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Bannari Amman Spinning Mills Ltd.

BSE: 532674 Sector: Industrials
NSE: BASML ISIN Code: INE186H01022
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VOLUME 7448
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P/E 8.09
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OPEN 50.00
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VOLUME 7448
52-Week high 100.60
52-Week low 47.75
P/E 8.09
Mkt Cap.(Rs cr) 331
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bannari Amman Spinning Mills Ltd. (BASML) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 31st Annual Report togetherwith audited accounts of the Company for the year ended 31st March 2021.

FINANCIAL RESULTS: (Rs. in Lakhs)
2020-21 2019-20
Profit before Depreciation 1563.77 2854.65
Less : Depreciation 2809.11 2831.16
Less : Taxes (190.29) (3.59)
Add/(Less) : Other Comprehensive Income 46.10 57.30
Profit after Tax (1008.95) 77.20
Surplus brought forward from last year 4870.76 5108.02
Amount available for appropriation 3861.81 5185.22

DIVIDEND

Your Directors have not recommended any dividend for the year 2020-21.

REVIEW OF OPERATIONS

The performance of the Company was significantly affected in the first half of thefinancial year 2020-21 on account of lock down measures imposed by the Governments tocontrol the impact of COVID-19. This resulted in complete closure of factories for about45 days fall in prices of finished goods due to reduced demand during the pandemicperiod disrupted logistics cancelled or suspended orders all of which contributed to thedecline in performance. Even after the lock down was lifted there were restrictions inlabour employment leading to reduced capacity utilization which further impacted theoperations.

However sentiments picked up in the second half of the year both in domestic andinternational markets which enabled the Company to reduce the losses for the full year.

IMPACTOF COVID-19

The impact of COVID 19 has been severe for the entire Global economy and textileindustry is no exception to this. Complete shut down of manufacturing units in the initialstages of COVID 19 pandemic sub optimal capacity utilization for 2 to 3 months afterrelaxation was permitted cancellation of orders by domestic and international buyers dueto uncertainty across the markets slump in physical Retail sales of apparel items werefactors affecting the industry adversely.

The Company has considered the possible effects that may result from the pandemicrelating to COVID-19 on the carrying amounts of Property plant and equipmentIntangibles Inventories Receivables and Other assets. In developing the assumptionsrelating to the possible future uncertainties in the global economic conditions because ofthis pandemic the Company as at the date of approval of these financial results has usedinternal and external sources on the expected future performance of the Company. TheCompany has evaluated its liquidity position recoverability and based on currentestimates expects the carrying amount of these assets will be recovered.

The unit wise performance of the company is furnished below:

Spinning Units

During the year under review the Spinning mills produced 26273 tonnes (30714.94tonnes) inclusive of purchased quantity Nil tonnes (77.11 tonnes) of Yarn and sold21853.38 tonnes (25779.09 tonnes) of Yarn.

The sales include 3859.87 tonnes (3322.73 tonnes) by way of export. The total yarnsales of this division amounted to Rs. 46580.55 Lakhs (Rs.54017.30 Lakhs) of which exportsales amounted to Rs.7777.97 Lakhs (Rs. 6701.80 Lakhs) constituting 16.70% (12.41%) of thetotal yarn sales.

The Spinning division produced 8048.59 tonnes (8809.02 tonnes) of saleable waste cottonand sold 7930.21 tonnes (8438.23 tonnes) and the total waste cotton sales of this divisionamounted to Rs.4564.97 Lakhs (Rs. 5466.79 Lakhs).

Weaving Unit

The Weaving division specializes in manufacturing wider-width cotton grey woven fabric.During the year under review 118.21 Lakh metres (159.20 Lakh metres) of fabric wereproduced and 113.02 Lakh metres (123.22 Lakh metres) of fabric were sold.

The sales include 38.12 tonnes (33.09 tonnes) by way of export. The total fabric salesof this division amounted to Rs.10965.78 Lakhs (Rs. 10324.09 Lakhs) of which export salesamounted to Rs. 3116.54 Lakhs (Rs. 2807.32 Lakhs).

Home Textile Unit

During the year under review the Home Textile division produced 9.59 Lakh pieces(14.66 Lakh Pieces) of made ups and sold 6.05 Lakh pieces (14.56 Lakh pieces).

The total sales of this division amounted to Rs.3106.41 Lakhs (Rs.3187.10 Lakhs) whichincludes fabric sales 12.77 Lakh metres (19.72 Lakh metres) and the sales amounted toRs.1315.82 Lakhs (Rs.1590.60 Lakhs).

Knitting Unit

During the year under review 5865.56 tonnes (5209.68 tonnes) of Knitted fabric wereproduced and 5500.41 tonnes (4777.35 tonnes) were sold. The total sales of this divisionamounted to Rs.12284.58 Lakhs (Rs.10826.52 Lakhs) of which export sales amounted toRs.4881.66 Lakhs (Rs.1627.60 lakhs).

Processing Unit

During the year under review 2069.83 tonnes (2206.45 tonnes) of fabric were processedon job work basis and 1098.59 tonnes (1001.12 tonnes) of fabric were produced and 1011.76tonnes (954.81 tonnes) of fabric were sold. The total fabric sales of this divisionamounted to Rs. 4316.55 Lakhs (Rs. 3933.93 lakhs).

Apparel Unit

During the year under review 28.73 Lakhs (10.62 lakhs) pieces of Garments wereproduced on job work basis and nil lakhs (7.41 lakhs) pieces of Garments on ownproduction. The total income of this division amounted to Rs.873.72 lakhs (Rs. 963.29Lakhs).

Wind Mills

The company has 4 windmills of 1250 KW each totaling 5 MW in Radhapuram TalukTirunelveli District Tamilnadu 23 Nos windmills each of 800 KW capacity totaling 18.4MW capacity in Dharapuram Taluk Tirupur District and Palani Taluk Dindigul DistrictTamilnadu. The total installed capacity of Windmills is 23.40 MW and the whole of the windpower generated is captively consumed by the Spinning Units and Weaving Unit.

The windmills produced 407.67 Lakh units of power as against 469.52 Lakh units producedin the last year.

PROSPECTS FOR THE FINANCIAL YEAR 2021-22

The second wave of Covid -19 pandemic reached its peak in April and May of the currentfinancial year.

The lock down measures imposed by the government to control the second wave hasaffected the operations and consequently the performance of the company has been impactedto an extent. The Central Government has warned of possible third wave also which mayaffect the fortunes of the industry.

Hence the prospects for the current year can not be reasonably estimated at this pointof time but the Company is confident of overcoming the adverse impact of the pandemic onthe operations of the Company.

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

In terms of the resolution framework for COVID-19 related stress prescribed by ReserveBank of India vide Circular No. RBI/2020-21/16 DOR.No.BP.BC/3/21.04.048/2020-21 dt.August 6 2020 ("August 6 Framework") the company has restructured its existingcredit facilities by extension of the tenure of Term loans from Banks and offer ofadditional/modification of the securities offered to them.

There are no material changes and commitments affecting the Financial position of theCompany subsequent to the end of the Financial Year.

There are no proceedings pending under the Insolvency and Bankruptcy Code 2016. Therewas no instance of one-time settlement with any Bank or Financial Institution.

PUBLIC DEPOSITS

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.

CAPITAL STRUCTURE

i. Sub-division of face value of equity shares

The Company has completed the sub-division of 1 (one) Equity Share of face value ofRs.10/- (ten) each fully paid up into Equity Shares of Rs.5/- (five) each fully paid upresulting in issuance of 2 (two) Equity Shares of Rs.5/- (five) each fully paidup therebykeeping the paid-up capital intact under Section 61(1)(d) of the Companies Act 2013 withnecessary approval of Regulators wherever applicable.

Accordingly the face value of the equity shares of the Company changed from Rs.10/- toRs.5/- with effect from 12.2.2021.

FURTHER ISSUE OF SHARES ON RIGHTS BASIS

The Company has initiated the procedural formalities for obtaining in-principleapproval from Stock Exchanges and have filed the Draft Letter of Offer with the Securitiesand Exchange Board of India in order to issue of equity shares to the shareholders of theCompany on Rights basis amounting to Rs.100 Crore in accordance with applicable lawsincluding Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2018 during the year.

Accordingly National Stock Exchange of India Limited and BSE Limited have issued thein-principle approval for Listing of shares on 4.5.2021 and on 18.6.2021 respectively andSEBI has issued its observation letter on 25.6.2021.

COMPANY BECOMES SUBSIDIARY

The company has become subsidiary of Murugan Enterprise Private Limited one of thepromoter company consequent to the acquisition of 779500 equity shares of Rs.10/- eachconstituting 4.95% from Sakthi Murugan Transports Private Limited another promotercompany with effect from 19.10.2020.

CORPORATE GOVERNANCE

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.

ANNUAL RETURN

Pursuant to the sub-section (3) of Section 92 of the Companies Act 2013 Annual Returnfor Financial Year ended on 31st March 2021 is posted on the website of theCompany viz. www.bannarimills.com

DIRECTORS

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.

In terms of Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a Special Resolution for continuation of present term of Directorshipof Sri K Sadhasivam (DIN 00610037) non-executive Independent Director is proposed who isattaining the age of 75 years. All Independent Directors have given declarations that theymeet the criteria of independence as laid down under Section 149 (6) of the Companies Act2013 and Regulation 25(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 persons Designation
Sri S V Arumugam Managing Director
Sri S Seshadri Chief Financial Officer
Sri N Krishnaraj Company Secretary

AUDIT COMMITTEE

The Audit Committee comprises of:

1. Sri K N V Ramani Chairman (Non-Executive Independent Director)
2. Sri S Palaniswami Member (Non-Executive Independent Director) and
3. Sri K Sadhasivam 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.

BOARD MEETINGS

During the year under review Seven 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/extended Corporate Guarantee to an amount of Rs.149.90 Croresfor the credit facilities both term loan and working capital facilities given by PunjabNational Bank (Erstwhile Oriental Bank of Commerce) to Young Brand Apparel PrivateLimited a Subsidiary Company.

Investments of the Company in the shares of other companies is provided under notes toBalance Sheet appearing in this Annual Report.

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 to attractretain and motivate Directors of the quality required to run the Company successfully

b. Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks and

c. Remuneration to Directors Key Managerial Personnel and senior management involves abalance between fixed and incentive pay reflecting short and long term performanceobjectives 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.Approval of Audit Committee wasobtained for transactions of repetitive nature on annual basis. All related partytransactions are placed before the Audit Committee for approval and Board of Directors fortheir review.

The policy on Related Party Transactions is available in the websitewww.bannarimills.com

Disclosure of these Transactions in form AOC-2 pursuant to Section 134 (3)(h) of theCompanies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014 as set outbelow:

Form AOC - 2

Form for disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arm's length transactions under third provisothereto

1. Details of contracts or arrangements or transactions not at arm's length basis: Nil

2. Details of material contracts or arrangement or transactions at arm's length basis:Nil

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 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 and loss of the Company for that period;

c) Your Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) Your Directors have prepared the annual accounts on a going concern basis;

e) Your Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

f) Your Directors have devised proper system to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

AUDITORS

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) Act 2017 the proviso to Section139 (1) relating to ratification of appointment of Auditors every year has been omitted.Accordingly the term of office of present Auditors continues without requirement ofratification at the Annual General Meeting.

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.

SECRETARIAL AUDIT

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 - I.

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.

COST AUDITOR

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 year2021 - 2022. 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 31.3.2021:

i. Abirami Amman Designs Private Limited

ii. Accel Apparels Private Limited

iii. Young Brand Apparel Private Limited (also Joint Venture Company)

iv. Bannari Amman 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:

Form AOC-1

Statement pursuant to Section 129 (3) of the Companies Act 2013 related to SubsidiaryCompanies Part A Subsidiaries

(Amount in Rs.)
Name of thesubsidiary Abirami Amman Designs Private Limi ted* Accel Apparels Private Limited* Young Brand Apprel Private Limited Bannari Amman Retails Private Limi ted* Bannari Amman Trendz Private Limi ted*
1 The date since when subsidiary wasacquired 23.6.2016 23.6.2016 7.7.2017 14.12.2018 21.2.2019
2 Share capital 1000000 100000 651606060 100000 100000
3 Reserves and surplus (73071) (272339) 80198591 (4662820) (8336547)
4 Total assets 954611 74239 2107131956 10818836 154767852
5 Total Liabilities 27682 246578 1375326639 15380958 163004558
6 Investments - - - - -
7 Turnover - - 1695724050 7913505 11617797
8 Profit before taxation (17266) (52000) 17485499 1227679 (4757388)
9 Provision for taxation - - 4774717 623925 (2832720)
10 Profit after taxation (17266) (52000) 12710782 603754 (1924668)
11 Proposed Dividend - - - - -
12 Extent of shareholding (in percentage) 100% 100% 51.33% 100% 100%

* Unaudited Notes:

1. Names of subsidiaries which are yet to commence operations-Abirami Amman DesignsPrivate Limited and Accel Apparels Private Limited.

2. Names of subsidiaries which have been liquidated or sold during the year - Nil

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function isdefined in the Internal Audit Manual. To maintain its objectivity and independence theInternal Audit function reports to the Chairman of the Audit Committee and to the Chairmanand Managing Director of the Company.

The Company has Independent Internal Auditor and an Internal Audit Department whichmonitors and evaluates the efficiency and adequacy of internal control system in theCompany its compliance with operating systems accounting procedures and policies at alllocations of the Company.

Based on the report of internal audit function corrective actions are taken in therespective areas and thereby strengthen the controls. Significant audit observations andrecommendations along with corrective actions thereon are presented to the Audit Committeeof the Board.

STATEMENT ON RISK MANAGEMENT POLICY

Pursuant to section 134(3) (n) of the Companies Act 2013 the Committee has developeda Risk Management Policy and implemented the same. At present the Company has notidentified any element of risk which may be of threat to the existence of the Company.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted Corporate Social Responsibility Committee which shallrecommend to the Board the activities to be undertaken by the Company as specified inSchedule VII recommend the amount of expenditure to be incurred on such activities andmonitor the CSR policy of the Company. The company has fully spent the amount stipulatedunder the requirements of the Act. The Company has constituted Corporate SocialResponsibility Committee consisting of the following Directors:

1. Sri S V Arumugam Managing Director
2. Sri S Palaniswami Independent Director
3. Sri K Sadhasivam Independent Director

The Annual Report on CSR activities and its related particulars is enclosed as AnnexureII

STATUTORY DISCLOSURES

I. Conservation of Energy and others- The particulars required to be included interms of Section 134(3)(m) of the Companies Act 2013 read with Rule 8(3) of theCompanies (Accounts) Rules 2014 for the year ended 31st March 2021 relatingto Conservation of Energy etc. is enclosed as Annexure III.

II. Remuneration of Directors and other details:

The information required under Section 197(12) of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 and formingpart of the Directors' Report for the year ended 31st March 2021 is providedin Annexure IV.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

During the year under review the human relations continued to be very cordial. TheCompany wishes to acknowledge the contribution of the employees at all levels of theorganisation.

The Company has an Anti-Sexual Harassment Policy in line with the requirements of TheSexual Harassment of Women at the Workplace (Prevention Prohibition & Redressal) Act2013 and an Internal Complaints Committee (ICC) has constituted to redress complaints ofsexual harassment as provided therein. All employees (permanent contractual temporarytrainees) are covered under this policy.

a. No.of complaints filed during the financial year 2020-21 Nil
b. No.of complaints disposed off during the financial year 2020-21 Nil
c. No.of complaints pending as on end of financial year 2020-21 Nil

ACKNOWLEDGEMENT

Your Directors acknowledge with gratitude the timely assistance and help extended bythe Bankers for having provided the required bank facilities. Your Directors wish to placeon record their appreciation of the contributions made by the employees at all levels forthe excellent performance of your company.

Coimbatore By Order of the Board
23rd July 2021 S V ARUMUGAM
Chairman & Managing Director
DIN 00002458

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