess of implementing several cost saving measures which will make the product morecompetitive.
RISKS AND CONCERNS:
With our presence in three continents we are exposed to risks which can adverselyimpact our operating performance cash flows financial performance managementperformance and overall sustainability. We have an active risk management strategy in theplace for the company whose role is to identify potential risks create mitigationstrategies and monitor the occurrence of risk.
The risks that may affect us include but are not limited to:
Inflationary pressure and other factors affecting demand for our products.
Increase in costs of raw material transport and storage.
Supplier and distributor relationships and retention of distribution channels.Competitive market conditions and new entrants to the market.
Labour shortages and attrition of key staff. Exchange rate fluctuation and arbitragerisk.
Compliance and regulatory pressures including changes to tax laws. Seasonalfluctuations.
Political risks associated with unrest and instability in countries where we have apresence or operation Power shortage
5. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has adequate internal control systems and procedures commensurate with itssize and nature of its business for the purchase of raw materials plant and machinerycomponents and other items and for sale of goods. The adequacy of the internal controlsystem is also periodically reviewed by the Audit Committee.
6. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:
The financial performance of the Company has been discussed at length in the directors'report to the members.
7. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT :
The Company has required number of skilled / semi-skilled persons and places emphasison training for improving quality and productivity.
8. HEALTH AND SAFETY MEASURES :
The Company has taken medical insurance cover for all workers. Adequate safety measureshave been taken in all our plants for prevention of any untoward incidents.
9. CAUTIONARY STATEMENT :
Statements made in this report regarding the Company's objectives projectionsexpectations and predictions may be forward looking statements under the applicablesecurities law and regulations. Actual results could differ materially from thoseexpressed or implied. Some of the important factors that could make a difference to theCompany's operations include global and domestic demand- supply conditions finished goodsprices raw material costs and availability interest rates fuel prices fluctuations inexchange rates changes in government regulations and tax structure economic developmentsin the domestic and overseas market and other incidental factors.
By Order of the Board
|Place : Tirupur ||(Sd/-) R. PREMCHANDER ||(Sd/-) R. JAICHANDER |
|Date : 21.08.2020 ||Managing Director ||Joint Managing Director |
| ||DIN: 00390795 ||DIN: 00390836 |