Your Directors have great pleasure in presenting the 73rd Annual Report ofthe Company along with the Audited Financial statements for the financial year ended 31stMarch 2019.
The Financial Results for the year under review are summarized hereunder.
(Rs. in Crs.)
| ||Standalone ||Consolidated |
|Particulars ||2019 ||2018 ||2019 ||2018 |
|Revenue from operations ||1306.94 ||1156.03 ||1306.94 ||1158.82 |
|Gross Profit ||119.65 ||116.06 ||122.12 ||118.42 |
|Less : Interest ||39.23 ||39.07 ||39.23 ||39.07 |
|Operating Profit (EBDT) ||80.42 ||76.99 ||82.89 ||79.36 |
|Less : Depreciation ||57.39 ||60.48 ||57.39 ||60.59 |
|Profit Before Tax (PBT) ||23.03 ||16.51 ||25.50 ||18.76 |
|Less: Current Tax ||(2.70) ||(6.57) ||(2.70) ||(6.57) |
|Profit After Tax (PAT) ||25.73 ||23.08 ||28.20 ||25.33 |
|Profit after OCI Income ||26.36 ||22.30 ||28.82 ||24.56 |
|Add : Surplus brought forward from previous year ||100.78 ||82.84 ||111.16 ||91.76 |
|Less: Dividend ||2.41 ||4.82 ||2.95 ||5.62 |
|Less: Dividend Tax ||0.49 ||0.98 ||0.49 ||0.98 |
|Less: Transfer to General Reserve (Add) / Less : ||NIL ||NIL ||NIL ||NIL |
|Transfer to OCI ||0.63 ||(1.44) ||0.63 ||(1.44) |
|Reserve due to Ind AS Transition || || || || |
|Balance carried to Balance sheet ||123.61 ||100.78 ||135.92 ||111.16 |
|Earning Per Share - Basic (in Rs.) ||53.42 ||47.92 ||58.55 ||52.60 |
|Earning Per Share - Diluted (in Rs.) ||53.42 ||47.92 ||58.55 ||52.60 |
PERFORMANCE OF THE COMPANY
During the year your Company has produced 283.06 lakhs Kg. Yarn 510.07 lakhs meterWoven fabrics and 201.63 lakhs Kg. Knitted fabrics.
The revenue from operations during the year 2018-19 increased to Rs.1306.94 croresfrom Rs.1156.03 crores in 2017-18. Profit after tax increased to Rs. 25.73 crores fromRs. 23.08 crores in 2017-18.
The Export turnover including incentives during the year was at Rs. 1133.15 croresagainst Rs.1025.18 crores in the previous year. Export turnover accounts for 87% of thetotal income of the Company.
Your Directors recommend a Dividend of 15% (i.e Rs.1.50/- per share) for the year ended31st March 2019.
The Dividend if approved by the shareholders at the AGM will be paid to the equityshareholders whose names appear in the Register of Members as on 19thSeptember 2019 and in respect of shares held in dematerialized form it will be paid tomembers whose names are furnished by National Securities Depository Limited and CentralDepository Services (India) Limited as beneficial owners as on the same date. The cashoutgo will be Rs. 0.87 Cr. (Rs. 0.72 Cr. as dividend and Rs. 0.15 Cr. as Dividend tax)
The paid-up Share Capital as on 31st March 2019 was Rs.4.82 Crs. During theyear the company has not issued any shares or any convertible instruments.
TRANSFER TO RESERVES
During the year under review the Company has not transferred any amount to GeneralReserve.
MATERIAL CHANGES OCCURRED AFTER THE END OF FINANCIAL YEAR
No material changes and commitments which could affect the companys financialposition have occurred between the end of the financial year and the date of this report.
MANAGEMENT DISCUSSIONS ON THE INDUSTRY SCENARIO & OUTPUTS
Global Textiles and Apparel Trade estimated at USD 764 billion in 2017 is estimated tobe growing at a Compounded Average Growth Rate (CAGR) of 3.4%. Apparel constitutes to 58%and Fabric 19% in the Total trade with a CAGR of 4.3% and 1% respectively.
India is one of the key players in the Global Textile Industry with good raw materialsbase and manufacturing strength across the production chain. India is the second largestexporter in the Global Textiles & Apparel Trade next to China with an estimateturnover of US $ 39 billion in 2018-19. The Indian Textile Industry occupies a keyposition in the Indian Economy with a contribution of 2% to the Indian GDP. The IndianTextile Industry provides direct employment to about 50 million people. Textile industryis one of the leading segments of Indian economy and one of the key sources of foreignearnings.
With the strong domestic consumption supported by consistent economic growth andbuoyant export demand. Indian Textile and Apparel exports trade is set to grow at a CAGRof 3.7% with a breakup of 4.5% in Apparel trade and 2.5% in Textiles. The trade warbetween USA & China and consequent imposition of higher tariff for Textile &Apparel imports from China into USA is expected to give a fl ip to other large scaletextile manufacturing countries like India.
Volatility in Cotton prices higher interest rates reduction in export incentiveshuge labour turnover and thin profit margin are the major challenges faced by TextileMills in the country. At the same time there is good potential for the growth in Textileand Apparel production due to the consistent demand growth in the domestic and exportmarkets.
Now the mills at large is focusing on continuous improvement in production and costreduction measures. Loyal Textile Mills is a vertically Integrated Textile Mill withactivities from cotton ginning to garmenting. Loyal Textile Mills has four textile millsone process house and a garment division.
The Company has established its credentials both in the domestic & export marketthrough supplies of quality products. During the current year the company has added 30knitting machines and increased the knitting machines capacity to 265. The company willendeavor to growth both on top line and active bottom line on a consistent basis.
The Company has bagged the following awards during the year.
1. TEXPROCIL Gold Trophy for 13th time in a row for the highest exports ofgrey fabrics.
2. SRTEPC Export Award for Best Export Performance in Knitted Fabrics
LOYAL INTERNATIONAL SOURCING PRIVATE LTD.
Loyal International Sourcing Private Limited (LISPL) is a 100% Wholly Owned SubsidiaryCompany started in the year 2014. The operations in LISPL has been stopped.
During the year the company has generated 6.89 crore units of wind power against 7.61crore units in the previous year and solar power 49.79 lakh units against 51.73 lakh unitsin the previous year. The wind power generation during the year has declined by 10.45% ascompared to the previous year due to low wind velocity.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The Particulars required under Section 134 (3) (m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is furnished in Annexure I to thisReport.
CONSOLIDATED FINANCIAL STATEMENT
The consolidated financial statements of the Company are prepared in accordance withthe provisions of Section 129(3) of the Companies Act 2013 read with Rule 5 of theCompanies (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.
As per the provisions of Section 152 of the Companies Act 2013 Mr. B VaidyanathanDirector retires by rotation at the forthcoming Annual General Meeting and being eligiblefor reappointment offers himself for re-appointment as Director of the Company subject tothe approval by the Shareholders of the Company in the Annual General meeting by anOrdinary Resolution. The Board recommends his re-appointment for the considerations of themembers of the company at forthcoming Annual General Meeting. Brief profile of Mr.B.Vaidyanathan has been given in the Notice convening the AGM.
As per Regulation 17 (1A) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) (Amendment) Regulations 2018 during the yearapproval of the members of the company was obtained through postal ballot process forcontinuation of Mr. Bendoor Tarachand Bangera Independent Director who has attained theage of 75 years.
Mr. Bendoor Tarachand Bangera continues to be Independent and Non-Executive Directorof the company from April 1 2019 till the completion of his present tenure.
DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Independent directors have submitted their disclosure to the Board confirming thatthey fulfill the requirements as to qualify for their appointment as an IndependentDirector under the provisions of Section 149 of the Companies Act 2013 as well as SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
The Board confirms that the said Independent Directors meet the criteria as laid downunder the Companies Act 2013 as well as SEBI Listing Regulations 2015.
The Board met five times during the year on 12th April 2018 25thMay 2018 11th August 201812th November 2018 and 8thFebruary 2019 and the gap between two meetings did not exceed one hundred and twenty days.
M/s. Ganesh Prasad (Firm Regd. No.000872S) Chartered Accountants were appointed asstatutory auditors of the Company for a period of 5 years in the 71st AGM heldon 25th September 2017 and they will hold office till the conclusion of 76thAGM.
The Auditors Report to the Shareholders on the Standalone and Consolidatedfinancial statements for the year ended 31st March 2019 does not contain anyqualification observation or adverse comment.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and read with Rule9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed Mr. M.K.Bashyam (FCS No.600 / C.P. No.3837) Practicing CompanySecretary Madurai to undertake the secretarial audit of the company for the financialyear ended 31st March 2019.
The Secretarial Audit Report is enclosed in this report as Annexure II. TheSecretarial Audit report does not contain any qualifications reservation or adverseremark.
Mr. B. Venkateswar Cost Accountant was appointed as Cost Auditor for auditing the costaccounts of the Company for the year ended 31st March 2019. The Cost AuditReport for the financial year 2018-19 will be submitted to the Central Government beforedue date.
The Board of Directors of the Company have appointed Mr. B. Venkateswar PracticingCost Accountant holding Membership No.27622 as Cost Auditor for the year ending 31stMarch 2020.
In accordance with the provisions of Section 148 (3) of the Companies Act 2013 readwith Rule 14 of the Companies (Audit and Auditors) Rules 2014 the remuneration payable tothe Cost Auditors has to be ratified by the members of the Company. Appropriate resolutionforms part of the Notice of the AGM.
The company has appointed M/s. Capri Assurances and Advisory Servicies Chennai asExternal Internal Auditors of the Company for two financial years viz. 2018-19 and2019-20.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual return in Form MGT- 9 as per theprovisions of the Companies Act 2013 and Rules thereto are annexed to this report as AnnexureIII.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134 (5) of the Companies Act 2013 withrespect to Directors Responsibility Statement it is hereby confirmed that:
a) In the preparation of the annual accounts for the year ended 31st March2019 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
b) the Directors have selected such accounting policies and applied them consistentlyand made judgementsandestimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the 31st March 2019 and ofthe profit of the company for the year ended on that date;
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
d) the Directors have prepared the annual accounts on a going concern basis;
e) the Directors have laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and are operatingeffectively; and
f) the Directors had devised proper system to ensure that systems to ensure compliancewith the provisions of all applicable laws and that such systems are adequate andoperating effectively.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of Section 135 and Schedule VII of the Companies Act 2013 the Board ofDirectors of the Company have constituted a CSR Committee. The Committee comprises ofthree Directors comprising of two Independent Directors and one Whole Time Director. Thecompany spends 2% of the average net profit of the previous three years for CSRactivities. The CSR activities are mainly focused on Education and Health Care. The CSRPolicy is available on the website of the company.
During the year the Company has contributed to a Charitable Trust a sum of Rs.48.64Lakhs in accordance with the provisions u/s 135 of the Companies Act 2013 for spendingtowards CSR activities. Annual Report on CSR activities is enclosed as Annexure IV.
RELATED PARTY TRANSACTIONS
Related party transactions that were entered during the financial year were on anarms length basis and were in the ordinary course of business. There were nomaterially significant related party transactions with the Companys PromotersDirectors Management or their relatives which could have had a potential confl ict withthe interests of the Company. Transactions with related parties entered by the Company inthe normal course of business are periodically placed before the Audit Committee for itsapproval.
Particulars of contracts or arrangements with related parties referred to in Section188 (1) of the Companies Act 2013 in the prescribed Form AOC-2 is attached as AnnexureV. Also Refer Note No.41 of Financial statement which sets out the transactions withrelated parties.
The Board of Directors of the Company has on the recommendation of the AuditCommittee adopted a policy to regulate transactions between the Company and its RelatedParties in compliance with the applicable provisions of the Companies Act 2013 the Rulesthere under and the Listing Regulations. This Policy was considered and approved by theBoard has been uploaded on the website of the Company.
PARTICULARS OF EMPLOYEES
No employee of the Company was in receipt of remuneration of not less than Rs.1.02 Crs.during the year or Rs.8.50 lakhs per month during any part of the said year as per Section197 of the Companies Act 2013 read with Rule 5 (2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014.
RATIO OF REMUNERATION OF DIRECTOR
As per Section 197 (12) of the Companies Act 2013 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the details of Ratio ofRemuneration to each Director to the median employees remuneration is furnished as AnnexureVI.
CEO / CFO CERTIFICATION
In accordance with Regulation 17(8) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a certificate on the Financial Statements and Cash FlowStatement of the company for the year ended 31st March 2019 duly signed by CEOand CFO was submitted to the Board of Directors and the same is attached as AnnexureVII.
The Company has in place a system of Corporate Governance. Corporate Governance isabout maximizing shareholder value legally ethically and sustainably. The company hastaken adequate steps to adhere to all the conditions laid down in SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 as amended from time to timewith respect to Corporate Governance. A report on Corporate Governance is included as partof this annual report as Annexure VIII. A Certificate from the Statutory Auditorsof the Company confirming the compliance of conditions of Corporate Governance asstipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015forms part of this Annual report.
As required under the provisions of Section 134 (3) (p) of the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board hascarried out a formal annual evaluation of its own performance and that of its committeesand individual directors based on the guideline formulated by the Nomination &Remuneration Committee.
The performance evaluation of the Directors was completed during the year under review.The performance evaluation of the Chairperson and the Non-Independent Directors wascarried out by the Independent Directors and Non-Executive Director.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board has adopted a policy on Familiarisation Programme forIndependent Directors of the Company.
The Policy on Familiarisation Programme as approved can be viewed on the Companyswebsite.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
In pursuant to the provisions of Section 177 (9) & (10) of the Companies Act 2013the company has framed a Vigil Mechanism / Whistle Blower Policy. The Vigil MechanismPolicy has been posted on the website of the Company. It is affirmed that no personnel ofthe Company has been denied access to the Audit Committee. No complaint has been receivedfrom any employee during this year.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
In order to comply with provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and Rules framed thereunder the Companyhas formulated and implemented a policy on prevention prohibition and redressal ofcomplaints related to sexual harassment of women at the workplace. All women employeeseither permanent temporary or contractual are covered under the above policy. An InternalComplaint Committee (ICC) has been set up in compliance with the said Act. During the yearunder review there were no cases filed pursuant to the provisions of the Act.
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 SYSTEM AND THEIR ADEQUACY
The Company has adequate system of internal control to safeguard and protect from lossunauthorized use or disposition of its assets. All the transactions are properlyauthorized recorded and reported to the Management. The Company is following all theapplicable Accounting Standards for properly maintaining the books of accounts andreporting financial statements. The internal auditor of the company checks and verifiesthe internal control and monitors them in accordance with policy adopted by the Company.
The company takes utmost care in managing the risks and it helps to improve operationsand production. Risk management framework has been formulated. The Board members areregularly informed of the risk assessment and risk mitigation measures. The forex exchangerisk is actively managed within the framework laid down by the Forex management policyapproved by the Board.
TRANSFER TO INVESTOR EDUCATION AND PRODUCTION FUND
During the year the company has transferred Rs.636106/- being the dividend amountwhich was due and payable and remained unclaimed and unpaid for a period of 7 years toInvestor Education and Protection Fund as per the requirements of the Companies Act 2013.
Pursuant to the provisions of Section 124 and rules and regulation made thereunder andother applicable provisions of the Companies Act 2013 the dividends which remain unpaidor unclaimed for a period of 7 years from the respective dates of transfer to the unpaiddividend 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:
|Financial Year ||Rate of Dividend ||Date of Declaration of Dividend ||Date of Dividend transfer to unpaid Dividend Account ||Last Date for Claiming unpaid Dividend ||Due to Transfer to IEPF |
|2011 -2012 ||10% ||22-08-2012 ||27-09-2012 ||23-08-2019 ||23-09-2019 |
|2012-2013 ||50% ||23-09-2013 ||28-10-2013 ||30-08-2020 ||30-09-2020 |
|2013-2014 ||75% ||11-09-2014 ||16-10-2014 ||28-08-2021 ||28-09-2021 |
|2014-2015 ||75% ||24-09-2015 ||29-10-2015 ||29-09-2022 ||29-10-2022 |
|2015-2016 ||100% ||14-09-2016 ||29-10-2016 ||29-09-2023 ||29-10-2023 |
|2016-2017 ||100% ||25-09-2017 ||25-10-2017 ||25-09-2024 ||25-10-2024 |
|2017-2018 ||50% ||27-09-2018 ||29-10-2018 ||27-09-2025 ||27-10-2025 |
Members who have so far not encashed the dividend warrants for the above years areadvised to submit their claim to the Companys RTA immediately quoting their folionumber / DP ID and Client ID.
During the year the company has not accepted deposit from the public falling within theambit of Section 73 of the Companies Act 2013 and the Companies (Acceptance of deposits)Rules 2014 and the amendments made thereunder.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED
Particulars of loans given investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilized by the recipient are provided in the Standalone Financial statement. (Refer NoteNo.4).
The Companys equity shares are listed on Bombay Stock Exchange (BSE Limited).
ENHANCING SHAREHOLDERS VALUE
The Company believes in the importance of its Members who are among its most importantstakeholders. Accordingly the companys operations are committed to the goal ofachieving high levels of performance and cost effectiveness growth building enhancingthe productive asset and resource base and nurturing overall corporate reputation. TheCompany is also committed to creating value for its stakeholders by ensuring that itscorporate actions have positive impact on the socio- economic and environmental growth anddevelopment.
The Board has pleasure in recording its appreciation for the assistance cooperationand support extended to the company by the banks and the government departments.
The Board also places on record its sincere appreciation of the response received fromthe companys valuable customers and thanks them for their continued support.
The company is grateful to all the employees for their continued co-operation extendedto the company. Their contribution has been outstanding and the Directors place on recordtheir appreciation for the same.
The Directors also thank the shareholders for their support and for the confidence theyhave reposed in the company.
Statements in the Boards report and the Management Discussion & AnalysisReport describing the Companys 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 or implied in thisreport. Important factors that could infl uence the companys operations includeglobal and domestic demand and supply conditions affecting selling price of finishedgoods input availability and prices changes in government regulations tax lawseconomical developments within the country and other factors such as litigation andindustrial relations.
|For and on behalf of the Board of Directors || |
|VALLI M RAMASWAMI ||P. MANIVANNAN |
|Chairperson & Whole Time Director ||Whole Time Director |
|Place : Chennai || |
|Date : 30th May 2019 || |