Ladies and Gentlemen
Your Directors have pleasure in presenting the Hundred and Eighth year Annual Reporttogether with the audited accounts of the Company for the year ended 31.03.2018.
|WORKING RESULTS ||31.3.2018 ||31.3.2017 |
|No. of days worked ||356 ||357 |
|Sales ||23668.46 ||22722.73 |
|Other income ||686.47 ||773.49 |
|GROSS REVENUE ||24354.93 ||23496.22 |
|Profit before Tax and Exceptional Items ||495.80 ||460.61 |
|Less : Exceptional items ||222.80 ||17.65 |
|Profit before Taxation ||273.00 ||442.96 |
|Tax Expense ||130.71 ||336.39 |
|Profit after Taxation ||142.29 ||106.57 |
|Other Comprehensive Income ||13305.35 ||4729.11 |
|Total Comprehensive Income ||13447.64 ||4835.68 |
Transition to Indian Accounting Standards
The Ministry of Corporate Affairs (MCA) vide its notification dated 16.02.2015notified the Indian Accounting Standards (Ind
AS) applicable to certain classes of companies. Ind AS has replaced the existing IndianGAAP prescribed under Section 133 of the Companies Act 2013 read with Rule 7 of theCompanies (Accounts) Rules 2014. For the Company Ind AS is applicable from April 12017 with a transition date of April 1 2016.
The following are the areas which has an impact on account of transition to Ind AS:
Expected credit loss model for provisioning on trade receivables.
Fair valuation of investments in equity instruments.
Fair Valuation of Rent advance.
Employee costs pertaining to defined benefit obligation.
Recognition of dividend liability and related taxes.
Recognition of Government Grants.
The reconciliations and descriptions of the effect of the transition from IGAAP to IndAS have been provided in the notes to accounts in the standalone financial statements.
The Spindles capacity remained at the same level of 1.33 lakh spindles throughout theyear 2017-18. Overall utilisation remained around 95% - same as that of 2016-17.
Your Company continued to outsource fabrics both for exports as well as for domesticmarket. Export of yarn and fabric accounted for ` 3529 Lakhs as against ` 4999 Lakhs inthe previous year a decrease of around 30% over the previous year's performance.
Overall the operational performance was better during the year thanks to improvementin realization of yarn prices as well as power cost reduction.
There was no change in the nature of business of the Company during the financial yearended 31 st March 2018.
TRANSFER TO RESERVES
The Company has not transferred any amount to its Reserves during the year underreview.
The Directors have recommended a dividend of `.9/- per Equity Share of `.100/- each at9% for the financial year 2017-2018 (Previous Year 9%). The Dividend of 9% ifapproved at the forth coming Annual General Meeting will result in the outflow of`.62.60Lakhs to the company in addition to `.12.87 Lakhs by way of dividend distribution tax.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND
In terms of the Companies Act 2013 any unclaimed or unpaid Dividend relating to thefinancial year 2010-11 will be transferred to the Investor Education and Protection Fundestablished by the Central Government after the conclusion of this Annual GeneralMeeting.
As per the requirements of the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 10937 equity shares of Rs. 100/-each on which dividend had remained unclaimed for a period of 7 years have beentransferred to the credit of Demat account identified by the IEPFAuthority during the yearunder review.
The paid up Equity Share Capital as on March 31 2018 was `.69555000/- comprising695550 shares of `.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 thisreport.
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 3 Meetings of the Nomination and Remuneration Committee 1 Meeting of theCorporate Social Responsibility Committee 1 Meeting of the Stakeholders RelationshipCommittee and 18 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 Company has complied with the Secretarial Standards on Board and General Meetingsissued by the Institute of Company Secretaries of India.
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-
(a) In the preparation of the annual accounts the applicable accounting standards havebeen followed and there are no material departures from those standards;
(b) 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 profit of the Company for that period; (c) the Directors have taken proper andsufficient care for maintenance of adequate accounting records in accordance with theprovisions of the Companies Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; (d) the Directors have preparedthe annual accounts on a going concern basis; (e) the Directors have laid down internalfinancial controls to be followed by the Company and that such internal financial controlsare adequate and were operating effectively; and
(f) 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 were no instances of frauds identifiedor reported by the Statutory Auditorsduring the course of their audit pursuant to Section 143(12) of the Companies Act 2013.
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 so as to qualify themselves to act as Independent Directors underthe provisions of the Companies Act 2013 and the relevant rules.
NOMINATION AND REMUNERATION COMMITTEE AND POLICY
The Company has reconstituted the Nomination and Remuneration Committee of Directors ofthe Company and its composition and attendance are reported elsewhere in the AnnualReport. The Board has on the recommendation of the Nomination & RemunerationCommittee framed a policy on Directors' appointment and remuneration including criteriafor determining qualification positive attributes independence of a Director and othermatters provided under sub-section
(3) of Section 178. The said Policy is available on the website of the Company www.lakshmimills.com. The abstract of the Policy is annexed hereto as Annexure - 6.
EXPLANATION AND COMMENTS ON AUDITOR REPORTS
The reports of the Statutory Auditors M/s. M. S. Jagannathan & Visvanathan (annexedelsewhere in the Annual Report) and that of the Secretarial Auditor Mr. M.D. Selvarajannexed hereto as Annexure 2 are self explanatory having no adverse comments.
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. Since there are no transactions which arenot on arm's length basis and material in nature the requirement of disclosure of suchrelated party transactions in Form AOC-2 does not arise.
The policy on Related Party Transactions as approved by the Board of Directors of theCompany has been uploaded on the Company's website and may be accessed through the link atwww.lakshmimills.com.
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 31.03.2018 and till the date of this report.
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 as Annexure- 3 to 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 Board has constituted a CSR Committee comprising of Sri S. Pathy Sri AdityaKrishna Pathy and Sri D. Rajendran. The company has adopted a Corporate SocialResponsibility Policy defining therein the CSR activities to be undertaken by the Companyin line with the provisions of Schedule VII of the Companies Act 2013. The CorporateSocial Responsibility Committee of the Board is responsible for the implementation andeffective monitoring of the CSR activities of the Company. The Annual Report on Company'sCSR activities of the Company is furnished in the prescribed format as Annexure - 4 andattached to this report.
Pursuant to the provisions of the Act the Board has carried out an annual evaluationof its own performance the individual Directors (including the Chairman) as well as anevaluation of the working of all Board Committees. The performance evaluation was carriedout on the basis of inputs received from all the Directors / Members of the Committees asthe case may be. The Independent Directors of the Company have also convened a separatemeeting for this purpose. All the results of evaluation has been communicated to theChairman 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 Sanjay Jayavarthanavelu Director is liable to retire byrotation at the ensuing Annual General Meeting ("AGM") and being eligible offershimself for re-appointment.
Your directors recommend the re-appointment.
Sri V. Jagannathan Independent Director has resigned from the Board of Directors ofthe Company with effect from 13.12.2017 due to his advanced age.
Sri Vijay Venkatasamy has been inducted to the Board of Directors of the Company witheffect from 14.02.2018 as an
Independent Director in the place of Sri V. Jagannathan and he shall hold office uptothe date of this Annual General Meeting. Accordingly necessary resolution proposing theappointment of Sri.Vijay Venkatasamy as an Independent Director of the Company has beenincluded in the Agenda of the Notice convening the Annual General Meeting for the approvalof the members.
Key Managerial Personnel of the Company as required pursuant to Section 2(51) and 203of the Companies Act 2013 are Sri S. Pathy - Chairman and Managing Director Sri AdityaKrishna Pathy - Deputy Managing Director Sri N. Singaravel - Company
Secretary and Sri V. Kannappan - Chief Financial Officer.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any joint venture subsidiary or associate company.
Your Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has adequate internal control systems to monitor business processesfinancial reporting and compliance with applicable regulations. The systems areperiodically reviewed for identification of control deficiencies and formulation of timebound action plans to improve efficiency at all the levels. The Audit Committee of theBoard constantly reviews internal control systems and their adequacy significant riskareas observations made by the mechanism and the operations of the Company andrecommendations made for corrective action through the internal audit reports. TheCommittee reviews the statutory auditors' report key issues significant processes andaccounting policies The Directors and Management confirm that the Internal FinancialControls (IFC) are adequate with respect to the operations of the Company. A report ofAuditors pursuant to Section 143(3)(i) of the Companies Act 2013 certifying the adequacyof Internal Financial Controls is annexed with the Auditors Report.
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. Pursuant to the amendment of Section 139 of the Companies Act 2013 the Company isno longer required to seek the ratification of the appointment of the Auditor at everyAnnual General Meeting. Accordingly it has been proposed to obtain the approval of themembers to continue the appointment of the Statutory Auditors without ratification oftheir appointment at every Annual General Meeting.
The Company has received a Certificate from the Statutory Auditors to the effect thattheir
Statutory Auditors of the Company would be within the limits prescribed under section139 of the Companies Act 2013. Members are requested to grant their approval for thecontinuation of the appointment of the Auditors for a period up to the conclusion of the112thAnnual General Meeting of the Company which ought to be held during the year 2022without ratification at every Annual General Meeting.
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 toundertake the Secretarial Audit of the Company. The Secretarial Audit report is annexedherewith as
Annexure - 2.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 the Directors on the recommendation of the AuditCommittee have appointed M/s. A.R.Ramasubramania Raja & Co. a firm of CostAccountants as the Cost Auditor of the Company for the financial year 2018 19
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (Cost Recordsand Audit) Rules 2014 the remuneration payable to the Cost Auditors for the financialyear 2017-18 & 2018 19 is subject to the approval of the shareholders in a generalmeeting. The Board recommends the ratification of their remuneration
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 Regulation 34 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements)
Regulations 2015 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.
COMPOSITION OF AUDIT COMMITTEE AND VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has reconstituted the Audit Committee of the Board of Directors of theCompany and its composition and attendance are disclosed elsewhere in the Annual Report.The Company has devised a vigil mechanism in the form of a Whistle Blower Policy inpursuance of provisions of Section 177(10) of the Companies Act 2013 and the policy isexplained in corporate governance report and also posted on the website of company and canbe accessed at the link http://www. lakshmimills.com. During the year under review therewere no complaints received under this mechanism.
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 duringthe financial year 2017 - 18
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 has been appended as Annexure - 5to this Report.
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.
| ||By Order of the Board |
| ||For The Lakshmi Mills Co. Ltd. |
| ||S. PATHY |
|Coimbatore ||Chairman and Managing Director |
|13th August 2018 ||(DIN 00013899) |