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Sri Nachammai Cotton Mills Ltd.

BSE: 521234 Sector: Industrials
NSE: N.A. ISIN Code: INE443E01016
BSE 00:00 | 19 Jul 16.00 0.15
(0.95%)
OPEN

16.64

HIGH

16.64

LOW

16.00

NSE 05:30 | 01 Jan Sri Nachammai Cotton Mills Ltd
OPEN 16.64
PREVIOUS CLOSE 15.85
VOLUME 10
52-Week high 25.00
52-Week low 11.50
P/E 9.70
Mkt Cap.(Rs cr) 7
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 16.64
CLOSE 15.85
VOLUME 10
52-Week high 25.00
52-Week low 11.50
P/E 9.70
Mkt Cap.(Rs cr) 7
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Sri Nachammai Cotton Mills Ltd. (SRINACHACOTT) - Director Report

Company director report

TO THE SHAREHOLDERS

Dear Shareholders

The Board of Directors of your Company is pleased to present the 37 Annual Report onthe business of the Company along with summary of financial statements for the year ended31 March 2017. The report is prepared in accordance with the provisions of the CompaniesAct 2013.

Financial Highlights

During the year under review performance of your company is as under:

Particulars 31.03.2017 31.03.2016
(9 months)
Profit before finance costs and Depreciation 95034029 47122720
Finance costs (45157469) (40437929)
Depreciation (43591420) (30081041)
Profit / (Loss) before taxation 6285140 (23396250)
Less : Tax expense 685604 2431163
Profit / (Loss) after tax 6970744 (20965087)

Dividend

The Company is unable to declare any Dividend on account of accumulated losses.

Review of Operations

During the year the Company has made a turnover of Rs. 1684213449/- as against Rs.1135464664/- in the previous year. The Company has made a net Profit of Rs. 6970744/-during the current year as compared to Net Loss of Rs. -20965087/- during the periodended (9 months) 2015 - 2016.

The Financial year 2016 - 2017 was a difficult year for the spinning industry inspiteof this the Company made a profit because of timely purchase of imported cotton.

Management's Discussion and Analysis

As per the Regulation 34(1) (e) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the report on "Management Discussion andAnalysis" forms an integral part of Annual Report as Annexure -1

Deposits

Company has not accepted any deposits from public.

Directors and Key Managerial Personnel

Pursuant to the provisions of Section 152 of the Companies Act 2013 Sri A.Annamalairetire by rotation and being eligible offers himself for appointment and the resolution isplaced before the Shareholders for approval.

A brief resume expertise shareholding in the Company and details of other entities inwhich the Director is interested as stipulated under Regulation 36(3)(a) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and as per Secretarial Standardis provided in the Notice attached.

At the Board Meeting held on 21 August 2014 Sri P.Palaniappan Chairman cum ManagingDirector and Smt. P.Umayal Joint Managing Director of the Company was reappointed for aterm of five years from 19.12.2014 to 18.12.2019 and designated as "Key ManagerialPersonnel" of the Company pursuant to Section 2(51) 203 of the Companies Act 2013read with Companies (Appointment and remuneration of Managerial Personnel) Rules 2014.

Sri.P.Palaniappan resigned from the post of Chairman cum Managing Director with effectfrom 18 November 2015 but shall continue to be the Managing Director of the Company.

Smt. P.Umayal was appointed as the Chairman of the Board of Directors with effect from18 November 2015 and she shall remain as Chairman cum Managing Director of the Company.

Pursuant to the provisions of Section 149 of the Act Sri Perumal Madhavagopal SriA.Alagappan Sri S.Ravichasndran Sri PL.Subbiah and Smt. Shantha Radhakrishnan wereappointed as independent Director at the 34 AGM of the Company held on 10 December 2014for a term of five consecutive years from 10 December 2014 to 9 December 2019.

All the Directors of the Company have confirmed that they are not disqualified frombeing appointed as directors in terms of Section 184(1) and Rule 9 (1) of the CompaniesAct 2013.

Declaration by Independent Directors

The Company has received necessary declaration from each independent director underSection 149(7) of the Companies Act 2013 that he/she meets the criteria of independencelaid down in Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (LODR).

During the year all the independent Directors were present in meeting of IndependentDirectors. The Independent Directors assessed the quality quantity and timeliness of flowof information between the management and the Board and expressed that the Current flow ofinformation and contents were adequate for the Board to effectively perform its duties.

Familiarization Programmes

The Company had conducted various sessions during the financial year to familiarize allthe Directors including the Independent Directors with the updates of Company theirrules responsibilities in the Company and the technology and the risk management systemsof the Company. Further the Directors are encouraged to attend the training programmesbeing organized by various regulators/bodies/institutions on above matters.

Number of Board Meetings and Committee Meetings

The Board met five (5) times during the financial year on 23 May 2016 6 August 20167 November 2016 2 February 2017 and 13th March 2017.

Statutory Auditors

The Company's Auditors M/S.M.S.Jagannathan & Visvanathan Chartered Accountantshold office till the conclusion of the ensuing Annual General Meeting.

The Auditors' Report for FY 2016-2017 does not contain any qualification reservationor adverse remark. The auditors' report is enclosed with the financial statements in theAnnual Report.

As per provisions of Section 139 of the Companies Act 2013 read with the Companies(Audit and Auditors) Rules 2014 the present Statutory Auditors of the Company havecompleted a period of 10 years and hence they are not eligible for re-appointment asStatutory Auditors for the financial year 2017-18.

It is proposed to appoint M/S.V.V.Soundararajan & CO. Chartered Accountants Salemas Statutory Auditors of the Company for a term of five years (5) commencing from thefinancial year 2017-18 till the conclusion of the Annual General Meeting to be held in theyear 2022 subject to ratification by Shareholders at every Annual General Meeting. TheCompany received a certificate from the said Auditors that they are not disqualified andthe new Audit firm confirmed their eligibility and willingness to accept office ifappointed.

Secretarial Auditor

As required under Section 204 of the Act and Rules made there under Sri M.R.L.Narasimha Practising Company Secretary was appointed to conduct the Secretarial Audit ofthe Company for the financial year 2016-17. The Secretarial Audit Report for the financialyear 2016-17 forms part of the Annual Report as Annexure No. VII to the Board'sReport. The Secretarial Audit Report does not contain any qualification reservation oradverse remark.

Cost Auditor

Section 148 of the Companies Act 2013 pertaining to audit of Cost Records isapplicable to the Company. Based on the recommendation of the Audit Committee Mr. V.Balasubramanian Cost Accountant was reappointed as Cost Auditor of the Company for thefinancial year 2017-18 and Resolution for the remuneration payable to Cost Auditor isplaced before the Shareholders for ratification.

Internal Auditor

The Company has re-appointed Mr. H. Venugopal as the Internal Auditor of the Companyfor a further period of one year for the financial year 2017-18. The scope of workincludes review of process for safeguarding the assets of the Company review ofoperational efficiency effectiveness of system and processes and assessing the strengthand weaknesses of internal control. Internal Auditor reports are placed before the AuditCommittee on a regular basis for taking suitable action for improvement whereverrequired.

Subsidiaries Joint Ventures and Associates

The Company does not have any Subsidiary Joint venture or Associate Company.

Corporate Social Responsibility

Corporate Social Responsibility is not presently applicable as the Company does notsatisfy the conditions laid down in Section 135 with regard to net worth turnover and netprofits.

Material Changes and Commitments

There have been no material changes and commitments between the end of financial year(March 31 2017) and the date of the report affecting the financial position of theCompany.

Adequacy of Internal Financial Controls and Internal Control System

The Company has in place adequate internal financial controls with reference tofinancial statements. During the year under review such controls were tested and noreportable material weakness in the design or operation was observed.

Company has established adequate Internal Control procedures commensurate with thenature of its business and size of its operations and for ensuring the orderly andefficient conduct of its business for safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information.

The Company has appointed Internal Auditor to observe the Internal controls whetherthe work flow of organization is being done through the approved policies of the Company.In every quarter during the approval of Financial statements Internal Auditors willpresent the Internal Audit Report and Management Comments on the Internal Auditobservation.

Particulars of Loan Guarantees and Investments under Section 186 Details of Loan

Sl. No. Period of making Loan Details of Lender Amount in Rs. Purpose for which the loan is to be utilized by the recipient Time period for which it is given Date of BR Rate of interest
1 01.04.2016 to 31.03.2017 Supreme Yarn Spinners Limited 30 Sugavaneswara Road Salem - 4 13525000/- Inter Corporate Loan Repayable on Demand 23.05.2016 12%
06.08.2016
07.11.2016
02.02.2017
2 01.04.2016 to 31.03.2017 Raja Yarn Spinners Limited 30 Sugavaneswara Road Salem - 4 52472500/- Inter Corporate Loan Repayable on Demand 23.05.2016 5.25%
06.08.2016
07.11.2016
02.02.2017

Significant & Material orders

No Significant and Materials orders have been passed by any Regulator or Court orTribunal which can have an impact on the going concern status and the Company's operationsin future.

Disclosure as required under Section 22 of Sexual Harassment of Workmen at Workplace(Prevention Prohibition and Redressal) Act 2013

As per the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 the Company has constituted an Internal ComplaintsCommittee. During the Financial Year 2016-2017 no compliant was received before thecommittee.

Conservation of Energy Technology Absorption Exports and Foreign Exchange earningsand outgo.

The information on Conservation of Energy Technology Absorption and Foreign Exchangeearnings and outgo stipulated under Section 134(3) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure– II

Corporate Governance

As per the new Regulation 27(2) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a Corporate Governance Report together with theCertificate from the Company's Auditors confirming the compliance of conditions onCorporate Governance is given in Annexure – III

Extract of Annual Return

The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12of the Companies (Management and administration) Rules 2014 in format MGT - 9 for theFinancial Year 2016-17 is enclosed with this report. - Annexure – IV

Contracts or Arrangements with Related Parties

Transactions entered with related parties have been explained in Form AOC – 2 -Annexure – V annexed with this report and forms part of this Report. FurtherPolicy on dealing with Related Party transactions has been uploaded on the Company'swebsite http.www.sncmindia.com.

Vigil Mechanism/Whistle Blower Policy

In pursuant to the provisions of Section 177(9) & (10) of the Companies Act 2013a Vigil Mechanism for Directors and employees to report genuine concerns has beenestablished.

The Vigil Mechanism Policy has been uploaded on the website of the Company athttp.www.sncmindia.com.

The main objective of this policy is to ensure sustainable business growth withstability and to promote a pro-active approach in reporting evaluating and resolvingrisks associated with the business. In order to achieve the key objective the policyestablishes a structures and disciplined approach to risk management in order to guidedecisions on risk related issues.

Audit Committee

Audit Committee is in existence in accordance with the provisions of section 177 of theCompanies Act 2013. The details relating to the composition meetings and functions ofthe Committee are given in Corporate Governance Report. The Board has acceptedrecommendations of Audit Committee hence no disclosure required under Section 177(8) ofthe Companies Act 2013.

Risk Management Policy

As per the Regulation 27(2) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board members were informed about risk assessment and minimizationprocedures after which the Board formally adopted steps for framing implementing andmonitoring the risk management plan for the company. All the results and evaluation hasbeen communicated.

Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performanceboard committees and individual directors pursuant to the provisions of the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

The performance of the board was evaluated by the board after seeking inputs from allthe directors on the basis of criteria such as the board composition and structureeffectiveness of board processes information and functioning etc. as provided by theguidance Note on Board Evaluation issued by the Securities and Exchange Board of India onJanuary 5 2017.

The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of criteria such as the Composition of committeeseffectiveness of committee meetings etc.

The Board and the Nomination and Remuneration Committee reviewed the performance ofindividual directors on the basis of criteria such as contribution of the individualdirector to the board and committee meetings like preparation on the issues to bediscussed meaningful and constructive contribution and inputs in meetings etc.

Nomination and Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed the policy on director's appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters as required under sub-section (3) of Section 178 of the Companies Act 2013 whichhave been outlined in Nomination & Remuneration policy forming part of this Report.

The details of Remuneration to Directors are given in Annexure – VI

Directors Responsibility Statement

In accordance with the provisions of Section 134(5) of the Companies Act 2013 yourdirectors confirm that:

(a) in the preparation of the annual accounts the applicable accounting standards hasbeen followed along with proper explanation relating to material departures;

(b) the Directors had 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) the directors 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) the directors had prepared the annual accounts on a going concern basis;

(e) have laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively.

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Particulars of Employees

The disclosure referred to the Rule 5(2) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 does not apply to the Company as there were no employeeswho are in receipt of remuneration in aggregate of more than Rs.10200000/- if employedthroughout the year or Rs.850000/- per month if employed for part of the year.

Details of top 10 employees based on their salary is disclosed in Annexure –VIII

Listing

The Equity Shares of the Company are listed in BSE Limited and the Company has dulypaid the Annual listing fees for the year 2017-18.

M/s. Cameo Corporate Services Limited Chennai is the Registrar for providingdepository services through National Securities Depository Limited (NSDL) and CentralDepository Services (India) Limited (CDSL) for holding Shares in Electronic mode (De-mat)of our Shareholders and also is the Registrar for Share Transfer Services for physicalsegment.

Acknowledgements

Your Directors wish to place on record their deep sense of appreciation for thetremendous support from the Bankers M/s. Indian Overseas Bank the shareholders and allour suppliers and customers. The Board also wishes to place on record their appreciationfor the contribution made by the employees at all levels.

For and on behalf of the Board of Directors
P. Umayal
Salem Chairman cum Managing Director.
29 May 2017 Din. 00110260.

ANNEXURE TO DIRECTOR'S REPORT

Conservation of energy technology adsorption and research and development and foreignexchange earnings and outgo

A. Conservation of energy
(a) Power and Fuel Consumption Current year ended Previous year ended
31.03.2017 31.03.2016
1. Electricity
(.i.) Purchased
Units 28834566 22802782
Total Amount (Rs.) 181296906 156698360
Rate Per unit (Rs.) 6.29 6.87
(ii) Own Generation
(a) Through Diesel Generator
Units 129816 124670
Units per litre of Diesel 3.46 3.38
Cost / Unit (Rs.) 10.19 12.29
(b) Through Steam Turbine/Generator Nil Nil
2. Coal Nil Nil
3. Furnace Oil Nil Nil
4. Other / Internal Generation Nil Nil
(b) Consumption per unit of production
Yarn produced (kgs) 8121380 5689579
Electricity Consumed (Units) 28964382 22927452
Consumption per Kg. of yarn 3.57 4.03

B. PARTICULARS OF TECHNOLOGY ABSORPTION

The Company has no R & D Division. The Company is a member of South India TextileResearch Association and gets the benefits of their research.

C. PARTICULARS ON FOREIGN EXCHANGE EARNINGS AND OUTGO

EARNINGS : Direct Exports Rs. Nil Rs. Nil
OUTGO : Import of Spares Rs. 5207994 Rs. 6017930
Import of Capital Goods Rs. Nil Rs. Nil
Import of Raw Material Rs. 383555816 Rs. 109201292
Rs. 388763810 Rs. 115219222
For and on behalf of the Board of Directors
Place : Salem P. Umayal
Date : 29th May 2017 Chairman cum Managing Director.
Din:00110260.