Your Directors submit the following Report on the working of the Company for the yearended 31.03.2020.
After meeting all working expenses interest repairs to machinery and buildings theworking result of the company for the year 2019-20 is given below :-
| || |
| ||31.03.2020 ||31.03.2019 |
| ||Rs.in lakhs ||Rs.in lakhs |
|Profit before Interest and Depreciation ||1480.97 ||1089.92 |
|Less / Add : Interest ||259.53 ||296.77 |
|Depreciation ||27.93 ||34.79 |
|(Loss) / Profit before Exceptional items ||1193.51 ||758.36 |
|Exceptional Items ||69.53 ||(14.24) |
|Current Tax ||24.48 ||-- |
|Deferred Tax Credit ||556.48 ||379.96 |
|Surplus/(Deficit) after Exceptional Item ||543.02 ||364.16 |
|Surplus/(Deficit) carried over to Balance Sheet ||543.02 ||364.16 |
* Figures of 31.03.2019 have been regrouped to conform to accounting Standard Ind AS.
The turnover of the company for the year 2019-20 had been Rs.31.40 crores againstRs.27.36 crores in the previous year. The above figure includes Rs.26.08 crores relatingto Real Estate Income. After charging depreciation interest and other overheads andadjustment of Exceptional items the company recorded a profit of Rs.11.26 crores which hadresulted into Rs.5.45 crores Net Profit after adjustment on account of Current Tax andDeferred Tax.
The Cotton Spinning Industry which had already been facing multiple challenges - lowdemand unfavourable duty structure and volatile cotton fibre prices - is confrontinganother trouble in the form of the COVID-19 pandemic.
The shut down of manufacturing units and weak demand are expected to take a heavy tollon cotton yarn industry in the next two quarters. This will lead to a drop in revenue anda fall in profit margin. For the past few years cotton yarn exports have taken a hitmainly on account of subdued demand from China a leading importer of Indian Cotton yarn.Cotton prices have fallen drastically making Indian Cotton the cheapest fibre globally.But it is not possible to take advantage of this. Owing to subdued demand yarn pricesalso started to crash squeezing the spreads.
The rural economy is doing better than most other sectors and will play a crucial rolein the revival of the Country's economy.
Real Estate Development
After complying with all the statutory requirements of the Directorate of Town andCountry Planning and Real Estate (Regulations and Development) Act the project waslaunched on 17th August 2018. So far about 50% of the Villas has been completed.
Construction activity came to a complete halt during the lock down. It is expected thatthe entire project would be completed by middle of 2021. The company is optimistic ofdisposing of the Villas as there is good response.
Management Discussion and Analysis
In terms of the provisions of Regulation 34(3) and Schedule-V of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Management Discussion andAnalysis is set out in this report. It contains an analysis on the performance of theindustry the Company Internal Control System and Risk management policy.
Board of Directors:
The composition of the Board of Directors of the Company is furnished in the CorporateGovernance Report annexed to this Report.
Sri.Ravichandran Dhamodaran (DIN : 00054538) Sri.R.Guru Chandrasekar (DIN :0008421861) and Sri.A. Surendran (DIN : 00765292) are appointed as Independent Directorsat the 72nd Annual General Meeting for a period of 5 years with effect from 27.09.2019.All the Independent Directors have affirmed that they satisfy the criteria laid down underSec.149(6) of the Companies Act 2013 and Regulations 16(b) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015. Further the Company's code of conductsuitably incorporates the duties of Independent Directors as laid down in the Act.
In the opinion of the Board the Independent Directors of the Company fulfill theconditions specified in the Act and SEBI (LO & DR) Regulations 2015 and areindependent of the Management.
The Ministry of Corporate Affairs Govt. of India has launched the IndependentDirectors' databank and it has entrusted the Indian Institute of Corporate Affairs withcreating and operating such a data bank under the Notification No.GSR804(E) dt.22ndOctober 2019. All the existing Independent Directors are required to register themselvesin the data bank. Accordingly the Company's Independent Directors have got themselvesregistered in the data bank for 5 (five) years.
Consequent to the expiry of the three year term of Sri.D.Lakshminarayanaswamy ManagingDirector and Smt.L. Nagaswarna Wholetime Director it is proposed to reappoint them.Necessary resolutions have been included in the Agenda of the ensuing Annual GeneralMeeting for members approval.
Retirement by rotation:
Sri.P Muthuswamy (DIN : 02651331) who has been appointed as a Director-Operationsretires by rotation at the ensuing Annual General Meeting of the Company as per the termsof his appointment. The place so vacated by him has to be filled up at the same meeting.The retiring Director is eligible for re-appointment at the ensuing Annual GeneralMeeting. Accordingly a resolution to this effect is included in the Agenda forconsideration of members at the ensuing Annual General Meeting of the Company.
During the year Five (5) Board Meetings were convened and held the details of whichare given in the Corporate Governance Report. The intervening period between twoconsecutive meetings was within the period prescribed under the Act.
Meeting of Independent Directors:
Pursuant to the provisions of the Companies Act 2013 (Para-VII(1) of Schedule-IV oneseparate meeting of independent directors without the attendance of Non-IndependentDirectors and Members of Management was held during the year and all the independentdirectors were present at this meeting. In the said meeting the independent directorsassessed the quality quantity and timeliness of flow of information between themanagement and the Board and expressed that the current flow of information and contentswere adequate for the Board to effectively perform its duties.
The evaluation of all the Directors and the Board as a whole was conducted based on thecriteria and framework adopted by the Board. The evaluation process has been framed by theNomination and Remuneration Committee and approved by the Board. A questionnaireconsisting of certain criteria is adopted for reviewing the functioning and effectivenessof the Board and for identifying possible areas for improvement. Each Board member isrequested to evaluate the effectiveness of the Board dynamics and relationshipsinformation flow decision making of the Directors relationship with Stakeholders.Company performance company strategy and effectiveness of the whole Board and its variouscommittees on a scale of one to five.
Necessary feed back is provided for improvement in the performance of the Directors andthe functioning of the overall Board and the various committees.
Familiarisation Programme for Independent Directors :
In compliance with the requirements of Regulation 25(7) of the SEBI (LO & DR)Regulations 2015 the company has put in place a Familiarization Programme for theIndependent Directors to familiarize them with the company their roles rightsresponsibilities in the company nature of the industry in which the company operatesbusiness models Regulatory matters etc.
Key Managerial Personnel:
Sri.D.Lakshminarayanaswamy (DIN:00028118) Managing Director Smt.LNagaswarnaWholetime Director (DIN:00051610) Sri.P Muthuswamy Director-Operations (DIN : 02651331)Sri.S.A.Subramanian and Sri.G.Krishnakumar as Company Secretary and Chief FinancialOfficer respectively constitute Key Managerial Personnel of the Company.
The policy on appointment remuneration and evaluation criteria for Directors andSenior Management is as per the recommendation of the Nomination and RemunerationCommittee of the Board. The Company recognized that Compensation Policy is an importantand strategic tool in the achievement of vision and goals of the company. It is in keepingwith the performance of the individuals internal equity market trends and industrypractices legal requirements and appropriate governance standards.
The Nomination and Remuneration Committee recommends the remuneration of Directors andSenior Management personnel which is approved by the Board of Directors subject to theapproval of shareholders where necessary.
In terms of the provisions of Section 177 of the Act and Regulation 18 of SEBI (ListingObligations & Disclosure Requirements) Regulations 2015 the Audit Committee of theBoard was constituted to act in accordance with the terms of reference prescribed therein.Detailed disclosure on composition terms of reference and meetings of the Audit Committeeare furnished in the Corporate Governance Report.
M/s.C.S.K.Prabhu & Co Chartered Accountants Coimbatore were appointed asStatutory Auditors at the 70th Annual General Meeting held on 28.09.2017 to hold suchOffice for a term of five consecutive financial years from the conclusion of 70th AnnualGeneral Meeting to the conclusion of the 75th Annual General Meeting to be held in theyear 2022 pursuant to the provisions of Section 139 141 and 142 of the Act read withcompanies (Audit & Auditors) Rules 2014. Under the Companies (Amendment) Act 2017 theClause relating to ratification of auditors' appointment by members has been deleted.
Ministry of Corporate Affairs (MCA) has vide Notification dated 31st December 2014amended the Companies (Cost Records and Audit) Rules 2014. Accordingly the rules apply tothe Companies which have turnover exceeding the prescribed limits. Since the Company'sturnover is less than the prescribed limit the company is exempt from maintenance of CostRecords and Audit thereof.
Smt.C.Jayanthi Practising Company Secretary was appointed to conduct the SecretarialAudit of the Company for the Financial year 2019-20 as required under Sec.204 of the Actand Rules made thereunder. The Secretarial Audit Report for the Financial Year 2019-20forms part of the Annual Report as annexure to the Board's Report.
The Board has appointed Smt.C.Jayanthi Practising Company Secretary as SecretarialAuditor of the Company for the Financial Year 2020-21.
Internal Auditor :
The Company continues to engage Smt.Sasirekha Vengatesh Chartered Accountants asInternal Auditors of the Company. The scope of work includes review of processes forsafeguarding the assets of the company review of operational efficiency effectiveness ofsystems and processes and assessing the strength and weaknesses of internal control.Internal Auditors reports are placed before the Audit Committee on a regular basis fortaking suitable action for improvement wherever required.
Directors' Responsibility Statement:
As required under section 134 of the Act it is stated
a. that in the preparation of the annual accounts the applicable accounting standardshad been followed alongwith proper explanation relating to material departures.
b. that the Directors had selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year (i.e)31st March 2020 and of the profit of the company for that period.
c. that the directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities.
d. that the directors had prepared the annual accounts on a going concernbasis.
e. that the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
f. that the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
Related Party Transactions:
All contracts / arrangements / transactions entered into by the company during theFinancial Year with related parties were in the ordinary course of business and on arm'slength basis. During the year the company had not entered into any contracts /arrangements / transactions with related parties which could be considered material inaccordance with the policy of the company on materiality of related party transactions.
Statement giving details of the Contacts / arrangements / transactions with relatedparties is placed before the Audit Committee and the Board of Directors for their approvalon quarterly basis.
Corporate Social Responsibility :
The Company has constituted a Corporate Social Responsibility (CSR) Committee inaccordance with the provisions of Section 135 of the Companies Act 2013 comprising ofthree Directors including an Independent Director.
During the current Financial Year 2019-20 as the average net profit of the threeimmediately preceding financial years is negative the company is not required to spendany amount on Corporate Social Responsibility. As and when the average Net Profit of threeimmediately preceding Financial Years in future records positive necessary investment inCSR activities will be made as required by law.
Subsidiary and Associate Companies :
Doral Real Estates Private Ltd is a subsidiary of the company since 02.06.2017.Pursuant to the provisions of Sec.129 of the Act the consolidated financial statements ofthe company and the subsidiary had been prepared in the Annual Report for laying beforethe ensuing Annual General Meeting.
Further along with the financial statement of the company a separate statementcontaining the salient features of the financial statement of the subsidiary is attachedto the Annual Report in form AOC1.
Pursuant to Regulation 24(1) of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 Sri.R.Guru Chandrasekar (DIN : 0008421861) an IndependentDirector of the company has been appointed as Director in the subsidiary company duringthe year.
The company does not have any Associate Company.
The Company has not accepted any deposits within the meaning of Section 73 of the Actand the Rules framed thereunder.
Effect of Covid-19 Pandemic :
The effect of Covid-19 pandemic on the company is detailed in the Annexure toManagement Discussion & Analysis Report. A copy of the same was filed with BSEand also hosted in the company's website.
Energy Conservation Technology Absorption and Foreign Exchange earnings & outgo :
The information on the above stipulated under Sec.134(3)(m) of the Act read with Rule 8of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure-II.
Particulars of Directors Key Management Personnel and Employees:
The information required pursuant to Sec.197 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of DirectorsKey Management Personnel and employees of the Company are provided in the Annual Report.
A separate Report on Corporate Governance is attached to this report. A certificatefrom the Practising Company Secretary of the company confirming compliance with theconditions of Corporate Governance as stipulated under Regulation 27 and Part-E ofSchedule-II of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015is attached to this report.
a. Details of loans guarantees and investments under the provisions of Sec.186 of theAct are given as Annexure.
b. The internal control systems and its adequacy are discussed in the ManagementDiscussion and Analysis annexed to the Directors Report.
c. There was no significant material order passed by the Regulators / Courts whichwould impact the going concern status of the company and its future operations.
d. The details forming part of the extract of the Annual Return in Form MGT-9 isannexed to the Directors' Report.
e. The Company has adopted the Whistle Blower Policy for Directors and Employees of theCompany to report concerns about the unethical behaviour actual or suspected fraud orviolation of the Company's Code of Conduct and ethics. The policy is provided pursuant toReg. 22 and Reg.46(2)e of SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. It also provides for adequate safeguard against victimization ofDirectors / Employees who avail of the mechanism and also provide for direct access to theChairman of the Audit Committee in exceptional cases. The policy is also disclosed in theCompany's Website.
f. The Company has adopted a code of conduct for the Board of Directors and SeniorManagement of the company and all of them have affirmed compliance of the same.
g. The Company has in place an Anti Sexual Harassment Fblicy in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibition&
Redressal) Act 2013. Necessary mechanism has been put across the company in thisregard to cover all the women employees in the company.
h. As contemplated under Regulation 17(8) of SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015 certificate from MD/CEO Sri.D.Lakshminarayanaswamy &CFO Sri.G.Krishnakumar was placed before the Board of Directors at the meeting held on30.06.2020.
i. Pursuant to Sec.134(3)(l) of the Act there was no significant material changes andcommitments affecting the financial position of the Company has taken place between theend of the financial year of the company and the date of Directors' Report excepting theeffect of Covid-19 pandemic.
Our thanks are due to The South Indian Bank Ltd. for their support and assistance tomeet our business needs.
The Directors appreciate the services rendered by the Officers Staff and the employeesof the Company.
We pray for the Grace of Almighty Sri Jaganatha Pferumal for the prosperity of theCompany.
| ||For and on behalf of the Board of Directors of Sri Ramakrishna Mills (Coimbatore) Limited |
|Place : Coimbatore ||D. LAKSHMINARAYANASWAMY |
|Date : 30.06.2020 ||Chairman of the meeting |
| ||(DIN : 00028118) |