Your Directors have pleasure in presenting the 28th Annual Report together with auditedaccounts of the Company for the year ended 31st March 2018
FINANCIAL RESULTS :
| ||2017-2018 ||2016-2017 |
|Profit before Depreciation ||3586.83 ||4402.52 |
|Less : Depreciation ||2823.26 ||2957.47 |
|Less : Taxes ||29.59 ||324.62 |
|Add : Other Comprehensive Income ||2.47 ||(34.06) |
|Profit after Tax ||736.45 ||1086.37 |
|Surplus brought forward from last year ||3092.02 ||3309.04 |
|Amount available for appropriation ||3828.47 ||4395.41 |
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 STANDARD (Ind AS)
Financial Year 2017-18 is the first year of implementation of Indian AccountingStandard. The Financial Statements for the year ended 31.3.2018 have been prepared inaccordance with the Indian Accounting Standard (Ind AS) notified under Section 133 of theCompanies Act 2013 read with Companies (Accounts) Rules 2014 and other relevantprovisions of the Act. The Financial Statements for the year ended 31.3.2017 have beenrestated in accordance with Ind AS for comparative purposes. Detailed information on theimpact of the transition from previous GAAP to Ind AS is provided in the annexed FinancialStatements.
REVIEW OF OPERATIONS
During the year under the review the overall turnover of the company increased by3.01% when compared with the previous year. After a stable first quarter the performanceof Spinning Unit and Knitting Unit was affected in the second and third quarters due todemand and supply mismatch resulting in sales of finished goods produced out of higherpriced cotton at lower values. The performance of the two divisions improved in the fourthquarter as the outlook for Textile sector turned positive.
The performance of Weaving unit and Processing unit was satisfactory during the year.The Home Textile unit of the Company has stabilised its operations and has registered aturnover of Rs.1833 Lakhs. The Company ventured into Retail marketing under brand nameBitz' for both innerwear and outer Garments. Though the scope is tremendous thebenefits will accrue only slowly due to the inherent nature of the business. The unit wiseperformance of the company is furnished below:
During the year under review the Spinning mills produced 27617.98 tonnes (28173.57tonnes) inclusive of purchased quantity 574.48 tonnes (2148.01 tonnes) of Yarn and sold22701.45 tonnes (23504.00 tonnes) of Yarn. The sales include 8233.75 tonnes (11006.80tonnes) by way of Export. The total yarn sales of this division amounted to Rs. 48076.01Lakhs (Rs.49587.71 Lakhs) of which export sales amounted to Rs.17293.56 Lakhs (Rs.22715.09Lakhs) constituting 35.97% (45.81%) of the total yarn sales
The Spinning division produced 8217.57 tonnes (8011.01 tonnes) of saleable waste cottonand sold 7913.97 tonnes (8045.74 tonnes) and the total waste cotton sales of this divisionamounted to Rs.4884.75 Lakhs (Rs.3746.00 Lakhs). The Spinning division traded cotton andmade a sales of 63.62 tonnes (234.00 tonnes) amounting to Rs. 95.05 Lakhs (Rs. 452.62Lakhs).
The Weaving division specializes in manufacturing wider-width cotton grey woven fabric.During the year under review 117.80 Lakh metres (117.39 Lakh metres) of Fabric wereproduced and 101.49 Lakh metres (112.50 Lakh metres) of fabric were sold.
The sales include 29.95 tonnes (30.46 tonnes) by way of Export. The total fabric salesof this division amounted to Rs.8218.19 Lakhs (Rs.9272.78 Lakhs) of which export salesamounted to Rs.2582.60 Lakhs (Rs. 2063.78 Lakhs).
Home Textile Division
During the year under review the Home Textile division produced 10.81 Lakh pieces(9.73 Lakh pieces) of made ups and sold 10.69 Lakh pieces (10.13 Lakh pieces). The totalsales of this division amounted to Rs.1806.94 Lakhs (Rs.1206.22 Lakhs) which includesfabric sales 4.68 Lakh metres (2.30 Lakh metres) and the sales amounted to Rs. 691.39Lakhs (Rs. 354.72 Lakhs)
During the year under review 8600.98 tonnes (6515.43 tonnes) of Knitted fabric wereproduced and 7968.18 tonnes (6341.31 tonnes) were sold. The total sales of this divisionamounted to Rs. 17405.17 Lakhs (Rs.12291.71 lakhs) of which export sales amounted toRs.10898.44 Lakhs (Rs.6670.71 lakhs).
Processing and Technical Textiles Division
During the year under review 3727.65 tonnes (2967.82 tonnes) of fabric were processedon job work basis and 709.54 tonnes (1236.55 tonnes) of fabric were produced and 631.27tonnes (1137.57 tonnes) of fabric were sold. The total fabric sales of this divisionamounted to Rs. 2704.16 Lakhs (Rs.4711.83 lakhs).
During the year under review 33.29 Lakhs (14.93 lakhs) pieces of Garments wereproduced and sold 14.28 Lakhs (13.58 Lakhs) pieces. The total sales of this divisionamounted to Rs.1689.31 (Rs.2704.85 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 549.11 Lakh units of power as against 583.71 Lakh units producedin the last year.
PROSPECTS FOR THE CURRENT FINANCIAL YEAR 2018-19
Investment to de-bottleneck the production process in Spinning division was undertakenduring the year 2017-18 which will result in the yarn production increasing to 90 tonnesper day from the earlier production of 75 tonnes per day. The increased production hasalready been achieved from the first quarter of current year 2018-19 onwards and coupledwith better product mix the profitability of the Spinning units will improve in the yearsto come. The contribution from Windmills on overall performance of the Company isdependent on availability of Wind of adequate velocity and its evacuation by TANGEDCO.
The performance of Knitting Processing Weaving and Home Textiles divisions havestabilized and hence will continue to contribute to the overall performance of theCompany. The Company is focusing on Home Textiles as one of the growth area and developinga range of products to increase business volume and margins from this unit.
The Retail division of the Company set up under the brand name Bitz' commencedoperations during the year 2017-18. The Company has appointed distributors in variouscities to market the products. The products have been well accepted by the market fortheir quality. Though the Company is making all out efforts to increase volume Retailingis a long term proposition and hence the benefits will accrue to the company gradually.After the introduction of Goods and Service Tax (GST) from 1 July 2017 onwards theGovernment st rationalized the Duty Drawback rates rates under Merchandise Exports fromIndia Scheme (MEIS) and Rebate of State Levies (ROSL) enabling the Industry to revert tonormal levels of apparel exports. The policy measures of the Government alongwith improveddemand scenario for Textile and Apparel products both in domestic and export markets lookspositive for the Company during the current financial year.
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.
Annual Return as on Financial Year ended on 31 March 2018 pursuant to thestsub-section (3) of Section 92 of the Companies Act 2013 is posted on the website of theCompany viz. www.bannarimills.com
During the period under review there were no changes in the Board of Directors.
Sri S V Arumugam (DIN 00002458) is required to retire by rotation at the ensuingAnnual General Meeting he is eligible for re-appintment and seeks re-appointment.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149 (6) of the Companies Act 2013.
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 |
# Appointed as Chief Financial Officer on 27.6.2018 in the casual vacancy caused bythe death of Sri C S Balakumar Chief Financial Officer on 10.6.2018.
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 its own performance of the individualDirectors as well as the Committees of Directors.
During the year under review Six 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 to Oriental Bank of Commerce by way ofsecurity for the credit facilities extended by the bank to Young Brand Apparel PrivateLimited for a sum of Rs. 11826 lakhs.
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 of the Companies Act 2013 are not attracted. Further nomaterially significant related party transactions were made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have potentialconflict with interest of the company at large. Hence reporting in AOC-2 is not made.Approval of Audit Committee was obtained for transactions of repetitive nature on annualbasis. All related party transactions are placed before the Audit Committee and Board ofDirectors for their review. The policy on Related Party Transactions is available in thewebsite www.bannarimills.com.
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.
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.
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.
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 on therecommendation of Audit Committee has appointed Sri M Nagarajan Cost AccountantCoimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year2018 - 2019. As required under the Companies Act 2013 a resolution seeking members'approval for the remuneration payable to the Cost Auditor forms part of the Noticeconvening Annual General Meeting.
JOINT VENTURE ASSOCIATE AND SUBSIDIARIES
During the year the Company has invested Rs.304.95 lakhs in its Joint Venture Companyviz. Young Brand Apparel Private Limited (YBA) thereby making YBA a subsidiary of ourcompany.
The Company has three subsidiaries viz. Abirami Amman Mills Private Limited AccelApparel Private Limited and Young Brand Apparel Private Limited as on 31.3.2018. Inaccordance with the Section 129 (3) of the Companies Act 2013 the consolidated FinancialStatements of the Company has been prepared which forms part of the Annual Report. Aseparate statement containing the salient features of the Financial Statements ofSubsidiaries in Form AOC-1 (Part a) is furnished :