Your Directors have pleasure in presenting the 29th Annual Report together with auditedaccounts of the Company for the year ended 31 March 2019. st
FINANCIAL RESULTS :
(Rs. in Lakhs)
| ||2018-2019 ||2017-2018 |
|Profit before Depreciation ||4912.48 ||3586.83 |
|Less : Depreciation ||3005.32 ||2823.26 |
|Less : Taxes ||(26.93) ||29.59 |
|Add : Other Comprehensive Income ||(9.29) ||2.47 |
|Profit after Tax ||1924.80 ||736.45 |
|Surplus brought forward from last year ||3487.10 ||3092.02 |
|Amount available for appropriation ||5411.90 ||3828.47 |
Your Directors are glad to recommend payment of dividend of Rs.1.60/- per equity shareof Rs.10/- each to the equity shareholders (@16% of the paid up capital).
IMPLEMENTATION OF INDIAN ACCOUNTING STANDARDS (Ind AS)
Financial Year 2018-19 is the second year of implementation of Indian AccountingStandards. The Financial Statements for the year ended 31.3.2019 have been prepared inaccordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of theCompanies Act 2013 read with Companies (Accounts) Rules 2014 and other relevantprovisions of the Act.
REVIEW OF OPERATIONS
During the year under the review the overall turnover of the company increased by12.34% when compared with the previous year. The performance of Spinning and Knittingdivision for the year was satisfactory though in the second half of the year there wasfluctuation in the prices of cotton and yarn/fabric which affected the margins slightly.Weaving and Home Textiles division continue to perform well and the Company isconcentrating on manufacture of value added products. The Processing division hasprocessed/produced more fabric during the year and the Company is taking efforts tofurther improve in the production and margin.
The performance of Retail division is yet to stabilize. However the Company isconfident of improved performance by creating better visibility for the products.
The unit wise performance of the company is furnished below :
During the year under review the Spinning Mills produced 32573.26 tonnes (27617.98tonnes) inclusive of purchased quantity Nil (574.48 tonnes) of Yarn and sold 24200.63tonnes (22701.45 tonnes) of Yarn. The sales include 4135.82 tonnes (8233.75 tonnes) by wayof Export. The total yarn sales of this division amounted to Rs.54447.61 Lakhs(Rs.48076.01 Lakhs) of which export sales amounted to Rs.9037.43 Lakhs (Rs.17293.56 Lakhs)constituting 17.49% (35.97%) of the total yarn sales.
The Spinning Division produced 9177.67 tonnes (8217.57 tonnes) of saleable waste cottonand sold 9707.61 tonnes (7913.97 tonnes) and the total waste cotton sales of this divisionamounted to Rs.5692.72 Lakhs (Rs.4884.75 Lakhs ). The Spinning Division traded cotton andmade a sales amounting to Rs.28.51 Lakhs (Rs. 95.05 Lakhs ).
The Weaving Division specializes in manufacturing wider-width cotton grey woven fabric.During the year under review 144.13 Lakh Metres (117.80 Lakh Metres) of Fabric wereproduced and 94.57 Lakh Metres (101.49 Lakh Metres) of Fabric were sold.
The sales include 34.27 tonnes (29.95 tonnes) by way of Export. The total fabric salesof this division amounted to Rs.8307.63 Lakhs (Rs.8218.19 Lakhs) of which export salesamounted to Rs.3057.11 Lakhs (Rs.2582.60 Lakhs).
Home Textile Division
During the year under review the Home Textile division produced 12.19 Lakh Pieces(10.81 Lakh Pieces) of made ups and sold 11.30 Lakh Pieces (10.69 Lakh pieces). The totalsales of this division amounted to Rs.3867.86 Lakhs (Rs.1806.94 Lakhs) which includesfabric sales 30.25 Lakh metres (4.68 Lakh metres) and the sales amounted to Rs.2560.49Lakhs (Rs. 691.39 Lakhs).
During the year under review 7809.54 tonnes (8600.98 tonnes) of Knitted fabric wereproduced and 7304.73 tonnes (7968.18 tonnes) were sold. The total sales of this divisionamounted to Rs.18277.75 Lakhs (Rs.17405.17 lakhs) of which export sales amounted toRs.7340.94 Lakhs (Rs.10898.44 lakhs).
Processing and Technical Textiles Division
During the year under review 3786.76 tonnes (3727.65 tonnes) of fabric were processedon job work basis and 933.17 tonnes (709.54 tonnes) of fabric were produced and 806.52tonnes (631.27 tonnes) of fabric were sold. The total fabric sales of this divisionamounted to Rs.3426.89 Lakhs (Rs.2704.16 lakhs).
During the year under review 10.43 Lakhs (33.29 lakhs) pieces of Garments wereproduced and sold 8.97 Lakhs (14.28 Lakhs) pieces. The total sales of this divisionamounted to Rs.1509.29 Lakhs (Rs.1689.31 Lakhs).
Wind Mill Division
The company has 4 windmills of 1250 KW each totaling 5 MW in Radhapuram TalukTirunelveli District Tamilnadu 25 Nos windmills each of 800 KW capacity totaling 20 MWcapacity in Dharapuram Taluk Tirupur District and Palani Taluk Dindigul DistrictTamilnadu and 3 Windmills of 1650 KW each in Kongalnagaram Udumalpet Taluk TirupurDistrict Tamilnadu. The total installed capacity of Windmills is 29.95 MW and the wholeof the wind power generated is captively consumed by the Spinning Units and Weaving Unit.
The windmills produced 521.09 Lakh units of power as against 549.11 Lakh units producedin the last year.
PROSPECTS FOR THE CURRENT FINANCIAL YEAR 2019-20
The Yarn production in Spinning divisions has been increased to 90 tonnes per day fromthe earlier level of 75 tonnes per day and it is further expected to be increased to 95tonnes per day during the current year with no additional Investment thereby improving themargins. The contribution from Windmills on overall performance of the Company isdependent on availability of Wind of adequate velocity and its evacuation by TANGEDCO andalso subject to changes in State Government policy on Wind power sector. The performanceof Knitting Processing Weaving and Home Textiles divisions have improved and hence theoverall performance of the Company during the year is expected to be better. The Retaildivision of the Company set up under the brand name BITZ which commenced operations duringthe year 2017-18 is yet to stabilize. The products have been well accepted by the marketfor their quality and their USP lies in the fact that they are Organic certified. Howevercompetition from established players longer credit cycle and customer awareness are someof the reasons for slow off take of the products. The Company is addressing the issuessystematically and hence the prospects for the current year is likely to be better.
With the Textile Industry getting settled in the Goods and Service Tax (GST) regimethe initial glitches have been sorted out. The GST rates for most of the cotton basedproducts has been pegged at 5% thereby providing level playing field to differentcategories of manufacturers. The Government has also been taking lot of initiatives toimprove the fortunes of the textile industry. One such initiative is the increase inRoSCTL rates from 2.20% to 8.20% for madeups and from 1.70% to 6.05% for Ready madeGarments which will increase the competitiveness for Home Textile & Apparel products.Thus the overall performance of the Company during the current year looks positive.
EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS
There are no material changes and commitments affecting the Financial position of theCompany subsequent to the end of the Financial Year.
The Company has no public deposits outstanding at the beginning of the year and theCompany has not accepted any deposits within the meaning of Section 73 to 76 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 during the yearunder review.
In line with requirements of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 your Company is committed to the principles of good Corporate Governanceand continues to adhere good corporate governance practices consistently.
A separate section is given on Corporate Governance Management Discussion and Analysisalongwith a certificate from a Practicing Company Secretary regarding compliance ofconditions of Corporate Governance as stipulated under Regulation 34(3) read with ScheduleV of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 formspart of this Annual Report.
An extract of the Annual Return as on Financial Year Ended on 31 March 2019 pursuantto the st sub-section (3) of Section 92 of the Companies Act 2013 and forming part of thereport in Form MGT - 9 is enclosed as Annexure - I and is posted on the website of theCompany viz. www.bannarimills.com
Sri S V Arumugam (DIN 00002458) will retire by rotation at the ensuing Annual GeneralMeeting he is eligible for re-appointment and seeks re-appointment.
Sri K N V Ramani (DIN 00007931) Dr K R Thillainathan (DIN 00009400) Sri SPalaniswami (DIN 00007901) Sri K Sadhasivam (DIN 00610037) Independent Directors areproposed to be re-appointed for second term of 5 consecutive years from 25.8.2019 to24.8.2024 and whose office shall not be liable to retire by rotation. Sri C S K Prabhu(DIN 00002913) expressed his inability for re-appointment as Independent Director forsecond term of 5 consecutive years due to his professional pre-occupations and hencerecommendation for the same has not been made.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149 (6) of the Companies Act 2013 and Regulation25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
The company has obtained a Certificate from Sri R Dhanasekaran Company Secretary inPractice certifying that none of the Directors on the Board of the Company have beendebarred or disqualified from being appointed or continuing as Directors of companies bythe Board/Ministry of Corporate Affairs or any such statutory authority.
KEY MANAGERIAL PERSONNEL
The Company has appointed the following persons as Key Managerial Personnel:
|Name of the person ||Designation |
|Sri S V Arumugam ||Managing Director |
|Sri S Seshadri ||Chief Financial Officer |
|Sri N Krishnaraj ||Company Secretary |
The Audit Committee comprises of
1. Sri C S K Prabhu - Chairman (Non- Executive Independent Director)
2. Sri K N V Ramani - Member (Non- Executive Independent Director) and
3. Sri S Palaniswami - Member (Non- Executive Independent Director)
The Board has implemented the suggestions made by the Audit Committee from time totime.
EVALUATION OF BOARD OF DIRECTORS
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 IndependentDirectors at their meeting without participation of non-Independent Directors andmanagement considered and evaluated the Boards' performance performance of the Chairmanand Managing Director.
The Board has carried out an annual evaluation of performance of Board and ofindividual Directors as well as the Committees of Directors. The evaluation has beenconducted internally in the manner prescribed by Nomination and Remuneration Committee.
During the year under review Five Board Meetings were conducted. The details of thesame have been given in the Corporate Governance Report under Regulation 17 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 forming part of thisReport.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company has furnished Corporate Guarantee for the credit facilities extended by thefollowing banks to Young Brand Apparel Private Limited a Subsidiary Company as detailedbelow : (Rs. in Lakhs)
|Name of the Bank ||Amount for which security is provided ||Amount outstanding ||Nature of facility |
|1 Oriental Bank of Commerce ||10015.00 ||6572.87 ||Working capital facility |
|2 Axis Bank ||2500.00* ||- ||Working capital facility |
*The facility is not availed by the subsidiary company as on reporting date.
ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has established a vigil mechanism for Directors and employees to reportconcerns about unethical behavior actual or suspected fraud or violation of the Company'scode of conduct or ethics. The policy has been posted in the website of the Company:www.bannarimills.com.
POLICY ON NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors have framed a policy setting out the framework for payment ofRemuneration to Directors Key Managerial Personnel and Senior Management Personnel of theCompany. The policy is explained as part of the Corporate Governance Report. The Committeeensures that a. The level and composition of remuneration is reasonable and sufficient toattract retain and motivate Directors of the quality required to run the Companysuccessfully b. Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks and c. Remuneration to Directors Key Managerial Personnel andsenior management involves a balance between fixed and incentive pay reflecting short andlong term performance objectives appropriate to the working of the Company and its goals.
RELATED PARTY TRANSACTIONS
All the related party transactions that were entered into during the financial year inthe ordinary course of business and the prices were at arm's length basis. Hence theprovisions of Section 188(1) of the Companies Act 2013 are not attracted. Further nomaterially significant related party transactions were entered by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havepotential conflict with interest of the company at large. Hence reporting in AOC-2 is notmade. Approval of Audit Committee was obtained for transactions of repetitive nature onannual basis. All related party transactions are placed before the Audit Committee andBoard of Directors for their review. The policy on Related Party Transactions is availablein the website www.bannarimills.com.
There were no transactions made with any person or entity belonging topromoter/promoter group which holds 10% or more shareholding in the Company.
SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS
There are no significant and material orders passed by the Regulators/Courts that wouldimpact the going concern status and the Company's operation in future.
DIRECTORS' RESPONSIBILITY STATEMENT
As stipulated in Section 134 (5) of the Companies Act 2013 your Directors confirmthat: a) Your Directors have followed in the preparation of the annual accounts theapplicable accounting standards with proper explanation relating to material departures;b) Your Directors have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit and loss of the Company for that period; c) Your Directors have taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of this Act for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) Your Directors have prepared the annualaccounts on a going concern basis; e) Your Directors have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and were operating effectively; and f) Your Directors have devised proper systemto ensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating effectively.
The present Auditors of the Company M/s Deloitte Haskins & Sells LLP CharteredAccountants Bangalore (Firm Registration No: 117366W/W-100018) were appointed for a termof 5 years pursuant to the resolution passed by the members at the Annual General Meetingheld on 25th September 2017. Pursuant to Section 40 of the Companies (Amendment) Act2017 the proviso to Section 139 (1) relating to ratification of appointment of Auditorsevery year has been omitted. Accordingly the term of office of present Auditors will becontinued without ratification. There is no audit qualification for the year under review.
DETAILS OF FRAUDS REPORTED BY AUDITORS
There were no frauds reported by the Statutory Auditors under provisions of Section 143(12) of the Companies Act 2013 and rules made thereunder.
Pursuant to provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr R Dhanasekaran Practicing Company Secretary to undertake the SecretarialAudit of the Company. The report is annexed herewith as Annexure - II.
Further the company has obtained an Annual Compliance Report from Sri R DhanasekaranPracticing Company Secretary in terms of SEBI circular No. CIR/CFD/CMD1/27/2019 dt:8.2.2019.
No adverse qualifications/comments have been made in the said report by the PracticingCompany Secretary.
COMPLIANCE OF SECRETARIAL STANDARDS
The Company has complied with all applicable Secretarial Standards issued by theInstitute of Company Secretaries of India from time to time.
Pursuant to section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the Board of Directors onthe recommendation of Audit Committee has appointed Sri M Nagarajan Cost AccountantCoimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year2019 - 2020. The Company has maintained such accounts and cost records as required underSection 148 (1) of the Companies Act 2013.
JOINT VENTURE ASSOCIATE AND SUBSIDIARIES
The Company has following five subsidiaries as on 31.3.2019: i. Abirami Amman DesignsPrivate Limited (Formerly Abirami Amman Mills Private Limited) ii. Accel Apparel PrivateLimited iii. Young Brand Apparel Private Limited (also Joint Venture Company) iv. BannariAmman Retails Private Limited; and v. Bannari Amman Trendz Private Limited.
In accordance with the Section 129 (3) of the Companies Act 2013 the consolidatedFinancial Statements of the Company has been prepared which forms part of the AnnualReport. A separate statement containing the salient features of the Financial Statementsof Subsidiaries in Form AOC-1 (Part A) is furnished: