TO THE MEMBERS
Your Directors have pleasure in presenting their 84th Annual Report and theAudited Accounts of the Company for the year ended 31st March 2020.
1. FINANCIAL RESULTS
The financial results for the year ended 31st March 2020 after charging allexpenses and contribution to P.A.C. Ramasamy Raja Memorial Fund of Rs. 5 Lakhs (which iswithin the limits prescribed in the Articles of Association) but before deducting financecost and depreciation have resulted in operating profit (EBITDA) of Rs. 6103.79 Lakhsagainst Rs. 7994.33 Lakhs for the previous financial year 2018-19. Summary of SeparateFinancial Results of the Company is furnished below:
| || ||(Rs. in Lakhs) |
| ||Separate ||Financials |
|Financial Results ||Year ended 31-03-2020 ||Year ended 31-03-2019 |
|Revenue ||38406.41 ||44066.25 |
|Operating Profit : Profit before Interest || || |
|Depreciation and Tax (PBIDT) ||6103.79 ||7994.33 |
|Less: Interest ||2586.57 ||2198.07 |
|Profit before Depreciation and Tax (PBDT) ||3517.22 ||5796.26 |
|Less: Depreciation ||3384.65 ||3178.05 |
|Profit before Tax ||132.57 ||2618.21 |
|Less: Tax Expenses || || |
|Current Tax || ||102.47 |
|Excess Income Tax provision related to || || |
|Earlier Years withdrawn || ||(77.58) |
|Deferred Tax (withdrawal) ||(508.67) ||(188.84) |
|Profit after Tax ||641.24 ||2782.16 |
|Other Comprehensive Income for the Year (Net of Tax) ||(31.04) ||(106.48) |
|Total Comprehensive Income for the Year (TCI) ||610.20 ||2675.68 |
2. SHARE CAPITAL
The Paid-up Capital of the Company is Rs. 737.62 Lakhs (Previous Year: Rs. 737.62Lakhs) consisting of 7376160 Shares of Rs. 10/- each.
Your Directors have pleasure in recommending a Dividend of Rs. 1/- per share (PreviousYear:
Rs. 4/- per share). The total amount of Dividend outgo for the year will be Rs. 73.76Lakhs.
The Finance Act 2020 has amended the provisions related to Tax on Dividend andaccordingly the dividend will be taxable in the hands of the Shareholders.
The Company has not provided any amount towards Current Tax since total income underregular computation and deemed total income under Section 115JB of the Income Tax Act1961 are negative. Deferred Tax of Rs. 508.67 Lakhs has been withdrawn for the financialyear 2019-20.
5. MANAGEMENT DISCUSSION AND ANALYSIS
In India the acreage for cultivation of cotton during the current cotton season2019-20 (October to September) has increased at 128 Lakh hectares which is about 6%higher than 121 Lakh hectares reported in last year due to good rainfall in cotton growingareas. There was a sluggish market condition for cotton yarn across the globe whichresulted in reduction of world cotton prices. However the cotton prices in India duringbeginning of the cotton season has not come down due to the following reasons:
(i) The Government of India has increased the Minimum Support Price (MSP) for cotton by2%
(ii) The Cotton Corporation of India (CCI) has commenced the MSP operations across allcenters of cotton growing area and covered majority of good quality cotton arrived in themarket during the peak cotton season from November 2019 to March 2020
(iii) CCI having purchased large volume of cotton under MSP operation has decided notto sell the cotton below its cost which created tight supply situation for cotton evenduring peak arrivals of cotton bales in the market.
As a result the cotton price in India was not driven by market demand but supported byMSP operations of CCI. The Spinning mills in India were forced to purchase cotton atcomparatively higher prices when international prices were falling down which hasaffected India's cost competitiveness in the global market. This has not only resulted inde-growth of export volume of yarn but also paved ways for import of cheaper fabric andgarments into India from other countries.
The outbreak of COVID-19 pandemic in India during the latter part of the cotton seasonhas changed the sentiments in the cotton market from April 2020 onwards and the prices ofmajor varieties of cotton have dropped by more than 20%.
The Company's focus is to produce more value added count and in order to meet thequality requirement of value added counts more volume of high quality imported cotton hasbeen procured whenever the prices are cheaper. This strategy has helped the Company toprocure diversified varieties of cotton across the global rather than depending only uponthe domestic cotton.
The production volume has decreased to 122 Lakhs Kgs during the financial year 2019-20as against 150 Lakhs Kgs of last year due to the reduction of production capacity andproduction of value added fine counts of yarn. In Andhra Pradesh Unit ring frames with acapacity of 4800 Spindles have been sold and the overall production capacity of theCompany has come down by about 3%.
SALE OF YARN
The sale volume has decreased in line with production and accumulation of stock at theend of the financial year 2019-20. The sale volume for the FY 2019-20 stood at 119 LakhKgs as compared to 146 Lakh Kgs of last year. The sale value of yarn has decreased to
Rs. 347.19 Crores during the FY 2019-20 as compared to Rs. 401.92 Crores of last year.
The Textile Industry especially spinning sector is in the midst of slowdown. Theexcess spinning capacity in India coupled with poor demand for yarn from overseas marketshas led to accumulation of stock and affected the profitability of spinning mills. Thecotton yarn export from India during the financial year 2019-20 has been substantiallyreduced by 30% as compared to financial year 2018-19.
During the past few years China has been a major importer of cotton yarn from Indiaand during the financial year 2019-20 it has cut down imports of yarn by 50%. During theFY 2019-20 China had imported 2283 Lakhs Kgs. of cotton yarn from India as against 4641Lakhs Kgs during the last FY 2018-19. The reduction was partly due to general sluggishnessprevailed in the textile industry and also partly due to outbreak of corona virus(COVID-19) in China during December 2019. Though the Company is not having any directexposure to Chinese market the sudden drop in export volume has created oversupplysituation for yarn which has affected domestic yarn market and yarn price has startedfalling down very steeply.
The outbreak of COVID-19 in India during January 2020 has affected production andsales of the Company during the month of March 2020. Various restrictions have beenimposed by both Government of India and State Governments on movement of goods and peopleand the Company was forced to shut down its operations with effect from 25-03-2020 to05-05-2020.
The Company is taking steps to attract more customers from overseas market and there isa good demand for our yarn from International customers on account of supply of consistentand superior quality of yarn. The Company's focus on value added customized yarn countsviz. Mercerized Yarn Melange Yarn Core Yarn etc. will be helpful to mitigate the impactto some extent.
The sale volume of mercerized yarn has increased to 154 Tonnes during the FY 2019-20(PY: 122 Tonnes) and the mlange yarn volume has increased to 146 Tonnes during the FY2019-20 (PY: 44 Tonnes). The Company is taking various steps to expand its market presenceboth in domestic and international markets and hope to achieve higher volume of sales invalue added yarns in the forthcoming years.
We have made export of Cotton Yarn (including merchant exports) for a value of
Rs. 104.36 Crores as against Rs. 127.96 Crores of the previous year. In addition to ourregular International Market our sales volume has grown considerably in new markets viz.Turkey Portugal etc. where our yarn quality is well accepted.
Your Directors are thankful to M/s. Asahi Kasei Advance Corporation M/s. Doko SpinningCo. Ltd. and M/s. Unitika Ltd. Japan for their continued support and efforts forpromotion of exports to Japan.
During the financial year 2019-20 the Company was able to consume power from its ownwind farms to the extent of 64% of total power requirement. Because of lower powergeneration from wind mills the Company was forced to consume power from other sourceswhich are high cost. In spite of this the power cost has been decreased during thefinancial year 2019-20 to Rs. 27.87 Crores as compared to Rs. 36.98 Crores incurred duringprevious year due to reduced production capacity and also because of various energyconservation measures taken by the Company.
The Finance cost has increased to Rs. 25.87 Crores during the financial year 2019-20from
Rs. 21.98 Crores of previous financial year mainly due to the additional borrowings formodernization of spinning machineries automation and investments made in machineries toproduce value added counts.
During the financial year 2019-20 the Company has received dividend income of
Rs. 21.28 Crores (PY: Rs. 20.86 Crores) and the particulars of dividend received areprovided under Note No.46(a) (viii).
KEY FINANCIAL RATIOS
Pursuant to Schedule V(B) of SEBI (LODR) Regulations 2015 the Key Financial Ratiosfor the year 2019-20 are given below:
|S.No. Particulars ||31-03-2020 ||31-03-2019 ||Formula adopted |
|1 Debtors Turnover Ratio (Days) ||57 ||50 ||365 Days / (Net Revenue / Average |
| || || ||Trade Receivables) |
|2 Inventory Turnover Ratio (Days) ||151 ||117 ||365 Days / (Net Revenue / Average |
| || || ||Inventories) |
|3 Interest Coverage Ratio ||1.01 ||1.91 ||(Profit Before Tax + Interest)/ |
| || || ||(Interest + Interest Capitalised) |
| || || ||Current Assets / (Total Current |
| || || ||Liabilities - Other Financial |
|4 Current Ratio ||1.03 ||1.03 || |
| || || ||Liabilities - Current maturities of |
| || || ||Long Term Debt) |
|5 Debt - Equity Ratio ||1.96 ||1.55 ||Total Debt / Total Equity |
|6 Operating Profit Margin ||17% ||19% ||EBITDA / Net Revenue |
|7 Net Profit Margin ||2% ||7% ||Net Profit / Net Revenue |
|8 Return on Networth ||2% ||9% || |
Total Comprehensive Income /
| || || ||Average Net worth |
|9 Total Debt / EBITDA ||9.55 ||5.74 ||Total Debt / EBITDA |
|10 Return on Capital Employed ||4% ||8% || |
(TCI + Interest) / (Average of Equity
| || || ||plus Total Debt) |
|11 Price Earning Ratio ||57 ||22 || |
Market Price per share as at
| || || ||31st March / Earning per share) |
Notes: a) For serial no. 5 and 9 there have been significant change (ie. 25% or more)in the ratios compared to previous year. The same is due to increase in debt for fabricprojects / modernisation of spinning mills. b) For Serial no. 237810 and 11 therehave been significant change (i.e. 25% or more) in the ratios compared to previous year.The same is due to reduced operating margin on account of general slowdown in the textileindustry especially in yarn segment disparity between yarn and cotton prices and reduceddemand in overseas market for yarn as explained in para 5 above. c) EBITDA denotes ProfitBefore Tax + Interest + Depreciation
6. MODERNISATION / EXPANSION
As a part of continuous thrust on modernization and expansion programme the Companyhas invested about Rs. 46 Crores in textile machinery & equipments like fullyautomated Ring frames with link coners by replacing old ring frames contamination pickingmachines new waste collection system etc.
7. PROSPECTS FOR THE CURRENT YEAR
The outbreak of deadly pandemic Covid-19 is creating worst ever historical crisis allover the world. All the major economies are getting affected due to this pandemic.Majority of the Governments across the globe have announced lockdown of manufacturingfacilities / malls / retail out-lets which has resulted in grinding halt of demand forvarious products including textile products. Cotton Association of India has revised itsestimate of cotton crop for the season 2019-20 to 330 Lakhs bales 24.50 Lakhs bales lowerthan its previous forecast as most ginning mills were shut down following nationwidelockdown to curb COVID-19 and lack of labour. In order to mitigate the crisis theGovernment of India & other government agencies have announced various steps includinggranting moratorium of principal repayment of term loan and interest payment on term loan/ working capital loans. These measures though will be helpful in managing the short-termcash flow of the Company more measures & support from the Governments are needed tocope up with the current situation.
The Company's long term strategy on the following areas would definitely be helpful inmanaging this unprecedented tough situation:
(a) The Company is having sufficient stock of good quality cotton of both imported& indigenous varieties which will be helpful in un-interrupted production &supply of yarn to our customers.
(b) The Company has developed strong customer base and also strengthened itsinfrastructure to manufacture any kind of yarn demanded by the customers.
(c) Due to good work practices and cordial relationship with workers for the last 8decades we are able to attract all our employees from nearby locations of our Mills. Oncethe Governments announced the lifting of lockdown order the Company has immediatelyresumed the production and sales activity.
(d) Employees at all levels are trained in Japanese management practices viz. 5S andTotal Productive Maintenance (TPM) and their training in these areas will be helpful inimplementing various cost cutting measures to mitigate the crisis.
(e) The Company is already implementing various measures to reduce the powerconsumption in all departments and is poised to excel as best spinning mills on powerconsumption standards.
(f) The Company's decision to make rapid investments in automation and optimization ofvarious production parameters will further improve quality of yarn and cost effectiveproduction.
Efforts are being taken continuously to scale up the production & sale of valueadded counts like Mlange yarn Mercerized yarn core spun yarn etc. which will replacecommodity counts in the forthcoming years. With the flexibility to produce value addedsuper fine counts the Company will continue to make efforts in expanding the marketingactivities across the globe to sustain its operations.
8. TRANSFER OF ASSETS FROM ANDHRA PRADESH UNIT
The Company has shifted majority of the machines installed at Andhra Pradesh Unit tothe parent unit at Rajapalayam and all the machines have been installed and the machinesare running with better efficiency. The Company has sold all residual machines of AP Unitand has initiated the process of selling the land & building.
9. FABRIC PROJECT
As reported in the last year's report the Company has implemented a project forestablishing yarn dyed weaving unit at Rajapalayam with the capacity of 122 Looms toproduce 10 Million meters of fabrics per annum at a cost of Rs. 276 Crores.
Installation of machines have been completed in various phases and the commercialproduction of the fabric unit has been commenced on 22-03-2020. The sample fabricsproduced from the fabric unit has been well accepted by our customers and they havestarted to place bulk orders. The full economic benefit of the Fabric unit will accruefrom the FY 2020-21.
10. WIND MILL
The Company has wind mills with installed capacity of 35.15 MW for its captive powerconsumption.
The wind farm has generated 596 Lakhs Kwh as compared to 622 Lakhs Kwh of the previousyear. The wind availability / velocity during the financial year 2019-20 was low ascompared to the financial year 2018-19. All the Units generated by wind mills wereadjusted for captive consumption at our Mills in Tamil Nadu. The income during the yearfrom the Wind Mill Division was
Rs. 39.76 Crores as against Rs. 41.46 Crores of previous year.
11. ASSOCIATE COMPANY
The Company has three Associate Companies viz. M/s. The Ramco Cements Limited M/s.Ramco Industries Limited and M/s. Ramco Systems Limited.
In accordance with Rule 5 of Companies (Accounts) Rules 2014 a statement containingthe salient features of the financial statements of the Company's Associates' is attachedin Form AOC-1 as Annexure - I.
CONSOLIDATED FINANCIAL STATEMENTS
As per provisions of Section 129(3) of the Companies Act 2013 and Regulation 34 ofSEBI (LODR) Regulations 2015 Companies are required to prepare consolidated financialstatements of its Subsidiaries and Associates to be laid before the Annual General Meetingof the Company.
Accordingly the consolidated financial statements incorporating the accounts ofAssociate Companies viz. M/s. The Ramco Cements Limited M/s. Ramco Industries LimitedM/s. Ramco Systems Limited along with the Auditors' Report thereon forms part of thisAnnual Report. As per Section 136 (1) of the Companies Act 2013 the Financial Statementsincluding Consolidated Financial Statements are available at the Company's website at thefollowing link at http://www.rajapalayammills.co.in.
The consolidated profit of the Company amounted to Rs. 9206.79 Lakhs for the yearended 31st March 2020 as compared to Rs. 10447.49 Lakhs of the previous year.
The Consolidated Total Comprehensive Income for the year under review is Rs. 9113.07Lakhs as compared to Rs. 10369.96 Lakhs of the previous year.
12. INTERNAL FINANCIAL CONTROLS
In accordance with Section 134(5)(e) of the Companies Act 2013 the Company hasInternal Financial Controls Policy by means of Policies and Procedures commensurate withthe size & nature of its operations and pertaining to financial reporting. Inaccordance with Rule 8(5)(viii) of Companies (Accounts) Rules 2014 it is herebyconfirmed that the Internal Financial Controls are adequate with reference to thefinancial statements. ERP System developed by Ramco Systems Limited has been installed foronline monitoring of all functions and management information reports are being used tohave better internal control system and to take decisions in time.
13. VIGIL MECHANISM / WHISTLE BLOWER POLICY
In accordance with Section 177(9) and (10) of the Companies Act 2013 and Regulation 22of SEBI (LODR) Regulations 2015 the Company has established a Vigil Mechanism and has aWhistle Blower Policy. The policy is available at the Company's website. The Policyprovides the mechanism for the receipt retention and treatment of complaints and toprotect the confidentiality and anonymity of the stakeholder. The complaints can be madein writing to be dropped into Whistle Blower Drop Boxes or through E-mail to dedicatedmail IDs. The Corporate Ombudsman shall have the sole access to these. The Policy providesto the complainant access to the Chairman of the Audit Committee. The web link for theVigil Mechanism is disclosed in the Corporate Governance Report.
The Board of Directors at their meeting held on 28-05-2019 based on the recommendationof the Nomination and Remuneration Committee have re-appointed Smt. R.Sudarsanam asManaging Director for a further period of 3 years starting from 01-04-2020. TheShareholders of the Company have approved her re-appointment at the AGM held on14-08-2019 by passing a Special Resolution.
In accordance with the provision of the Companies Act 2013 and in terms of theMemorandum and Articles of Association of the Company the following Directors retire byrotation at the ensuing Annual General Meeting and they are eligible for re-appointment.
1. Shri A.V. Dharmakrishnan (DIN: 00693181)
2. Shri P.V. Abinav Ramasubramaniam Raja (DIN: 07273249)
The Independent directors hold office for a fixed term of 5 years and are not liable toretire by rotation.
The Company has received necessary declarations from all the Independent Directorsunder Section 149(7) of the Companies Act 2013 that they meet the criteria ofindependence as provided in Section 149(6) of the Companies Act 2013.
Independent Directors have complied with the code for Independent Directors prescribedin Schedule IV of the Companies Act 2013.
The Company had formulated a Code of Conduct for the Directors and Senior ManagementPersonnel and the same has been complied with.
At the Annual General Meeting held on 10-08-2016 Smt. Soundara Kumar was appointed asan Independent Director for a period of 5 consecutive years commencing 27-08-2015 to26-08-2020. She is eligible for re-appointment for another period of 5 years as anIndependent Director from 27-08-2020 to 26-08-2025. In accordance with Section 149(10) ofthe Companies Act 2013 her re-appointment has been proposed in the notice convening theAnnual General Meeting as Special Resolution. Her profile and rationale for re-appointmenthave been provided in the statement pursuant to Section 102 of the Companies Act 2013attached to the notice convening the Annual General Meeting.
Smt. P.V. Nirmala Raju (DIN: 00474960) has been co-opted on 24-04-2019 as an AdditionalDirector. She has been appointed as a Director at the AGM held on 14-08-2019.
Pursuant to Rule 8(5)(iii) of Companies (Accounts) Rules 2014 it is reported thatother than the above there have been no changes in the Directors or Key ManagerialPersonnel during the year.
The Audit Committee has four members out of which three are Independent Directors.Pursuant to Section 177(8) of the Companies Act 2013 it is reported that there has notbeen an occasion where the Board had not accepted any recommendation of the AuditCommittee.
In accordance with Section 178(3) of the Companies Act 2013 and based upon therecommendation of the Nomination and Remuneration Committee the Board of Directors haveapproved a policy relating to appointment and remuneration of Directors Key ManagerialPersonnel and Other Employees.
As per Proviso to Section 178(4) the salient features of the Nomination andRemuneration Policy should be disclosed in the Board's Report. Accordingly the followingdisclosures are given:
Salient Features of the Nomination and Remuneration Policy:
The objective of the Policy is to ensure that:
(a) the level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;
(b) relationship of remuneration to performance is clear and meets appropriateperformance benchmarks;
(c) remuneration to directors key managerial personnel and senior management shall beappropriate to the working of the company and its goals; and
(d) to carry out any other function as is mandated by the Board from time to time and /or enforced by any statutory notifications amendment or modification as may beapplicable.
The Nomination and Remuneration Committee and this Policy shall be in compliance withthe Companies Act 2013 and SEBI (LODR) Regulations 2015.
The web address of the Policy is at www.rajapalayammills.co.in/pdf/nomination-and-remunerationpolicy.pdf.
15. EVALUATION OF BOARD
Pursuant to Section 134(3)(p) of the Companies Act 2013 and Regulation 25(4) of SEBI(LODR) Regulations 2015 Independent Directors have evaluated the quality quantity andtimeliness of the flow of information between the Management and the Board Performance ofthe Board as a whole and its Members and other required matters.
Pursuant to Schedule II Part D of SEBI (LODR) Regulations 2015 the Nomination andRemuneration Committee has laid down evaluation criteria for performance evaluation ofIndependent Directors which will be based on attendance expertise and contributionbrought in by the Independent Director at the Board and Committee Meetings which shall betaken into account at the time of reappointment of Independent Director.
Pursuant to Regulation 17(10) of SEBI (LODR) Regulations 2015 the Board of Directorshave evaluated the performance of Independent Directors and observed the same to besatisfactory and their deliberations beneficial in Board / Committee meetings.
Pursuant to Regulation 4(2)(f)(ii)(9) of SEBI (LODR) Regulations 2015 the Board ofDirectors have reviewed and observed that the evaluation frame work of the Board ofDirectors was adequate and effective.
The Board's observations on the evaluations for the year under review were similar totheir observations for the previous year. No specific actions have been warranted based oncurrent year observations. The Company would continue to familiarize its Directors on theindustry technological and statutory developments which have a bearing on the Companyand the industry so that Directors would be effective in discharging their expectedduties.
During the year four Board Meetings were held. The details of the Meetings of theBoard and its various Committees are given in Corporate Governance Report.
17. SECRETARIAL STANDARD
As required under Clause 9 of Secretarial Standard 1 the Board of Directors confirmsthat the company has complied with applicable Secretarial Standards.
18. PUBLIC DEPOSITS
Pursuant to Rule 8(5)(v) & (vi) of Companies (Accounts) Rules 2014 it is reportedthat the Company has not accepted any deposit from public during the financial year underreview. There was no outstanding of deposits as on 31-03-2020 (Previous year: NIL). TheCompany has no deposit which is not in compliance with the Chapter V of the CompaniesAct 2013.
The Company has received a sum of Rs. 170 Lakhs from Directors as deposit / loan duringthe financial year 2019-20. It has repaid an amount of Rs. 500 Lakhs during the year2019-20. The loans from Directors are not treated as deposits under Chapter V of theCompanies Act 2013.
19. ORDERS PASSED BY REGULATORS
Pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules 2014 it is reported that nosignificant and material orders have been passed by the Regulators or Courts or Tribunalsimpacting the going concern status and Company's operations in future.
20. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Pursuant to Section 186(4) of the Companies Act 2013 it is reported that:
(a) the particulars of loans are provided under Note No.46 (a) (xiv) of SeparateFinancial Statements.
(b) the particulars of the guarantees and investments are provided under Note No.43 andNote No.9 & 10 respectively of Notes forming part of Separate Financial Statements.
The guarantees are to secure the loans from Banks / Financial Institutions to theborrowers.
21. CORPORATE SOCIAL RESPONSIBILITY
In terms of Section 135 and Schedule VII of the Companies Act 2013 the Board ofDirectors have constituted a Corporate Social Responsibility (CSR) Committee and adopted aCSR Policy which is based on the philosophy that "As the Organization grows theSociety and Community around it also grows."
The Company has undertaken various projects in the areas of education health ruraldevelopment water and sanitation promotion and development of traditional artslivelihood enhancement projects etc. largely in accordance with Schedule VII of theCompanies Act 2013.
The CSR obligations pursuant to Section 135(5) of the Companies Act 2013 for the year2019-20 is Rs. 57.23 Lakhs. As against this the Company has spent an amount of Rs. 57.30Lakhs on CSR. The Company had also spent a sum of Rs. 1.74 Lakhs on other social causesand projects which do not qualify as CSR expenditure under the classifications listed outin Schedule VII of the Companies Act 2013.
The CSR policy is available at the Company's website at the following link at http://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/corporate-social-responsibility-policy.pdf.
The Annual Report on CSR activities as prescribed under Companies (Corporate SocialResponsibility Policy) Rules 2014 is attached as Annexure - II.
M/s. N.A. Jayaraman & Co. Chartered Accountants (FRN: 001310S) and M/s. SRSV &Associates Chartered Accountants (FRN:015041S) who have been appointed as the StatutoryAuditors of the Company at the 81st Annual General Meeting would be theAuditors of the Company till the conclusion of the 86th Annual General Meetingto be held in the year 2022.
As required under Regulation 33(1)(d) of SEBI (LODR) Regulations 2015 the Auditorshave also confirmed that they hold a valid certificate issued by the Peer Review Board ofthe Institute of Chartered Accountants of India.
The report of the Statutory Auditors for the year ended 31st March 2020does not contain any qualification reservation or adverse remark and no instance of fraudhas been reported by Auditors under Section 143(12) of Companies Act 2013.
Shri M.R.L. Narasimha a Practicing Company Secretary is the Secretarial Auditor of theCompany. Pursuant to Section 204(1) of the Companies Act 2013 the Secretarial AuditReport submitted by the Secretarial Auditor for the year ended 31st March 2020is attached as Annexure - III. The report does not contain any qualification reservationor adverse remark.
The Company is required to maintain the accounts and records which have been specifiedby the Central Government under Section 148(1) of the Companies Act 2013 as cost recordsand accordingly such accounts and records are made and maintained by the Company.
The Board of Directors had approved the appointment of Shri M. Kannan Cost Accountantas the Cost Auditor of the Company to audit the Company's Cost Records relating tomanufacture of textile products for the year 2020-21 at a remuneration of Rs. 1.40 Lakhsplus applicable taxes and out-of-pocket expenses.
The remuneration of the cost auditor is required to be ratified by the members inaccordance with the provisions of Section 148(3) of the Companies Act 2013 and Rule 14 ofCompanies (Audit and Auditors) Rules 2014. Accordingly the matter is being placed beforethe Members for ratification at the ensuing Annual General Meeting.
The Cost Audit Report for the financial year 2018-19 due to be filed with Ministry ofCorporate Affairs by 30-09-2019 had been filed on 09-09-2019. The Cost Audit Report forthe financial year 2019-20 is due to be filed within 180 days from the closure of thefinancial year and will be filed within the stipulated period.
23. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Pursuant to Section 134(3)(m) of the Companies Act 2013 and Rule 8(3) of Companies(Accounts) Rules 2014 the information relating to Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and Outgo is attached as Annexure - IV.
24. EXTRACT OF ANNUAL RETURN
In Accordance with Section 92(3) of the Companies Act 2013 read with Rule 12(1) ofCompanies (Management and Administration) Rules 2014 an extract of the Annual Return inForm MGT-9 is attached herewith as Annexure - V.
In accordance with Section 134(3)(a) of the Companies Act 2013 the company placed acopy of the annual return on its website at http://www.rajapalayammills.co.in.
25. CORPORATE GOVERNANCE
The Company has complied with the requirements regarding Corporate Governance asstipulated in SEBI (LODR) Regulations 2015. As required under Schedule V(C) of SEBI(LODR) Regulations 2015 a Report on Corporate Governance being followed by the Companyis attached as Annexure - VI. As required under Schedule V(E) of SEBI (LODR) Regulations2015 a Certificate from the Auditors confirming compliance of conditions of CorporateGovernance is also attached as Annexure - VII to this Report.
As required under Regulation 34(3) read with Schedule V para C(10)(i) of SEBI (LODR)Regulations 2015 Certificate from the Secretarial auditor that none of the Company'sDirectors have been debarred or disqualified from being appointed or continuing asDirectors of Companies is enclosed as Annexure - VII A.
26. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The disclosures in terms of provisions of Section 197(12) of the Companies Act 2013read with Rule 5(1) (2) and (3) of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 relating to remuneration are provided in Annexure - VIII.
27. INDUSTRIAL RELATIONS AND PERSONNEL
The Company has 3320 employees as on 31-03-2020. Industrial relations with employeesremained cordial during the year. Human Resources Development activities receivedconsiderable focus. The emphasis was on imparting training and development of theskill-set of the employees to enable them to face the challenges in the work environment.
The Company has complied with provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.
The Statement and disclosures pertaining to the Sexual Harassment of women at workplace(Prevention prohibition and Redressel) Act 2013 are available at point no.10 (xii) ofCorporate Governance Report.
28. RELATED PARTY TRANSACTION
Prior approval / Omnibus approval is obtained from the Audit Committee for all relatedparty transactions and the transactions are periodically placed before the Audit Committeefor its approval. No transaction with the related party is material in nature inaccordance with Company's "Related Party Transaction Policy" and Regulation 23of SEBI (LODR) Regulations 2015. In accordance with Indian Accounting Standard - 24(Related Party Disclosure) the details of transactions with the related parties are setout in Note No. 47 of disclosures forming part of Financial Statements.
As required under Regulation 46(2)(g) of SEBI (LODR) Regulations 2015 The Company'sRelated Party Transaction Policy is disclosed in the Company's website and its web link ishttp://www.rajapalayammills.co.in/pdf/related-party-transaction-policy.pdf.
29. RISK MANAGEMENT POLICY
Pursuant to Section 134(3)(n) of the Companies Act 2013 and Regulation 17(9) of SEBI(LODR) Regulations 2015 the Company has developed and implemented a Risk ManagementPolicy. The Policy envisages identification of risk and procedures for assessment andminimization of risk thereof. The Risk Management Policy of the Company is available atthe Company's website at the following weblink http://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/riskmanagement-policy.pdf.
30. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Dividend amount of Rs. 242316/- related to the year 2011-12 and Rs. 1175155/-related to the year 2012-13 (Interim Dividend) remaining unclaimed / unpaid for a periodof over 7 years was transferred to IEPF on 31-08-2019 and 11-03-2020 respectively.
2086 Nos. of shares corresponding to the above said Dividends were transferred toIEPF.
The Company had transferred a Dividend of Rs. 710828/- to IEPF for 177707 Nos. ofshares already transferred to IEPF.
Year wise amount of unpaid / unclaimed dividend lying in the unpaid account andcorresponding shares which are liable to be transferred to IEPF and due dates for suchtransfer are tabled below:
|Year ||Type of Dividend ||Date of Declaration of Dividend ||Last date for claiming Unpaid Dividend ||Due date for transfer to IEP Fund ||No. of Shares of Rs.10/- each ||Amount of unclaimed / unpaid Dividend as on 31-03-2020 - Rs. |
|2012-2013 ||Final Dividend ||01-08-2013 ||31-07-2020 ||29-08-2020 ||228391 ||228391 |
|2013-2014 ||Interim Dividend ||03-02-2014 ||02-02-2021 ||03-03-2021 ||220128 ||1100640 |
| ||Final Dividend ||04-08-2014 ||03-08-2021 ||01-09-2021 ||211814 ||529535 |
|2014-2015 ||Dividend ||12-08-2015 ||11-08-2022 ||09-09-2022 ||261570 ||653925 |
|2015-2016 ||Interim Dividend ||16-03-2016 ||15-03-2023 ||13-04-2023 ||285954 ||857862 |
|2016-2017 ||Dividend ||10-08-2017 ||09-08-2024 ||07-09-2024 ||284409 ||1137636 |
|2017-2018 ||Dividend ||10-08-2018 ||09-08-2025 ||07-09-2025 ||119447 ||477788 |
|2018-2019 ||Dividend ||14-08-2019 ||13-08-2026 ||11-09-2026 ||126700 ||506800 |
31. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act 2013 the Directors confirm that:
(a) they had followed the applicable accounting standards along with proper explanationrelating to material departures if any in the preparation of the annual accounts for theyear ended 31st March 2020;
(b) they had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as on 31st March 2020 and the profit ofthe Company for the year ended on that date;
(c) they had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) they had prepared the Annual Accounts on a going concern basis;
(e) they had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and
(f) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
The Directors are grateful to the various Departments and agencies of the Central andState Governments for their help and co-operation. They are thankful to the FinancialInstitutions and Banks for their continued help assistance and guidance. The Directorswish to place on record their appreciation of employees at all levels for their commitmentand their contribution.
On behalf of the Board of Directors
For RAJAPALAYAM MILLS LIMITED
P.R. VENKETRAMA RAJA
CHENNAI 24th June 2020.
[Pursuant to Section 129(3) of the Companies Act 2013 read with Rule 5 of Companies(Accounts) Rules 2014]
Statement containing salient features of the financial statement of Associate Companies
PART A - SUBSIDIARY COMPANY
The Company has no Subsidiary Company.
PART B - ASSOCIATE COMPANY
Statement pursuant to Section 129 (3) of the Companies Act 2013 related to AssociateCompanies
|Particulars || ||2019-20 || |
|Name of the Associate Company ||The Ramco Cements Limited ||Ramco Industries Limited ||Ramco Systems Limited |
|Last Audited Balance Sheet date ||31-03-2020 ||31-03-2020 ||31-03-2020 |
|Date on which the Associate was associated / acquired ||01-04-2016 ||01-04-2016 ||01-04-2016 |
|No. of Shares held as on 31st March 2020 ||33065000 ||8401680 ||733531 |
|Amount of Investment in Associate as on || || || |
|31-03-2020 (Rs. in Lakhs) ||4864.91 ||1100.81 ||1141.55 |
|Extent of Shareholding % as on 31-03-2020 ||14.04 ||9.69 ||2.40 |
|Description of how there is significant influence || ||Note (1) || |
|Reason why Associate is not consolidated || ||Not applicable || |
|Net worth attributable to Shareholding (Rs. in Lakhs) ||500699.00 ||320941.00 ||60790.10 |
|Profit / Loss for the Year (Consolidated) (Rs. in Lakhs) ||60012.00 ||16592.00 ||2806.80 |
|a) Considered in Consolidation (Rs. in Lakhs) ||9477.42 ||731.67 ||64.86 |
|b) Not considered in Consolidation (Rs. in Lakhs) ||50534.58 ||15860.33 ||2741.31 |
Note: 1) Significant influence exists based on combined voting rights.
2) Names of associates or joint ventures which are yet to commence operations - NIL
3) Names of associates or joint ventures which have been liquidated or sold during theyear - NIL
On behalf of the Board of Directors
For RAJAPALAYAM MILLS LIMITED
P.R. VENKETRAMA RAJA
CHENNAI 24th June 2020.