To the Members
Your directors are pleased to present their 32nd Annual Report together withthe audited accounts of the Company for the financial year ended 31st March2017.
|Particulars ||2016-17 ||2015-16 |
|Income from Operations ||840.70 ||415.85 |
|Other Income ||1.28 ||2.26 |
|Total Income ||841.98 ||418.11 |
|Profit before Tax ||27.92 ||29.64 |
|Provision for Current Tax ||12.30 ||9.60 |
|Prior year Tax ||7.83 ||0.00 |
|Provision for Deferred Tax ||1.34 ||0.91 |
|Profit after Tax ||9.13 ||20.95 |
|Add: Opening balance in Profit and Loss account ||190.05 ||169.10 |
|Balance available for appropriations ||199.18 ||190.05 |
Your board has not declared any dividend during the year under review. OPERATIONS
During the year the Company reported a Profit after Tax (PAT) of Rs. 9.13 lakhs asagainst Rs. 20.95 lakhs for the previous year. During the year under review the sales andother income were at Rs. 841.98 lakhs as against Rs. 418.11 lakhs for the previous year.
Your Company has successfully completed its Third year of operations with manufacturingof garments which has huge potential on export target of textiles set by the Government ofIndia. The Management is confident by bagging new orders from Direct buyers which willcontribute higher margin on our exports by improving capacity utilization of units duringthe financial year 2017-18.
As the members are aware the Company's shares are compulsorily tradable in electronicform. As on 31st March 2017 87.26% of the Company's total paid-up Capitalrepresenting 872590 Shares is in dematerialised form. In view of the numerous advantagesoffered by the Depository system members holding shares in physical mode are advised toavail of the facility of dematerialization from either of the Depositories.
The Company has not accepted any deposit from the public within the meaning of Section73 of the Companies Act 2013 for the year ended 31st March 2017.
Particulars as required under section 129(3) of the Companies Act 2013 in respect ofsubsidiary companies are furnished in the annexure to this report in Form AOC-1.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to section 129 (3) of the Companies Act 2013 Consolidated FinancialStatements of the company and its subsidiary company have been prepared and attached tothis Annual Report
Conservation of Energy and others:- The particulars required to be included in terms ofSection 134 (3) (m) of the Companies Act 2013 read with rule 8(3) of the CompaniesAccounts) rules 2014 for the year ended 31.03.2017 relating to conservation of energy etcis enclosed as Annexure 1.
Remuneration of directors and other details:-
The company has no employees in receipt of remuneration exceeding the limits prescribedunder section 197(12) of the Companies Act 2013 read with Companies (Appointment andremuneration of Managerial Personnel) Rules 2014.
CORPORATE GOVERNANCE REPORT
In line with requirements of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 your company is committed to the
principles of good Corporate Governance and continues to adhere good CorporateGovernance practice consistently.
Additional disclosures as stipulated under regulations 34(3) read with Schedule V ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 have beengiven appropriate places and forms part of this Annual Report.
As the Company's paid up equity share capital is not exceeding Rs. 10 Crore and networth of the company was not exceeding Rs. 25 Crore as on previous financial year(31.03.2017) regulations 17 to 27 and clauses
(b) to (i) of sub-regulations (2) of regulation 46 and paras CD and E of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 are not applicable to thecompany.
DIRECTORS' RESPONSIBILITY STATEMENT
As stipulated in Section 134 (5) of the Companies Act 2013 your directors confirmthat:
a) Your Directors have followed in the preparation of the annual accounts theapplicable accounting standards with proper explanation relating to material departures;
b) Your Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;
c) Your Directors have 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) Your Directors have prepared the annual accounts on a going concern basis;
e) Your Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
Sri K. Dhanakumar (DIN: 00048730) Director retires from the Board by rotation and iseligible for re-appointment at the ensuing Annual General Meeting.
The profile of the director seeking reappointment as required under regulation 36(3)of SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 are given in theAnnexure to the Notice of the Annual General Meeting.
During the year under review the company has appointed Mr.Vaibhav Duvvur (DIN03477028) and Mrs. Manonmani Kandavel (DIN 07143912) as Independent directors of thecompany for the period of five years with effect from the date of ensuing Annual GeneralMeeting.
All independent directors have given declarations that they meet the criteria ofindependence as laid down under section 149(6) of the Companies Act 2013.
The Audit Committee consists of three Non-Executive Directors out of which two areIndependent Directors. The present members of the Committee are Sri Vaibhav Duvvur Sri KDhanakumar Smt. Manonmani Kandavel and Sri Vaibhav Duvvur is the Chairman of AuditCommittee.
The board has implemented the suggestions made by the auditor committee from time totime.
In terms of Section 139 of the Companies Act 2013
M/s. S. Lakshminarayanan Associates Chartered Accountants Coimbatore the existingstatutory auditor of the company the appointment periods expires at the ensuing AnnualGeneral Meeting. Your board has received necessary consent from Mr. R. NatarajanChartered Accountant bearing Registration No. 24306 to be appointed as a statutoryauditor of the company at the ensuing Annual General Meeting for a period of five years.Your board has placed necessary resolution in this regard for the approval of members.
The Company has received a certificate from the auditor to the effect that he iseligible to be appointed and he is not disqualified for reappointment.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATEAND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which this financial statement relateand on the date of this report
THE EXTRACT OF ANNUAL RETURN
The Extract of Annual Return as required under section 92(3) of the Companies Act 2013read with rule 12(1) of the Companies (Management and Administration) Rules 2014 in FormMGT-9 is given in Annexure 2.
KEY MANAGERIAL PERSONNEL
The company has the following Key Managerial Person as on 31.03.2017. 1. Sri T.Rajkumar: Managing Director
EVALUATION OF BOARD OF DIRECTORS
Pursuant to the provisions of the Companies Act 2013 and the rules made there underindependent directors at their meeting without participation of non-independent directorsand management considered and evaluated the boards' performance performance of thechairman and Managing Director.
The board has carried out an annual evaluation of its own performance of theindividual directors as well as the Committees of directors.
During the year under review 4 board meetings were conducted. (30.05.2016 13.08.201614.11.2016 and 13.02.2017)
The details of the attendance of the directors are given below:
|Name of the Directors ||No. of meetings attended |
|Mr. T. Rajkumar ||4 |
|Mr. K. Dhanakumar ||4 |
|Mr. Vaibhav Duvvur ||4 |
|Mrs. Manonmani Kandavel ||4 |
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013
During the year under review the company has not made any investment and no loan orguarantee was given or security was provided by the company covering under Section 186 ofthe Companies Act 2013.
ESTABLISHMENT OF VIGIL MECHANISM/WHISTLE BLOWER POLICY
The company has established a vigil mechanism for directors and employees to reportconcern about unethical behavior actual or suspected fraud or violation of the company'scode of conduct or ethics. The policy has been posted in the website of the company.
POLICY ON NOMINATION AND REMUNERATION COMMITTEE
The board of directors have framed a policy setting out the framework for payment ofremuneration to directors Key Managerial Personnel and Senior Management Personnel of thecompany. The policy is explained as part of the Corporate Governance report. The committeeensures 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 and
c. Remuneration to Directors Key Managerial Personnel and senior management involves abalance between fixed and incentive pay reflecting short and long term performanceobjectives appropriate to the working of the Company and its goals.
RELATED PARTY TRANSACTIONS
All the related party transactions that were entered into during the financial year inthe ordinary course of business and the prices were at arm's length basis. Hence theprovisions of Section 188 of the Companies Act 2013 are not attracted. Further nomaterially significant related party transactions were made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have potentialconflict with interest of the company at large. Hence reporting in
AOC-2 is not made. Approval of Audit Committee was obtained for transactions ofrepetitive nature on annual basis. All related party transactions are placed before theAudit Committee and Board of Directors for their review. The policy on Related PartyTransactions is available in the website of the company.
Additional disclosures as required under Schedule V of the SEBI (Listing obligationsand Disclosure requirements)
|Name of the Subsidiary ||Nature ||Balance at the end of the year ||Maximum amount outstanding |
|Sri Arumuga ||Investments ||Rs. 10 Crore ||Rs. 10 Crore |
|Cottspin Pvt Ltd ||Loans and Advances ||Rs. 6099331/- || |
|Sri Mahasakthi ||Investments ||Rs. 10 Crore ||Rs. 10 Crore |
|Mills Ltd ||Loans and Advances ||Rs. 5563360/- || |
SECRETARIAL AUDIT REPORT
Secretarial Audit Report for the year under 31st March 2017 as requiredunder section 204 of the Companies Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is enclosed and your board hasseparately replied for the observations / qualifications of the Secretarial Audit Reportmade in his report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope and authority of the Internal Audit function isdefined in the Internal Audit Manual. To maintain its objectivity and independence theInternal Audit function reports to the Chairman of the Audit Committee & to theChairman and Managing Director.
The Company has an Internal Audit Department which monitors and evaluates theefficiency and adequacy of internal control system in the Company its compliance withoperating systems accounting procedures and policies at all locations of the Company.
Based on the report of internal audit function corrective actions are taken in therespective areas and thereby strengthen the controls. Significant audit observations andrecommendations along with corrective actions thereon are presented to the Audit Committeeof the Board.
STATEMENT ON RISK MANAGEMENT POLICY
Pursuant to Section 134(3) (n) of the Companies Act 2013 the Company has developed aRisk Management Committee. The committee has developed a risk Management policy andimplemented the same. The board is of the opinion that there is no threaten to theexistence of the company.
CORPORATE SOCIAL RESPONSIBILITY:
As your company is not covered under any of the conditions prescribed under Section 135of the Companies Act 2013 the Company is not required to develop and implement anyCorporate Social Responsibility initiatives during year ended 31st March 2016.
DETAILS OF SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS /COURTS/ TRIBUNALIMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE.
There were no significant material orders passed by the Regulators/ Courts/Tribunalwhich would impact the going concern status of the company and its future operations.
The Stock Exchange has suspended trading of Company's securities with effect from02.08.2016 due to non compliance of certain provisions of SEBI regulations. However thesaid order does not affect the ongoing concern status of the Company's operation infuture.
MANAGEMENT DISCUSSION AND ANALYSIS DISCLOSURE AS STIPULATED UNDER SCHEDULE V OF THESEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS)
Industry Structure and Development
The spinning industry is continuously expanding in South Asia and China in the last fewyears and is becoming growth engine of these economics.
At present the contribution of the Indian Textile Industry to its GDP is about 4.8%.Role of Textile Industry in India GDP has been quite beneficial in the economic life ofthe country. The worldwide trade of textiles and clothing has boosted up the GDP of Indiato a great extent as this sector has brought in a huge amount of revenue in the country.
Opportunities and Threats
India's textile industry is one of the leading textile industries in the worldexporting to over 100 countries. It contributes a significant 17 percent to India'soverall export earnings and employs over 35 million people directly making it the secondlargest source of employment after agriculture
After the removal of quotas by European Union in 2005 and because of TextileUpgradation Fund (TUF) interest susbsidy huge capacity expansions have taken place inTextile Industry in India.
The government has set huge the target for textile exports for the current year.Policies of Government of India provides opportunities for the Indian Textile Exportduring the current year.
Segment-wise or Product Wise Performance and Financial performance with respect tooperational performance
The company deals with only one product i.e Garments. The disclosure of the performancehas been given in the financial statement.
The outlook for Textile Industry in India is optimistic. It is expected that IndianTextile Industry would continue to grow at an impressive rate. The fundamental strength ofthis industry flows from its strong production base of wide range of fibres/ yarns fromnatural fibres like cotton jute silk and wool to synthetic / man-made fibres likepolyester viscose nylon and acrylic. In fact apart from China no other country canboast of such strong and diverse base in textile fibres/ yarns. The complex and variedstructure of industry coupled with India's close linkage with culture and multi-fibre rawmaterial base enables it to produce variety of products for varying consumer needs andpreferences. The growth pattern of the Indian Textile Industry in the last decade has beenconsiderably more than the previous decades primarily on account of liberalization oftrade and economic policies initiated by the Indian Government in the 1990s.
The inherent strengths of the Textile Industry have seen the Textile Industry throughrough days and hard times. There have been many periods of adversity when growth chartshave dipped and it has appeared that misfortune will overtake. But like phoenix theTextile Industry has risen each time from the ashes.
Risk & Concerns
High volatility of cotton yarn prices rupee exchange rate high attrition andshortage of work force are the major concerns for us. In order to mitigate the aboverisks we have been taking several initiatives like lowering inventory levels reducingmanpower requirement by modernization of machines application of autonomous maintenancephilosophy rationalization of workforce Employee training and development etc.
There is proper and adequate system of Internal Controls to ensure that all assets aresafeguarded and protected against loss from unauthorized use or disposition and that alltransactions are authorized recorded and reported correctly. The internal control systemsare supplemented by Internal Audits and review of the same by Audit Committee at corporatelevel.
Material developments in Human Resources/Industrial Relations front including numberof people employed.
The company's industrial relations are cordial. There was no significant changes in thehuman resources during the period under review. The total number of people employed duringthe year was twenty five (including temporary employees).
Disclosure of Accounting Treatment as stipulated under Schedule V of the SEBI (Listingobligations and Disclosure requirements)
The company has prepared financial statements prescribed accounting standard has beenfollowing and there was no deviation in the treatment.
Disclosure of demat suspense account/unclaimed suspense account as stipulated underSchedule V of the SEBI (Listing obligations and Disclosure requirements)
Details of shares in the demat suspense/unclaimed suspense account:
(a) Aggregate number of shareholders and the outstanding shares in the suspense accountlying at the beginning of the year (01.04.2016): Nil
(b) Number of shareholders who approached the company for transfer of shares fromsuspense account during the year (201617) : Nil
(c) Number of shareholders to whom shares were transferred from
suspense account during the year (2016-17) : Nil
(d) Aggregate number of shareholders and the outstanding shares in the suspense accountlying at the end of the year (31.03.2017) : Nil
Your Directors wish to place on record the valuable assistance and cooperation extendedby the members and other stakeholders.
| ||For and on behalf of the Board || |
|28.02.2018 ||T.Rajkumar || |
|Coimbatore ||Chairman & Managing ||Director |
| ||DIN: 00048665 || |
Addendum to observations/qualifications made in the Secretarial Audit Report for theyear ended 31st March 2017.
1. The Company is taking steps to appoint a qualified whole time Company Secretary.
2. The essential data stored in a computer data were corrupted and it took substantialtime to retrieve. Due to this unexpected situation the company could not send documentsto hold Annual General Meeting for the year ended 31st March 2016. Howeverthe Annual General Meeting was held belatedly on 29th May 2017.
3. Steps are being taken to file the resolutions passed by the board of directorsapproving the financial statements and boards report for the year ended 31stMarch 2016 with required additional fees.
4. Arrangements are being made to pay listing fees.
5. Due to lack of sufficient staff the company could not submit the periodicalfinancial results and shareholding pattern within the due date with Stock exchange.Effective steps are being taken to file the above said documents and also to publish theresults in news papers within the time.
6. Necessary steps are being taken to submit copies of Annual Report and proceedings ofthe Annual General Meeting for the year ended
31st March 2016 as required under regulation 34 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015
7. Steps are being taken to file the compliance certificate to the exchange as requiredunder regulation 7(3) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 for the half year ended 31st March 2017.
8. Steps are being taken to update the company's website (arumugaenterprise.com) asrequired under regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015
9. The company has belatedly filed the annual forms (consisting AOC-4 and MGT 7) forthe financial year ended 31.03.2016 with Registrar of Companies with required additionalfee.
10. Steps are being taken to file the proceedings of the Annual General Meeting withRegistrar of Companies as required under 121 of the Companies Act 2013.
| ||For and on behalf of the Board |
|28.02.2018 ||T.Rajkumar |
|Coimbatore ||Chairman & Managing Director |
| ||DIN: 00048665 |