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Sri Nachammai Cotton Mills Ltd.

BSE: 521234 Sector: Industrials
NSE: N.A. ISIN Code: INE443E01016
BSE 14:16 | 02 Mar 12.67 0.60
(4.97%)
OPEN

12.67

HIGH

12.67

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12.67

NSE 05:30 | 01 Jan Sri Nachammai Cotton Mills Ltd
OPEN 12.67
PREVIOUS CLOSE 12.07
VOLUME 200
52-Week high 18.80
52-Week low 9.85
P/E
Mkt Cap.(Rs cr) 5
Buy Price 12.67
Buy Qty 20.00
Sell Price 12.67
Sell Qty 10.00
OPEN 12.67
CLOSE 12.07
VOLUME 200
52-Week high 18.80
52-Week low 9.85
P/E
Mkt Cap.(Rs cr) 5
Buy Price 12.67
Buy Qty 20.00
Sell Price 12.67
Sell Qty 10.00

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 39th AnnualReport on the business of the Company along with summary of financial statements for theyear ended 31st March 2019. The report is prepared in accordance with the provisions ofthe Companies Act 2013.

Financial Highlights

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

Particulars 31.03.2019 31.03.2018

(Rupees in Lakhs)

Profit before Finance Costs and Depreciation 688.53 772.35
Finance costs 494.35 450.81
Depreciation 126.29 250.88
Profit / (Loss) before taxation 67.89 70.66
Less : Current tax (MAT) 2.34 -
MAT Credit Entitlement (2.34) -
Deferred tax 55.34 0.38
Profit / (Loss) after tax 12.55 71.04
Add : Other comprehensive income
Remeasurement of post employment benefit obligations 2.00 3.14
Gain on fair valuation of investments (0.41) (1.02)
Income tax relating to these items (0.10) (1.00)
Total other comprehensive Income for the year 1.49 1.12
Total Comprehensive Income / (Loss) for the year 14.04 72.17
Earnings per share Basic / Diluted 0.29 1.66

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. 15986.23 (in lakhs) as againstRs. 15731.34 (in lakhs) in the previous year. The Company has made a net profit of Rs14.04 Lakhs during the current year as compared to Net Profit of Rs.72.17 Lakhs last year.

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 reappointment and the resolutionis placed 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.

The tenure of Smt. P. Umayal Chairman cum Managing Director and Sri P. PalaniappanManaging Director expires on 18th of December 2019. The Board at their meetingheld on 24th May 2019 reappointed them as Chairman cum Managing Director andManaging Director for a period of three years effective from 19.12.2019 to 18.12.2022.Theresolution is placed before the Shareholders for approval.

The tenure of Independent Directors Sri A.Alagappan Sri S.Ravichasndran and SriPL.Subbiah expires on 09th of December 2019. The Board at their meeting held on24th May 2019 reappointed them as independent Director for a term of fiveconsecutive years from 10th December 2019 to 9th December 2024 subject to theapproval of the Shareholders.

Smt C.Renuka was appointed as an Additional Director of the Company with effect from 30thMay 2018. She was appointed as Non executive Non Independent Director in the AnnualGeneral Meeting held on 25th September 2018.

Smt S.Vasantha Non Executive Non Independent Director retired from the Board witheffect from 30th May 2018 due to her absence from India.

Sri Perumal Madhavagopal ceases to be Director of the Company from 20.03.2019 due todemise.

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.

Pursuant to Regulation 34(3) and Schedule V para Clause (10)(i) of SEBI( ListingObligation and Disclosure Requirements) Regulations 2015 Certificate of NonDisqualification of Directors is received from the Practicing Company Secretary Sri M.R.LNarasimha is attached as Annexure-VII

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 30th May 2018 14thAugust 2018 12th September 2018 9th November 2018 and 4thFebruary 2019.

Statutory Auditors

The Company's Auditors M/S.V.V.Soundararajan & CO. Chartered Accountants Salemhold office for a term of five years (5) commencing from the financial year 2017-2022 tillthe conclusion of the Annual General Meeting to be held in the year 2022.

The Auditors' Report for the year 2018-19 does not contain any qualificationreservation or adverse remark. The auditors' report is enclosed with the financialstatements in the Annual Report.

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 2018-19. The Secretarial Audit Report for the financialyear 2018-19 forms part of the Annual Report as Annexure-VIII to the Board's Report.

The Secretarial Audit Report does not contain any qualification reservation or adverseremark other than the following

Sl. No. ACTION TAKEN BY DETAILS OF VIOLATION DETAILS OF ACTION OBSERVATIONS REMARKS BY PCS
1 BSE LIMITED Non submission of Annual Report within the prescribed time limit under Reg 34 Levy of fine amounting to Rs. 49560 NIL

The company mailed the Annual Report for the year 2017-18 at the mail idcorp.relation@bseindia.com on 1st of October 2018. The company uploaded theannual report on 26th November 2018 on receipt of the notice. The company have paid thefine.

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 CommitteeMr.B.Venkateswar Cost Accountant was appointed as Cost Auditor of the Company for thefinancial year 2019-20 and the remuneration payable to Cost Auditor is placed before theShareholders 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 2019-20. 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 312019) 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 adequacy 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. No fraud was reported duringthe Financial year.

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 - 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 01.04.2018 to 31.03.2019 Supreme Yarn Spinners Limited Door No.181 'VASANTHAM” 4th Cross Street New Fairlands Salem 636 016 39000000 Inter Corporate Loan Repayable on Demand 30.05.2018 14.08.2018 09.11.2018 04.02.2019 12%
2 01.04.2018 to 31.03.2019 Raja Yarn Spinners Limited Door No.181 'VASANTHAM” 4th Cross Street New Fairlands Salem 636 016 106942500 Inter Corporate Loan Repayable on Demand 30.05.2018 14.08.2018 09.11.2018 04.02.2019 5.25%

Investment made under Section 186 of the Companies Act 2016

Investment made by the Company is within the limits specified under Section 186 of theCompanies Act 2013.

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 2018-2019 no compliant was received before thecommittee Conservation of Energy Technology Absorption Exports and Foreign Exchangeearnings and 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 2018-19 is enclosed with this report. The Annual return shall be availableon Company's website http.www.sncmindia.com - 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. Further policy ondealing with Related Party transactions has been uploaded on the Company's websitehttp.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 structure 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 ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets 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 - IX.

Listing

The Equity Shares of the Company are listed in BSE Limited and the Company has dulypaid the Annual listing fees for the year 2019-20.

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.
24th May 2019 Din. 00110260.

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