Ladies and Gentlemen
Your Directors have pleasure in presenting the Hundred and Tenth year Annual Reporttogether with the audited accounts of the Company for the year ended 31.03.2020.
FINANCIAL SUMMARY / HIGHLIGHTS :
| || ||(Rs.in Lakhs) |
| ||31.03.2020 ||31.03.2019 |
|No. of days worked ||349 ||357 |
|Revenue from operations ||21845.05 ||24770.32 |
|Other income ||371.37 ||381.66 |
|GROSS REVENUE ||22216.42 ||25151.98 |
|Profit / (Loss) before Tax and Exceptional Items ||(807.30) ||(386.33) |
|Less : Exceptional items ||849.90 ||(28.57) |
|Profit / (Loss) before Taxation ||42.60 ||(414.90) |
|Tax Expense ||194.52 ||378.22 |
|Profit / (Loss) after Taxation ||(151.92) ||(793.12) |
The Spindles capacity remained at the same level of 1.33 lakh spindles throughout theyear 2019-20. Overall utilization remained around 95% - same as that of 2018-19.
The revenue segments of the Company have been reclassified as (a) Textile Business and(b) Rental Services.
CHANGE IN NATURE OF BUSINESS
There is no change in the nature of business operations of the Company during the year.
The income generated from rental services during the year was Rs. 397.62 Lakhs(Previous year - Rs. 273.60 Lakhs)
Your Company apart from manufacturing of Cotton and Synthetic yarn continued tooutsource fabrics both for exports as well as for domestic market. Export of yarn andfabric accounted for Rs. 4180 Lakhs as against Rs. 3731 Lakhs in the previous year anincrease of around 12.03% over the previous year's performance.
The Directors have not recommended any dividend for the financial year 2019-2020(Previous Year - 5%).
TRANSFER TO RESERVES
The Company has not transferred any amount to its Reserves during the year underreview.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
The dividend amount remaining unclaimed for the year 2012-13 is required to betransferred to the Investor Education and Protection Fund established by the CentralGovernment after the conclusion of this Annual General Meeting.
During the year under review there was no dividend amount remaining unclaimed for aperiod of 7 years and the relevant shares thereon for transfer to the Investor Educationand Protection Fund since no dividend was declared for the financial year 2011-12.
The paid up Equity Share Capital as on March 31 2020 was Rs. 69555000/- comprising695550 shares of Rs.100/- each. During the year under review the company has not madeany fresh issue of shares.
EXTRACT OF ANNUAL RETURN
As per the requirements of the Companies Act 2013 the extract of annual return in theprescribed Form MGT 9 is annexed hereto as Annexure - 1 forming part of this report. Thesaid extract is available on the website of the Company - www.lakshmimills.com/Investor& Markets/ Annual Return.
BOARD MEETINGS AND ITS COMMITTEES CONDUCTED DURING THE PERIOD UNDER REVIEW
During the year under review 4 Meetings of the Board of Directors 4 Meetings of theAudit Committee 2 Meetings of the Nomination and Remuneration Committee 1 Meeting of theCorporate Social Responsibility Committee 1 Meeting of the Stakeholders RelationshipCommittee and 13 Meetings of the Share Transfer Committee were held. Further details ofthe same have been enumerated in the Corporate Governance Report annexed herewith.
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.lakshmimills.com/Policies. The abstract of the policy is annexed heretoas Annexure - 2.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
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 of the Company with the related parties were in the ordinary course ofbusiness and on an arm's length pricing basis and not material in nature and thus adisclosure in Form AOC-2 is not required. Further there are no material related partytransactions during the year under review with Promoters Directors or Key ManagerialPersonnel.
The policy on Related Party Transactions as approved by the Board of Directors of theCompany has been uploaded on the website of the Company and may be accessed through thelink at www.lakshmimills.com/Policies.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There is no material change or commitments after the closure of the financial year ason 31.03.2020 and till the date of this report.
COVID - 19
The Company has considered internal and certain external sources of informationincluding credit reports economic forecasts and industry reports up to the date ofapproval of the financial statements in determining the impact on various elements of itsfinancial statements. The Company has used the principles of prudence in applyingjudgments estimates and assumptions including sensitivity analysis and based on thecurrent estimates the Company expects to fully recover the carrying amount ofinventories trade receivables including intangible assets and investments. The eventualoutcome of impact of the global health pandemic may be different from those estimated ason the date of approval of these financial statements.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to Conservation of Energy Technology Absorption ForeignExchange Earnings and Outgo as required under section 134 (3) (m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is attached herewith asAnnexure - 3 forming part of this report.
The Company follows a comprehensive and integrated risk management process. The riskmanagement process is designed to safeguard the organization from various risks throughadequate and timely actions. It is designed to anticipate evaluate and mitigate risks inorder to minimize its impact on the business. The potential risks are inventoried andintegrated with the management process such that they receive the necessary considerationduring decision making and are periodically reviewed and revised by the Board ofDirectors.
CORPORATE SOCIAL RESPONSIBILITY
The company has adopted a Corporate Social Responsibility Policy defining therein theCSR activities to be undertaken by the Company in areas or subject specified in ScheduleVII of the Companies Act 2013. The Corporate Social Responsibility Committee of the Boardis responsible for the implementation and effective monitoring of the CSR activities ofthe Company. The Annual Report on Company's CSR activities of the Company is furnished inthe prescribed format as Annexure - 4 to this report.
Pursuant to the provisions of the Act and the Listing Regulations the Board hascarried out the annual evaluation of its own performance the individual Directors(including the Chairman) as well as an evaluation of the working of all Board Committees.The performance evaluation was carried out on the basis of inputs received from all theDirectors / Members of the Committees considering the various aspects of the Board'sfunctioning composition of the Board and its Committees culture execution andperformance of specific duties obligations and governance. The Independent Directors ofthe Company have also convened a separate meeting for this purpose. All the results ofevaluation have been communicated to the Chairman of the Board of Directors.
DIRECTORS' & KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152 of the Act and the Articles ofAssociation of the Company Sri R. Santharam Director is liable to retire by rotation atthe ensuing Annual General Meeting ("AGM") and being eligible offers himself forre-appointment. The Board recommends his reappointment on the consideration of the Membersof the Company at the forthcoming Annual General Meeting. Brief profile of Sri R.Santharam has been given in the Notice convening the Annual General Meeting.
Sri Aditya Krishna Pathy Deputy Managing Director was appointed for a period of 5years from 30.07.2015 and his term of office expired on 29.07.2020. The Nomination andRemuneration Committee at its meeting held on 24.06.2020 has recommended to the Board thereappointment for a further period of 5 years with the terms and conditions and the Boardat its meeting held on 24.06.2020 has approved the reappointment of Sri Aditya KrishnaPathy as Deputy Managing Director for a period of 5 years from 30.07.2020 and the paymentof remuneration subject to the approval of the Shareholders at the ensuing Annual GeneralMeeting.
Based on the recommendation of the Nomination and Remuneration Committee the Board ofDirectors at their meeting held on 7th August 2020 has recommended the reappointment ofSmt Suguna Ravichandran (DIN: 00170190) 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 Sri Aditya Krishna Pathy Deputy ManagingDirector and Smt Suguna Ravichandran Independent Director of the Company.
The Key Managerial Personnel of the Company pursuant to Section 2(51) and 203 of theCompanies Act 2013 are Sri S. Pathy - Chairman and Managing Director Sri Aditya KrishnaPathy - Deputy Managing Director Sri N. Singaravel - Company Secretary and Sri A.Doraiswamy - Chief Financial Officer.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any joint venture subsidiary or associate company.
During the year under review your Company has not accepted any deposits within themeaning of Section 73 of the Companies Act 2013 and the Companies (Acceptance ofDeposits) Rules 2014.
SIGNIFICANT AND MATERIAL ORDERS IF ANY PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators Courts Tribunalswhich would impact the going concern status of the Company and its future operations.
INTERNAL FINANCIAL CONTROLS
Your Company has in place adequate internal financial controls commensurate with thesize scale and complexity of its operations. Such controls have been assessed during theyear under review taking into consideration the essential components of internal controlsstated in the Guidance Note on Audit of Internal Financial Controls over FinancialReporting issued by the Institute of Chartered Accountants of India. Based on the resultsof such assessments carried out by the management no reportable or significantdeficiencies and no material weakness in the design or operation of any control wasobserved.
The Directors and Management confirm that the internal financial controls withreference to the Financial Statements are commensurate with the size and nature ofbusiness of the Company. A report of Auditors pursuant to Section 143(3)(i) of theCompanies Act 2013 certifying the adequacy of Internal Financial Controls is annexed withthe Auditors Report.
COMPOSITION OF AUDIT COMMITTEE AND VIGIL MECHANISM / WHISTLE BLOWER POLICY
The composition and attendance of the Audit Committee of the Board of Directors of theCompany are disclosed elsewhere in the Annual Report. The Company has devised a vigilmechanism in the form of a Whistle Blower Policy in pursuance of provisions of Section177(10) of the Companies Act 2013 as explained in the Corporate Governance Report andalso posted on the website of company and can be accessed at the link http://www.lakshmimills. com/Policies. During the year under review there were no complaintsreceived under this mechanism.
M/s. M.S.Jagannathan & Visvanathan (Firm Registration No.001209S) CharteredAccountants Coimbatore were appointed as the Statutory Auditors of the company for aperiod of five years at the 107th Annual General Meeting of the company held on 26th July2017.
The Company has received a Certificate from the Statutory Auditors to the effect thattheir continued appointment as the Statutory Auditors of the Company would be within thelimits prescribed under section 139 of the Companies Act 2013.
There is no audit qualification reservation or adverse remark for the year underreview.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 as amended from time to time the Board ofDirectors on the recommendation of the Audit Committee has reappointed M/s.A.R.Ramasubramania Raja & Co. (Firm Registration No. 000519) a firm of CostAccountants as the Cost Auditor to audit the cost records of the Company for thefinancial year 2020-21. M/s. A.R.Ramasubramania Raja & Co. have confirmed that theirappointment is within the limits of section 141(3)(g) of the Companies Act 2013 and havealso certified that they are free from any disqualifications specified under section141(3) and proviso to section 148(3) read with section 141(4) of the Companies Act 2013.
The Audit Committee has also received a Certificate from the Cost Auditor certifyingtheir independence and arm's length relationship with the Company.
As per the provisions of the Companies Act 2013 read with the Companies (Cost Recordsand Audit) Rules 2014 a resolution seeking Members' approval for the remunerationpayable to the Cost Auditors for the financial year 2020-21 forms part of the Noticeconvening the 110th Annual General Meeting of the Company for their ratification.Accordingly the Board recommends for the resolution seeking Members' ratification for theremuneration payable to M/s. A.R.Ramasubramania Raja & Co. Cost Auditors is includedin the Notice.
The Company has maintained the Cost Records as specified by the Central Governmentunder sub-section (1) of Section 148 of the Companies Act 2013.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. M.D.Selvaraj MDS & Associates Company Secretary in Practice (C.P No.411) to undertake the Secretarial Audit of the Company. The Secretarial Audit report isannexed herewith as Annexure - 5 and forms an integral part of this Report.
Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Management Discussion and Analysis Report Report on CorporateGovernance and Auditors Certificate regarding compliance of conditions of CorporateGovernance provided elsewhere in this Report forms part of the Directors' Report.
During the year under review the Company has not passed any transaction through PostalBallot.
PARTICULARS OF EMPLOYEES
Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197(12) of Companies Act 2013 and Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is appended as Annexure - 6 to thisReport.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place a policy on Sexual Harassment of Women at Workplace in linewith the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013. An Internal Compliant Committee has been set up toredress complaints received. All employees (permanent contractual temporary trainees)are covered under this policy. There were no complaints received from any employee of theCompany during the financial year 2019-20.
The Board acknowledges the continued assistance from the Bankers Cotton Yarn andCloth Dealers of the Company and Shareholders and appreciates the valuable servicesrendered by the employees at all levels.
May the Goddess Lakshmi continue to shower her choicest Blessings for the prosperity ofthe Company in the years to come.