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Loyal Textile Mills Ltd.
|BSE: 514036||Sector: Industrials|
|NSE: N.A.||ISIN Code: INE970D01010|
|BSE 00:00 | 23 Apr||405.45||
|NSE 05:30 | 01 Jan||Loyal Textile Mills Ltd|
|Mkt Cap.(Rs cr)||195|
|Mkt Cap.(Rs cr)||195.43|
Loyal Textile Mills Ltd. (LOYALTEXTILE) - Director Report
Company director report
Your Directors have great pleasure in presenting the 72nd Annual Reportof the Company along with the Audited Financial statements for the financial year ended31st March 2018.
(Rs. in crore except Earnings per share)
Your Directors recommend a Dividend of 50% (i.e Rs.5/- per share) forthe year ended 31st March 2018.
The Dividend if approved by the shareholders at the AGM will be paidto the equity shareholders whose names appear in the Register of Members as on 20thSeptember 2018 and in respect of shares held in dematerialized form it will be paidto members whose names are furnished by National Securities Depository Limited and CentralDepository Services (India) Limited as bene3 cial owners as on the same date. The cashoutgo will be Rs. 2.90 Cr (Rs. 2.41 Cr as dividend and Rs. 0.49 Cr as Dividend tax).
The paid-up Share Capital as on March 31 2018 was Rs.4.82 crore.During the year the company has not issued any shares or any convertible instruments.
TRANSFER TO RESERVES
During the year under review the Company has not transferred anyamount to General Reserve.
MATERIAL CHANGES OCCURRED AFTER THE END OF FINANCIAL YEAR
No material changes and commitments which could affect the company'sfinancial position have occurred between the end of the financial year and the date ofthis report.
PERFORMANCE REVIEW MANAGEMENT DISCUSSIONS AND ANALYSIS AND CURRENTYEAR OUTLOOK
During the year company has produced 259.08 lakhs Kgs. of Yarn 494.66lakhs metre Woven fabrics and 210.62 lakhs Kgs. of Knitted fabrics.
The turnover for the year 2017-18 were at Rs.1158.75 crores as againstRs.1134.74 crores and Profit after tax was Rs. 23.08 crores as against Rs. 23.69 crores inthe previous year. The Export turnover during the year was Rs.988.05 crores as againstRs.990.92 crores in the previous year. Export turnover constitutes 82% of the total incomeof the Company.
The Financial year 2017-18 was a highly challenging year for thecompany. Rupee appreciation and the increase in cotton price has adversely affected theperformance during the year. The sudden demise of the Chairman and Managing Director SriManikam Ramaswami on 02.10.2017 is a great loss to the company. His vision strongknowledge in Technology were great strength for the company. Under his leadership thecompany enjoyed a cordial relationship with all the stakeholders.
The Textiles sector is one of the largest contributors to India'sexports with approximately 13 per cent of total exports. The textile industry is alsolabour intensive and is one of the largest employers. The textile industry employs about105 million people directly and indirectly. India's overall textile exports during FY2017-18 stood at US$ 37.74 billion. The future for the Indian textile industry lookspromising buoyed by both strong domestic consumption as well as export demand.
High economic growth has resulted in higher disposable income. This hasled to rise in demand for products creating a huge domestic market. The domestic marketfor apparel and lifestyle products currently estimated at US$ 85 billion is expected toreach US$ 160 billion by 2025.
Market Trends and Outlook
There is a huge market potential for Textile Products viz yarn fabricsand garments within the country and in the global market. Your company has establishedcredentials in manufacturing and exporting yarn woven/knitted fabrics and technicalgarments across the globe. Export constitutes 82 % of the turnover during the year.
There is good potential for increasing the export of technicalgarments. The company has planned to increase the volume in the value-added product inexports and the domestic during the current year.
The process house (LSF) in Cuddalore has been equipped to increase theprocessing volume during the current financial year (2018-19)
The company bagged the following awards during the year.
TEXPROCIL Gold Trophy for the 11th time in a row for the highestexport of grey cotton fabrics
Gold Trophy for the highest export of garments in the Rs. 50-100Cr category from Apparel Export Promotion Council.
Silver Plaque for Top Four Star exporter in Southern Region fromFederation of Indian Export Organisations.
During the year the company has generated 7.73 crore units of windpower against 6.96 crore in the previous year and solar power 52.25 lakh units against51.71 lakh units in the previous year.
ITALIAN JOINT VENTURE
Italian joint venture is performing satisfactorily. The JVCompany has made a profit of Euro 6.10 lakh pre-tax and Euro 4.10 lakh post tax.
LOYAL INTERNATIONAL SOURCING PRIVATE LTD.
Loyal International Sourcing Private Limited (LISPL) is a 100% WhollyOwned Subsidiary Company started in the year 2014.
The operation in LISPL during the year was very minimal as theoperation was stopped from July 2017.
CONSOLIDATED FINANCIAL STATEMENT
The consolidated financial statements of the Company are prepared inaccordance with the provisions of Section 129(3) of the Companies Act 2013 read with Rule5 of the Companies (Accounts) Rules 2014 and Regulations 33 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 along with a separate statementcontaining the salient features of the financial performance of subsidiaries and jointventures is attached to the financial statements in the prescribed format.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The sad and sudden demise of Mr. Manikam Ramaswami Chairman &Managing Director of the Company happened on 02.10.2017. Mrs. Valli M Ramaswami the Wholetime Director was appointed as Chairperson in the Board Meeting held on 19.10.2017. Mr. RPoornalingam and Mr.Madhavan Nambiar were re-appointed as Independent Directors in theAnnual General Meeting held on 25th September 2017. In addition Mr.B.T.Bangera andMrs.Vijayalakshmi Rao were appointed as Independent Directors in the Annual GeneralMeeting held on 25th September 2017.
Mr. B. Vaidyanathan was co-opted as Additional Director in the Boardwith effective from December 07 2017 and designated as Executive Director of the Company.Subsequently Mr.B.Vaidyanathan was re-designated as Non-Executive Director effective fromMarch 19 2018. He will hold office up to the date of ensuing Annual General Meeting andhe is eligible for appointment as Director of the company.
Mrs. Valli M Ramaswami who ceased as Director effective from 10thFebruary 2018 was appointed as an Additional Director effective from April 12 2018 anddesignated as Whole Time Director of the Company and Chairperson of the Board. She willhold office up to the date of ensuing Annual General Meeting and eligible for appointmentas Director of the Company. Ms. Vishala Ramswami was appointed as Chief Executive Of3 cerof the company with effect from October 19 2017. She resigned from the post with effectfrom March 19 2018. Mr. A. Velliangiri was appointed as Chief Executive Of3 cer of thecompany with effect from March 30 2018.
JUSTIFY>M/s.GANESH PRASAD (Firm Regd.No.000872S) Chartered Accountants havebeen appointed as statutory auditors of the Company for a period of 5 years in the 71stAGM held on 25th September 2017 and they will hold office till the conclusion of 76th AGM.
The Auditor's report to the shareholders on the standalone andconsolidated financial statement for the year ended March 31 2018 does not contain anyqualification observation or adverse comment.
Pursuant to the provisions of Section 204 of the Companies Act 2013and read with Rule 9 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the Company has appointed Mr.K.Bashyam (FCS No.600) PracticingCompany Secretary Madurai to undertake the secretarial audit of the company for thefinancial year ended March 31 2018. The Secretarial Audit Report is enclosed in thisreport as Annexure III. The Secretarial Audit report does not contain anyqualifications reservation or adverse remark.
Mr. V. Balasubramanian Cost Accountant was appointed as Cost Auditorfor auditing the cost accounts of the Company for the year ended 31st March 2018. TheCost Audit Report for the financial year 2017-18 will be submitted to the CentralGovernment before due date.
The Board of Directors of the Company have appointed Mr. B.Venkateshwar Practicing Cost Accountant holding Membership No.27622 as Cost Auditor forthe year ending 31st March 2019.
In accordance with the provision of Section 148(3) of the Companies Act2013 read with Rule 14 of the Companies (Audit and Auditors) Rules 2014 the remunerationpayable to the Cost Auditors has to be rati3 ed by the members of the Company. Appropriateresolution forms part of the Notice convening the AGM.
The company has appointed M/s. Capri Assurances and Advisory ServicesChartered Accountants as Internal Auditors of the Company for two financial years viz.2017-18 and 2018-19.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual return in formMGT- 9 as per the provisions of the Companies Act 2013 and Rules thereto are annexed tothis report. Annexure II
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 134(5) of the Companies Act2013 with respect to Directors' Responsibility Statement it is hereby confirmed that: a)in the preparation of the annual accounts for the year ended March 31 2018 theapplicable accounting standards have been followed along with proper explanation relatingto material departures; b) the Directors have selected such accounting policies andapplied them consistently and made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company at theMarch 31 2018 and of the profit of the company for the year ended on that date; c) theDirectors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; d)the Directors have prepared the annual accounts on a going concern basis; e) the Directorshave laid down internal financial controls to be followed by the company and that suchinternal financial controls are adequate and are operating effectively; and f) theDirectors had devised proper system to ensure that systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
PARTICULARS OF EMPLOYEES
No employee of the Company was in receipt of remuneration of not lessthan Rs.1.02 crores during the year or Rs.8.50 lakhs per month during any part of the saidyear as per Section 197 of the Companies Act 2013 read with Rule 5 (2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014.
RATIO OF REMUNERATION OF DIRECTOR
As per Section 197 (12) of the Companies Act 2013 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 thedetails of Ratio of Remuneration to each Director to the median employee's remuneration isfurnished as Annexure VI.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of section 135 and Schedule VII of the Companies Act 2013the Board of Directors of the Company have constituted a CSR Committee. The Committeecomprises of three Directors comprising of two Independent Directors and one Whole TimeDirector. The company spends 2% of the average net profit of the previous three years forCSR activities. The CSR activities are mainly focused on Education and Health Care. TheCSR Policy is available on the website of the company
During the year the company has contributed to a Charitable Trust a sumof Rs.47.49 Lakhs in accordance with the provisions u/s .135 of the Companies Act 2013for spending towards CSR activities. Annual Report on CSR activities is enclosed asAnnexure IV.
CEO / CFO CERTIFICATION
In accordance with Regulation 17(8) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a certificate on the Financial Statements andCash Flow Statement of the company for the year ended March 31 2018 duly signed by CEOand CFO was submitted to the Board of Directors and the same is attached as AnnexureVII.
The company has taken adequate steps to adhere to all the conditionslaid down in SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 withrespect to Corporate Governance. A report on Corporate Governance is included as a part ofthis annual report as Annexure VIII.
A Certificate from the Statutory Auditors of the Company con3 rming thecompliance of conditions of Corporate Governance as stipulated in SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms part of this Annualreport.
RELATED PARTY TRANSACTIONS
Related party transactions that were entered during the financial yearwere on an arm's length basis and were in the ordinary course of business. There were nomaterially significant related party transactions with the Company's Promoters DirectorsManagement or their relatives which could have had a potential conflict with theinterests of the Company. Transactions with related parties entered by the Company in thenormal course of business are periodically placed before the Audit Committee for itsapproval.
Particulars of contracts or arrangements with related parties referredto in section 188(1) of the companies Act 2013 in the prescribed form AOC-2 isattached as Annexure V. Also Refer Note No.43 of Financial statementwhich sets out the transactions with related parties.
The Board of Directors of the Company has on the recommendation of theAudit Committee adopted a policy to regulate transactions between the Company and itsRelated Parties in compliance with the applicable provisions of the Companies Act 2013the Rules there under and the Listing Regulations. This Policy was considered and approvedby the Board has been uploaded on the website of the Company.
As required under the provisions of Section 134(3) (p) of the CompaniesAct 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 theBoard has carried out a formal annual evaluation of its own performance and that of itscommittees and individual directors based on the guideline formulated by the Nomination& Remuneration Committee.
Further the Independent Directors of the Company met once during theyear to review the performance of non-independent directors performance of the Chairmanand performance of the board as a whole.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to Regulation 25 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has adopted a policy onfamiliarisation programme for Independent Directors of the Company.
The Policy on Familiarisation Programme as approved can be viewed onthe Company's website.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
In pursuant to the provisions of section 177(9) & (10) of theCompanies Act 2013 the company has framed a Vigil Mechanism/Whistle Blower Policy. TheVigil Mechanism Policy has been posted on the website of the Company.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
During the year under review there were no cases filed pursuant to theprovisions of the Act.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
The particulars required under Section 134(3)(m) of the Companies Act2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is furnished in AnnexureI to this Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by theRegulators/Courts which would impact the going concern status of the company and itsfuture operations.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has adequate system of internal control to safeguard andprotect from loss unauthorized use or disposition of its assets. All the transactions areproperly authorized recorded and reported to the Management. The Company is following allthe applicable Accounting Standards for properly maintaining the books of accounts andreporting financial statements. The internal auditor of the company checks and veri3 esthe internal control and monitors them in accordance with policy adopted by the company.
The Board members are regularly informed about risk assessment andminimization procedures after which the board formally adopted steps for framingimplementing and monitoring the Risk Management plan for the company. All the riskassociated with the business of the company have been taken care of by adequate measuresby the company.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the year the company has transferred Rs.1088210/- being thedividend amount which was due and payable and remained unclaimed and unpaid for a periodof 7 years to Investor Education and Protection Fund as per the requirements of theCompanies Act 2013.
Pursuant to the provisions of Section 124 and rules and regulation madethereunder and other provisions of the Companies Act 2013 the dividends which remainunpaid or unclaimed for a period of 7 years from the respective dates of transfer to theunpaid dividend account of the company are due for transfer to the Investor Education andProtection Fund (IEPF).
Due dates for transfer of Unclaimed Dividends to the IEPF is givenbelow:
Members who have so far not encashed the dividend warrants for theabove years are advised to submit their claim to the Company's R&TA at the aforesaidaddress immediately quoting their folio number / DP ID and Client ID.
During the year the company has not accepted deposit from the publicfalling within the ambit of section 73 of the Companies Act 2013 and the Companies(Acceptance of deposits) Rules 2014.
DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Independent directors have submitted their disclosure to the Boardcon3 rming that they fulfill the requirements as to qualify for their appointment as anIndependent Director under the provisions of Section 149 of the Companies Act 2013 aswell as SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
The Board con3 rms that the said Independent Directors meet thecriteria as laid down under the Companies Act 2013 as well as SEBI Listing Regulations.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN ANDSECURITIES PROVIDED
Particulars of loans given investments made guarantees given andsecurities provided along with the purpose for which the loan or guarantee or security isproposed to be utilized by the recipient are provided in the standalone financialstatement (Refer Note No.5).
The Company's equity shares are listed on the Bombay Stock ExchangeMumbai.
ENHANCING SHAREHOLDERS' VALUE
The company believes in the importance of its Members who are among itsmost important stakeholders. Accordingly the company's operations are committed to thegoal of achieving high levels of performance and cost effectiveness growth buildingenhancing the productive asset and resource base and nurturing overall corporatereputation. The company is also committed to creating value for its stakeholders byensuring that its corporate actions have positive impact on the socioeconomic andenvironmental growth and development
The Board has pleasure in recording its appreciation for theassistance cooperation and support extended to the company by the banks and thegovernment departments.
The Board also places on record its sincere appreciation of theresponse received from the company's valuable customers and thanks them for theircontinued support.
The company is grateful to all the employees for their continued cooperation extended to the company. Their contribution has been outstanding and theDirectors place on record their appreciation for the same.
The Directors also thanks the shareholders for their support and forthe confidence they have reposed in the company.
Statements in the Board's report and the Management Discussion &Analysis describing the Company's objectives expectations or forecasts may be forward -looking within the meaning of applicable securities laws and regulations. The Companycannot guarantee the accuracy of assumptions and the projected future performance of theCompany. The actual results may materially differ from those expressed of implied in thisreport. Important factors that could in3 uence the Company's operations include global anddomestic demand and supply conditions affecting selling price of 3 finished goods inputavailability and prices changes in government regulations tax laws economicaldevelopments within the country and other factors such as litigation and industrialrelations.
Place: Chennai Date: 25th May 2018