Loyal Textile Mills Ltd.
|BSE: 514036||Sector: Industrials|
|NSE: LOYALTEX||ISIN Code: INE970D01010|
|BSE 00:00 | 12 Aug||1002.65||
|NSE 00:00 | 12 Aug||1005.70||
|Mkt Cap.(Rs cr)||483|
|Mkt Cap.(Rs cr)||483.28|
Loyal Textile Mills Ltd. (LOYALTEX) - Director Report
Company director report
Your Directors have great pleasure in presenting the 75thAnnual Report of the Company along with the Audited Financial statements for the financialyear ended 31st March 2021.
The Financial Results for the year under review are summarizedhereunder.
(Rs. in Cr.)
PERFORMANCE OF THE COMPANY
During the year your Company has produced 229.52 lakh Kg Yarn 445.73lakh meter Woven fabric and 198.45 lakh Kg. Knitted fabric.
The revenue from operations during the year increased to Rs.1121.80Cr. from Rs.1104.43 crore in 2019-20. Profit after tax increased to Rs.27.52 Cr. fromRs.4.26 Cr. in 2019-20. The revenue from exports during the year was at Rs.774.67 Cr.against Rs.762.91 Cr. in the previous year. Exports accounts for 72 % of the Revenue fromOperations.
Your Directors recommend a Dividend of 75% (i.e. Rs.7.50/- per share)for the year ended 31st March 2021. The dividend if approved by theshareholders at the AGM will be paid to equity shareholders whose name appear in theRegister of Member as on 17th September 2021 and in respect of shares held indematerialized form it will be paid to members whose names are furnished by NationalSecurities Depository Limited (NSDL) and Central Depository Services (India) Limited(CDSL) as beneficial owners as on the same date. The cash outgo will be Rs.3.61 Cr.
The paid-up Share Capital as on 31st March 2021 was Rs.4.82Cr. 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 OCCURED AFTER THE END OF FINANCIAL YEAR
No material changes and commitments which could affect thecompany's financial position have occurred between the end of the financial year andthe date of this report.
MANAGEMENT DISCUSSIONS ON THE INDUSTRY SCENARIO & OUTPUTS
The domestic Textiles and Apparel Industry contributes 2% toIndia's GDP and contributes 12% to the country's export earnings.
The Textiles and Apparel industry in India is the second-largestemployer in the country next to Agriculture providing direct employment to over 45 millionpeople.
India has good raw material base and manufacturing strength inproduction of Textiles and Apparel. Considering the importance of Textile and ApparelTrade the Government of India has been implementing various policies and promotionalmeasures to develop the Textile Industry.
As per the announcement made in the Union Budget 2021-22 seven megatextile parks will be set up in next three years to make the Textile Industry globallycompetitive and attracting large investments.
Global Textile and Apparel Trade was about USD 839 billion in 2019with a CAGR of 4% since 2005. In the total trade 56% is contributed by Apparel followed byfabrics with a share of 18%. China is the dominant leader in the Global Textiles Tradewith a share of 34% followed by Bangladesh Vietnam and Germany with a share of 5% each.India is the 5th largest exporter with exports of USD 36.4 billion.
Indian domestic Textiles and Apparels trade is estimated at USD 75billion in 2020-21. As in the case of global trade apparel contributes major portion inthe trade with a share of 73%. With the strong domestic consumption and buoyant exportdemand the Indian Textile and Apparel export trade was growing at a CAGR of 3.9% till2019-20.
COVID 19 pandemic has impacted the entire world right from January2020. Covid 19 has made the financial year 2020-21 a most challenging year for everyindividual every industry and every country across the globe. Country wide Lock downsannounced by various countries across the world has hampered in production and supplychain of all industries. Textile and Apparel Industry has also been hit very badly acrossthe globe right from January 2020.
India's domestic demand declined by 30% during 2020-21. Indiaexports also declined from USD 33.5 billion in 2019-20 to USD 28.4 billion in 2020-21.India imports also declined from USD 8.6 billion in 2019-20 to USD 5.6 billion in 2020-21.The COVID 19 impacts subdues between September and February. However the second wavestarted in February 2021 has stalled the recovery and has made the business and economymoving backwards. Lock downs have been announced in many states which will impact Textileproduction and the supply chain for next 6-12 months.
To mitigate the COVID 19 impact as a pro-active measures the Companystarted manufacturing reusable Face masks made out of treated Woven and knitted fabric andPPE kit and supplied to Industrial houses educational Institutions and public at largeat competitive price. The masks and PPE kits were supplied under the brand name of SUPERASHIELD. These masks and PPE kits received overwhelming response and appreciation forquality.
Volatility in cotton prices cut in the export incentives very highlabour turnover and low profit margin are the major challenges faced by the Textiles millsin the country. These challenges are inherent and have to be addressed through achievingcontinuous improvement in production and cost saving measures.
Loyal Textile Mills has four textile mills one process house and agarment division. The Company is focusing on continuous improvement in production and costreduction measures. The Company has established its credentials both in the domestic andexport marker through supplying quality products.
Due to COVID-19 TEXPROCIL has not announced any Award for theachievers in the textile industry during the year.
LOYAL INTERNATIONAL SOURCING PRIVATE LTD.
Loyal International Sourcing Private Limited (LISPL) is a 100% WhollyOwned Subsidiary Company started in the year 2014. There was no operation in LISPL duringthe year and the operation in LISPL has been stopped.
During the year the company has generated 5.75 Cr. units of wind poweragainst 5.97 Cr. units in the previous year and solar power 43.73 lakh units against 48.68lakh units in the previous year. The wind power generation during the year declined by 3 %as compared to the previous year due to low wind velocity.
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.
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.
As per the provisions of Section 152 of the Companies Act 2013 Mr. B.Vaidyanathan Director (DIN: 00263983) retires by rotation at the forthcoming AnnualGeneral Meeting and being eligible for re-appointment offers himself for re-appointment asDirector of the Company subject to the approval by the Shareholders of the Company in theAnnual General Meeting by an Ordinary Resolution. The Board recommends his reappointmentfor the considerations of the members of the company at forthcoming Annual GeneralMeeting. Brief profile of Mr. B. Vaidyanathan has been given in the Notice convening theAGM.
Mr. R. Poornalingam Director was retired as IndependentDirectoroftheCompanyoncompletionofhissecondtermon23rd September 2020. The Board ofDirectors on recommendation of the Nomination and Remuneration committee has appointedMr. R. Poornalingam as Additional Director (Non-Independent Director) with effect from23rd October 2020 through Circular resolution. As per Regulation 17(1A) of SEBI (Listing
Obligations and Disclosure Requirements) Regulations 2015 hisappointment was approved by the Shareholders of the company through Postal Ballot process.
The Board of Directors on recommendation of the Nomination andRemuneration Committee has proposed appointment of Mr. S. Arun Mr. R. Kannan asIndependent Directors for a term of 3 years effective from 23rd October 2020and 20th November 2020 respectively and Ms. Vishala Ramswami as ExecutiveDirector for a term of 3 years effective from 20th November 2020.
The Board recommends their appointment for the consideration of themembers of the company at forthcoming Annual General Meeting. Brief profile of Mr. S.Arun Mr. R. Kannan and Ms. Vishala Ramswami has been given in the Notice convening theAGM.
DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS
The Independent directors have submitted their disclosure to the Boardconfi 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 confirms that the said Independent Directors meet thecriteria as laid down under the Companies Act 2013 as well as SEBI Listing Regulations.
The Board met Four times during the year on 24th June 202014th August 2020 11th November 2020 and 11th February2021.
M/s. Ganesh Prasad (Firm Regd.No.000872S) Chartered Accountants wereappointed as statutory auditors of the Company for a period of 5 years in the 71stAGM held on 25th September 2017.
M/s. Ganesh Prasad (Firm Regd.No.000872S) Chartered Accountants willhold offi ce till the conclusion of 76th AGM. The Auditor's Report to theShareholders on the Standalone and Consolidated financial statement for the year endedMarch 31 2021 does not contain any qualification 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. M.K.Bashyam (FCS No.600) PracticingCompany Secretary Madurai to undertake the secretarial audit of the company for thefinancial year ended 31st March 2021.
The Secretarial Audit Report is enclosed in this report as
Mr. B. Venkateswar Cost Accountant was appointed as Cost Auditor forauditing the cost accounts of the Company for the year ended 31st March 2021.The Cost Audit Report for the financial year 2020-21 will be submitted to the CentralGovernment before due date.
In accordance with the provisions of Section 148(3) of the CompaniesAct 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules 2014 theremuneration payable to the Cost Auditor has to be ratified by the members of the Company.Appropriate resolution forms part of the Notice.
The company has appointed M/s. Capri Assurances and Advisory Servicesas External Internal Auditors of the Company for two financial years viz. 2020-21 and2021-22.
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 as 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 confirmedthat:
a) In the preparation of the annual accounts for the year ended March31 2021 the applicable accounting standards have been followed along with properexplanation relating to material departures;
b) the Directors have selected such accounting policies and appliedthem consistently and made judgements and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the March 31 2021and of the profit of the company for the year ended on that date;
c) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
d) the Directors have prepared the annual accounts on a going concernbasis;
e) the Directors have laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and areoperating effectively; and
f) the Directors had devised proper system to ensure that 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 theBoard of Directors of the Company have constituted a CSR Committee. The Committeecomprises of three Directors comprising of two Independent Directors and oneNon-Independent Director. The company spends 2% of the average net profit of the previousthree years for CSR activities. The CSR activities are mainly focused on Education andHealth Care. The CSR Policy is available on the website of the company.
During the year the company has contributed to a Charitable Trust a sumof Rs.23.09 Lakhs in accordance with the provisions of Section 135 of the Companies Act2013 for spending towards CSR activities. Annual Report on CSR activities is enclosed as AnnexureIV.
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 wereno materially significant related party transactions with the Company's PromotersDirectors Management or their relatives which could have had a potential conflict 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 referredto in section 188(1) of the Companies Act 2013 in the prescribed Form AOC-2 isattached as Annexure V. Also Refer Note No.41 of Financial statement which sets outthe 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.
PARTICULARS OF EMPLOYEES
No employee of the Company was in receipt of remuneration of not lessthan Rs.1.02 Cr. 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'sremuneration is furnished as Annexure VI.
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 2021 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. CorporateGovernance is about maximizing shareholder value legally ethically and sustainably. Thecompany has taken adequate steps to adhere to all the conditions laid down in SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 as amended from timeto time with respect to Corporate Governance. A report on Corporate Governance is includedas part of this annual report as Annexure VIII. A Certificate from the StatutoryAuditors of 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 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.
The performance evaluation of the Directors was completed during theyear under review. The performance evaluation of the Chairperson and the Non-IndependentDirectors was carried out by the Independent Directors and Non-Executive Director. TheBoard of Directors expressed their satisfaction with the evaluation process.
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. It is affirmed thatno personnel of the Company has been denied access to the Audit Committee. No complainthas been received from any employee during this year.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
In order to comply with provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and Rules framed thereunderthe Company has formulated and implemented a policy on prevention prohibition andredressal of complaints related to sexual harassment of women at the workplace. All womenemployees either permanent temporary or contractual are covered under the above policy.An Internal Committee (IC) has been set up in compliance with the said Act. During theyear under review there were no cases filed pursuant to the provisions of the Act.Necessary annual returns have been filed with respective collectrate.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators /Courts which would impact the going concern status of the company and its futureoperations.
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 verifi esthe 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 toimprove operations and production. Risk management framework has been formulated. TheBoard members are regularly informed of the risk assessment and risk mitigation measures.The forex exchange risk is actively managed within the framework laid down by the Forexmanagement policy approved by the Board.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the year the company has transferred Rs.693760/- 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 applicable provisions of the Companies Act 2013 the dividends whichremain unpaid or unclaimed for a period of 7 years from the respective dates of transferto the unpaid dividend account of the company are due for transfer to the InvestorEducation and Protection 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 RTA immediatelyquoting 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 and the amendments made thereunder.
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.4).
The Company's equity shares are listed on Bombay Stock Exchange.
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 tothe goal 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 socio- economic 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 continuedco-operation 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 beforward - looking within the meaning of applicable securities laws and regulations. TheCompany cannot guarantee the accuracy of assumptions and the projected future performanceof the Company. The actual results may materially differ from those expressed or impliedin this report. Important factors that could influence the company's operationsinclude global and domestic demand and supply conditions affecting selling price offinished goods input availability and prices changes in government regulations taxlaws economical developments within the country and other factors such as litigation andindustrial relations.