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|BSE: 532893||Sector: Industrials|
|NSE: VTMLTD||ISIN Code: INE222F01029|
|BSE 00:00 | 18 Apr||27.05||
|NSE 05:30 | 01 Jan||VTM Ltd|
|Mkt Cap.(Rs cr)||109|
|Mkt Cap.(Rs cr)||108.74|
VTM Ltd. (VTMLTD) - Director Report
Company director report
FOR THE YEAR ENDED ON 31st MARCH 2018. '
To the Members of YTM Limited
Your Directors have pleasure in presenting their 71st Annual Reportalong with the Audited statement of accounts for the year ended 3181 March 2018.
Adoption of Financial Statements under Ini AS:
Pursuant to the notification issued by the Ministry of CorporateAffairs dated 16* February 2015 relating to the Companies (Indian Accounting Standards)Rules 2015 the Company has adopted "Ind AS" with effect from Is' April 2017.Accordingly the Financial Statements for the year 2017-18 have been prepared incompliance with the Companies (Indian Accounting Standards) Rules 2015.
Operating & Financial Performance Profits Dividends &Retention
During the year under review the Company's performance improved at theoperational level and the Company recorded a higher profit from the manufacturingactivities of Rs.773.92 lakhs (against Rs.397.52 lakhs last year). The turnover has alsoincreased by about 10%. During the year exports were at Rs J82451 lakhs representing2341% of the total turnover. Trading conditions were volatile throughout the year.Textile exports out of India registered a negative trend however the domestic consumptionis showing some positive trends.
Appropriation to General Reserve
Considering the profitability and the available surplus the Board ofDirectors desires to appropriate a sum ofRs.4500 lakhs to General Reserve.
Considering the profits for the year and as recommended by the AuditCommittee the Board of Directors are pleased to recommend a dividend ofRe.0.75 per sharei.e.75% on Equity Shares of Re. 1 /- each. The dividend together with dividend tax entailsa cash outflow ofRs.363.71 lakhs
in the current year (previous year Rs.363.42 lakhs). If this isapproved at the forthcoming Annual General Meeting dividend will be deposited with thebank within the time prescribed and dividend will be paid to those who are Members of theCompany as on record date specified in this regard. The Book Closure period being 13thJune 2018 to 22nd June 2018 (Both days inclusive) in respect of shares heldelectronically dividend will be paid on the basis of beneficial ownership as per detailsfurnished by the depositories.
Extract of Annual Return:
The Extract of Annual Return is furnished in Form MGT-9 as per AnnexureIII
The company does not have any body corporate as its Associate.
There is no change in the nature of the business of the Company.
There were no significant and material orders passed by regulators orcourts or tribunals impacting the going concern status and Company's operations in future.
There were no material changes and commitments affecting the financialposition of the Company occurring between March 312018 and the date of this Report of theDirectors.
Internal Control System
The Company has in place an established internal control systemdesigned to ensure proper recording of financial and operational information andcompliance of carious internal controls and other regulatory and statutory compliances.Code on Internal Control which require that the Directors to review the effectiveness ofinternal controls and compliance controls financial and operational risks riskassessment and management systems and related party transactions have been complied with.Self certification exercises arc also conducted by which senior management certifieseffectiveness of the internal control system their adherence to Code of Conduct andCompany's policies for which they arc responsible financial or commercial transactionsif any. where they have personal interest or potential con llict of interest. InternalAudit has been conducted on periodical basis.
Company's Policies on Corporate Social Responsibility RemunerationEmployee Concern (Whistle Blowing) the Code of Conduct applicable to Directors andEmployees of the Company and policies such as Insider Trading Code Insider Trading FairDisclosure Code and Policy on Materiality of and dealing with Related Party Transactionsrequired under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015and SEBI (Prohibition of Insider T rading) Regulations 2015 have been complied with.
These Policies the Code of Conduct and other policies/codes asreferred above are available
on the Company's website www.vtmill.com
ISO and SS Certification
The Company's factory at Sulakarai Virudhunagar Tamil Nadu has beencertified ISO for Quality Management System Standard and also holds a SS Certificationfrom AOTS Alumni SS Forum of India and GOTS Certification for the manufacture of organiccotton fabrics.
The Company is primarily a manufacturer of textile products and ismanaged organizationally as a single unit. Accordingly the Company is a single businesssegment company. Geographical (secondary) segment has been identified as domestic salesand exports as detailed below:
The introduction of GST was a major reform. But the markets took alonger time than expected to adjust to this change. The small traders and manufacturershave just come on line. The advent of GST has enabled the Company to take Input Tax Credit[ITC] a feature which was hitherto not available to your Company. Tax evasion is expectedto vanish and as a result bring in more compliance across the chain.
During the year under review export of clothing and textile from Indiashowed a dismal growth. Indian manufacturers are faced with higher cost as compared to theneighbouring countries and other competing countries.
While Government is taking a number of steps to address these concernsyour Company is also concentrating on eliminating inefficiencies and saving cost.
The power situation continues to be comfortable on a Pan India basisand we are able to source competitively priced power.
The Company is taking steps for development and implementation of riskmanagement policies. The element of risk that may threaten the company is the uncertaintyin the overseas market on which the company depends for its exports.
Further in the domestic market there is a risk of competition from alarge number of textile units and the uncertainty of monsoon and its consequential impacton the demand scenario.
Your Directors look forward to the current year with hope and optimismas there are good indications for a normal monsoon. This will boost the rural economy andhelp in increasing demand. It will also help to boost the Indian cotton crop. Thesefactors may improve your company's business prospects and the profitability.
The Board consists of 8 Directors with one Chairman and ManagingDirector four Non -Executive Independent Directors two Non-Executive Directors and oneWoman Non -Executive Director.
Section 203 of the Companies Act 2013 requires a listed company tohave a Managing Director/CEO/Whole Time Director as one of the Key Managerial Personnel.In terms of the provisions Sri T. Kannan the Chairman of the Company has been appointedas Chairman and Managing Director duly recommended by the Nomination and RemunerationCommittee
and approved by the Board of Directors. He is already the Chairman andManaging Director of M/s. Thiagarajar Mills Private Limited and accordingly hisremuneration is fixed in such a way that the total remuneration from both companies puttogether does not exceed the limits as prescribed u/s. 197 of the Companies Act 2013.
The details of number and dates of meetings held by the Board and itsCommittees attendance of Directors and remuneration paid to them is given separately inthe attached Corporate Governance Report.
The sitting fees paid to the Non-Executive Directors are within thelimits prescribed under the Companies Act 2013 and Rules thereon.
Sri K. Vethachalam Director of the Company retires by rotation atthe ensuing Annual General Meeting and being eligible has offered himself forreappointment as a Director of the Company. Being eligible lie is proposed to bere-appointed as Director of the Company.
Non-Executive Independent Directors
The Non-Executive Independent Directors have confirmed and declaredthat they are not disqualified to act as a Non-Executive Independent Director incompliance with the provisions of Section 149 of the Companies Act 2013 and the Board isalso of the opinion that the Non -Executive Independent Directors fulfill all theconditions specified in the Companies Act 2013 making them eligible to act asNon-Executive Independent Directors. The Non Executive Independent Directors have conveneda meeting on 28 February 2018.
Code of Conduct
All Directors Key Managerial Personnel and Senior Management of theCompany have confirmed compliance with the Code of Conduct applicable to the Directors andemployees of the Company. The Code of Conduct is available on the Company's website
The Board of Directors acknowledges the responsibility for ensuringcompliance with the provisions of Section 134(3)(c) read with Section 134(5) of theCompanies Act 2013 and the provisions as referred in SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 in the preparation of the annual accounts forthe year ended on 31st March 2018 and state that:
i in the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any;
ii. the Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;
iii. the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of this Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
iv. the Directors have prepared the annual accounts on a going concernbasis;
v. the Directors have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and areoperating effectively and the Company has adopted proper policies and procedures forensuring orderly and efficient conducting of the business:
a) The management designed and implemented policies with respect toadherence to accounting standards as a general requirement applied by a Company inpreparing and presenting financial statements
b) The management evolved a sound system for regular evaluation of thenature and extent of the risks to which the Company is exposed and to control riskappropriately.
c) The board ensured the effective financial controls including themaintenance of proper accounting records and the Company is not unnecessarily exposed toavoidable financial risks. They also contribute to the safeguarding of assets includingthe prevention and detection of fraud. The financial information used within the businessand for publication is reliable.
vi. the Directors had devised proper system to ensure compliance withthe provisions of all applicable laws and that such systems are adequate and operatingeffectively.
Key Managerial Personnel
The following persons have been appointed as Key Managerial Personnelof the Company in compliance with the provisions of Section 203 of the Companies Act.2013:
a) Sri T. Kannan. Chairman and Managing Director
b) Sri V. Sundaramoorthy Chief Financial Officer (upto 0306.2017) and
c) Sri R. Krishnan Chief Financial Officer (from 01.04.2018)
d) Sri S. Paramasivam Company Secretary Corporate Governance
The Company has in place the SEBI guidelines pertaining to CorporateGovernance. During the year under consideration the Company had an Eight member Board ofDirectors consisting of one Chairman and Managing Director four Non-Executive IndependentDirectors three Non-Executive Directors of which one is a Woman Director.
The Corporate Governance Report giving the details as required underRegulation 34(3) read with Schedule V to SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 is given separately as Annexure I and forms part of thisReport of the Directors. The Corporate Governance Certificate for the year ended on March31 2018 issued by M/s.CNGSN & Associates LLP Auditors of the Company is alsoattached as part of Annexure I and forms apart of this Report of the Directors.
The Company has formulated Insider Trading Code and Insider TradingFair Disclosure Code in terms of Regulation 9 read with Schedule B and Regulation 8 readwith Schedule A of SEBI (Prohibition of Insider Trading) Regulations 2015 respectivelyand provided in the company's website at www.vtmiil.com.Mr S. Paramasivam Company Secretary is the Compliance Officer responsible for compliancewith the Insider Trading procedures. As there was no insider trading in the securities ofthe company the company has not reported any Insider Trading details to the StockExchange.
Sri T. Kannan Chairman and Managing Director of the Company has givenhis certificate under Regulation 17(8) read with part D of Schedule II of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 regarding the annual financialstatements for the year ended on 31st March 2018 to the Board of Directors. The Chairmanhas given his certificate under Regulation 34(3) read with Part D of Schedule V of theabove said Regulations in compliance with the Code of Conduct of the Company for the yearended March 312018 which is attached as Annexure VIII and forms a part of this Report ofthe Directors.
The Audit Committee consists of three Independent Directors andsatisfies the provisions of Section. 177(2) of the Companies Act 2013. The Committee nowcomprises Mr.RM. Somasundaram as Chairman and Mr.A. Mariappan and Mr.L.N.V. Subramanianwho are all
Independent Directors. The Company Secretary is the Secretary of theCommittee. The details of all related party transactions are placed periodically beforethe Audit Committee. During the year there were no instances where the Board had notaccepted the recommendations of the Audit Committee. The Company has in place a vigilmechanism details of which are available on the Company's website
The Audit Committee has also been delegated the responsibility formonitoring and reviewing risk management assessment and minimization proceduresimplementing and monitoring the risk management plan and identifying reviewing andmitigating all elements of risks which the Company may be exposed to.
The Audit Committee is empowered with monitoring the appointment of KeyManagerial
The details of terms of reference of the Audit Committee number anddates of meetings held :
attendance of the Directors and remuneration paid to them are givenseparately in the attached Corporate Governance Report.
The Board reviewed and evaluated its own performance from the followingangles:
Company Performance Strategy and Implementation Risk ManagementCorporate ethics
Performance of the Individual Directors
Performance of the Committees viz. Audit Committee Nomination andRemuneration Committee Stakeholders Relationship Committee and Corporate SocialResponsibility Committee
The Board also evaluated the performance of the above referredCommittees and concluded that the Committees continued to operate effectively with fullparticipation from all members and executive management of the Company.
The Board upon evaluation considered that the Board is well balanced interms of diversity of experience. The Board noted that all Directors have understood theopportunities and risks to the Company's strategy and are supportive of the directionarticulated by the management team towards improvement. Corporate responsibility ethicsand compliance are taken seriously and there is a good balance between the core values ofthe Company and the interests of shareholders.
The Directors also expressed their satisfaction in all the above areasconsidering the Company's performance in all fronts viz. New Product Development Salesand Marketing International business Employee relations and compliance with statutoryrequirements.
Related Party Transactions:
During the year 2014-15 and in 2015-16 the company has entered intocontracts or arrangements with such number of related parties with the approval by theBoard of Directors in respect of the following:
1. Sale purchase or supply of any goods or materials
2. Selling or otherwise disposing of or buying property of any kind
3. Leasing of property of any kind
4. Availing or rendering of any services
The details in respect of the material contracts or arrangements ortransactions on arm's length basis carried on with the related parties hat e beenfurnished in ANN ENl' R H V.
As the contract*; or agreements entered into with the related.partiesare expiring on 31.03.2019 the Board proposes to consider renewal of* the contracts to beentered into w ith related panics for the consent of the Board of Directors and theapproval of the Members of the Company at the ensuing Annual (ienerai Meeting wherevernecessary.
A Corporate Social Responsibility Committee was constituted on April24 2014 with Sri T.Kannan as Chairman and M's. K. Thiagarajan and RM. SomasundaramDirectors of the Company as Members.
The Committee met once during the year on 28th February 2018 toreview the CSR policies recommend for contributions for CSR Activities carried out duringthe year and recommend for balance amounts to be spent for the Financial Year 2017-18.
The Committee considered the social activities as referred in ScheduleVII to the Companies Act and recognizes that its operations impact a wide community of thepublic for promoting health care including preventive health care and imparting educationfor uplifting the social status of the public. In structuring its approach to variousaspects of Corporate Social Responsibility the Company takes account of guidelines andstatements issued by various regulatory bodies. Social environment and ethical mattersare reviewed by the Committee including the impact of such matters that may have on theCompany's management of risk.
The Company finalized the maimer of implementation of the CSR Policyand spent a sum of Rs.066 lakh towards conducting eye camp for the public nearby themills as a preventive health care activity and contributed a sum of Rs.27.86 lakhs to aleading educational institution for development of infrastructure facilities in theInstitution. The details of the project amount of estimates and the contribution to theimplementing agency has been shown in AnnexureVIL
The CSR policy is available on the Company's website
The terms of reference of the Corporate Social ResponsibilityCommittee number and dates of meetings held attendance of the Directors and remunerationpaid to them are given separately in the attached Corporate Governance Report.
In compliance with the Sexual Harassment of Women at Workplace(Prevention Prohibitionand Redressal) Act. 2013 the Company has constituted an InternalComplaints Committee with three employees and a NGO representative and Smt Until KantianDirector of the Company ts the Adviser to the Committee. I'he Board also has approved theprevention of Sexual Harassment Policy and all employees especially women employees weremade aware : of the Policy and the manner in which complaints could be lodged. TheCommittee has submitted its Annual Report and the same has been approved by the Board.
The following is reported pursuant to Section 22 of the SexualHarassment of Women at Workplace (prevention Prohibition and Redressal) Act 2013;
Nomination and Remuneration Committee
A Nomination and Remuneration Committee was constituted on April242014 and as on 31 st March 2018 Sri RM. Somasundaram is the Chairman and M/s. T.Kannan K. Thiagarajan and A. Mariappan are Members of the Committee. The constitutionsatisfies the provisions of Section 178 of the Companies Act 2013. The Company Secretaryis the Secretary of this Committee.
During the year the Committee met twice on 3O.O4.2017 and 02.08.2017the first one for reviewing the Nomination and Remuneration Policy and the second one forconsidering and accepting the resignation of Mr. V. Sundaramoorthy as Chief FinancialOfficer.
The Company's Remuneration Policy is available on the Company's websitewww.vtmill.com and annexed as forming part of this report as ANNEX! 'RE X.
The details oflertns of reference of the Nomination and RemunerationCommittee number and dates of meetings held attendance of the Directors and remunerationpaid to them are given separately in the attached Corporate Governance Report.
The Shareholders and Investors Grievance Committee was constitutedearlier on 26.06.2004. To comply with the requirements of the Companies Act 2013 and thelisting agreements with Stock Exchanges the name of the Committee was changed toStakeholders Relationship Committee effective from April 25 2014. As on 31st March 2017the Members of the Committee are Sri'L.N.V. Subramanian as Chairman and Sri T. Kannan asMember. The Company Secretary is the Secretary of the Committee The Committee hasdelegated the responsibility for share transfers and other routine share maintenance workto the Company Secretary and to M/s.Karvy Computer Share Private Limited the Registrarsand Share Transfer Agents of the Company. All requests for dematerialisation andrematerialisation of shares transfer or transmission of shares and other sharemaintenance matters are completed within 30 days of receipt of valid and completedocuments. The Committee approved all activities through Circular Resolutions and allthose Circular Resolutions were placed and discussed at the Board meetings. The Committeealso reports to the Board on matters relating to the shareholding pattern shareholding ofmajor shareholders insider trading compliances movement of share prices redressal ofcomplaints Reports on SCORES of SEBI and all compliances under the Companies Act 2013and the listing agreement with Stock Exchanges.
The shares of the Company are listed on the Bombay Stock Exchange. TheCompany's shares are compulsorily traded in the dematerialized form. The ISIN numberallotted is INE222PG1G29. The details of shareholding pattern distribution ofshareholding and share prices are mentioned separately in the attached CorporateGovernance Report.
In terms of Section 139 of the Companies Act and the rules madethereon M/s CNGSN &
Associates LLP Chartered Accountants Chennai (Firm Regn. No.004915S/S200036) have been appointed as Auditors of the Company by the members at theirmeeting held on 23rd June
2017 and the Auditors have been appointed for a period of five yearsfrom the conclusion of 70*
Annual General Meeting till the conclusion of the 75* Annual GeneralMeeting. The Auditors have already submitted certification u/s. 141 of the Companies Actand Peer Review Certificate in respect of their appointment as Auditors of the Company.
A Secretarial Audit was conducted during the year by the SecretarialAuditor ;
Mr.M.K.Bashyam Practicing Company Secretary in accordance with theprovisions of Section 204 of the Companies Act 2013. The Secretarial Auditor's Report isattached as Annexure 11 and forms a part of this Report of the Directors. There are noqualifications or observations or remarks made by the Secretarial Auditor in his Report.
The Company has not accepted any deposits from the public and as suchthere are no outstanding deposits in terms of the Companies (Acceptance of Deposits)Rules 2014.
The company does not have any deposit which is not in compliance withthe Companies Act
The Company has not granted any inter-corporate loan given guaranteeor provided security for availing loan by any other company. However the company hasinvested its funds in such number of companies and in such number of shares in otherbodies corporate as referred to in Notes No. 11 and 13 of the Balance Sheet.
In compliance with Section 186 of the Companies Act 2013 loans toemployees bear interest at applicable rates.
Conservation of Energy Technology Absorption and Foreign Exchange
Earnings anti Outgo
The prescribed particulars of Conservation of Energy TechnologyAbsorption and Foreign Exchange Earnings and Outgo required under section 134(3)(m) readwith Rule 8(3) of the Companies (Accounts) Rules 2014 is attached as Annexure IV andforms a part of this Report
of the Directors.
Particulars of Employees
The prescribed particulars of Employees required under Section134(3)(q) read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is attached as Armexure VI and forms a part of this Report of theDirectors. There are no employees drawing remuneration more than Rs.102 Lakhs per annum orRs.850000/- per month.
The Annexures referred to in this Report and other information whichare required to be disclosed are annexed herewith and form a part of this Report of theDirectors:
I. Corporate Governance Report along with Certificate on CorporateGovernance by the Auditor of the Company.
II. Secretarial Audit Report.
III. Extract of the Annual Return inFormMGT-9.
IV. Particulars on Conservation of Energy Technology Absorption andForeign Exchange Earnings and Outgo.
V. Form AOC-2 for material contracts with Related Parties.
VI. Ratio of remuneration and Particulars of Employees.
VII. Annual Report on CSR spending.
VIII. Chairman & Managing Director's Certificate under Regulation34(3) read with Part D of Schedule V to SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 on compliance of Code of Conduct.
IX. Certificate by Chairman and Managing Director and Chief FinancialOfficer under Regulation 17(8) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 on Financial Statements.
X. Remuneration Policy.
Your Directors record their sincere appreciation of the dedication andcommitment of all employees in achieving and sustaining excellence in all areas of thebusiness. Your Directors thank the Shareholders customers suppliers and bankers andother stakeholders for their continuous support to the Company.
For and on behalf of the Board of Directors T. KANNAN
CHAIRMAN AND MANAGING DIRECTOR
Kappalur Madurai April 27 2018
Management Discussion & Analysis:
The company's Sales Turnover has gone up by Rs142G lakhs from Rs.15043 Lakhs to Rs. 16463 Lakhs registering an increase of 9.44% The Profit afterdepreciation has been marginally down from Rs. 1245 Lakhs to Rs. 1205 Lakhs. Alsodespite an increase in tax provision from Rs.144 Lakhs to Rs.432 Lakhs the Profit aftertax has been only marginally down from Rs.820 Lakhs to Rs.774 Lakhs as set out in theDirectors' Report.
Industry structure and developments has been elaborately stated in theDirector's Report. !
Internal Control Systems has been elaborately stated in the Director'sReport nan Resources:
The Company has a recruitment and training policy to meet its HR needs.The Company's performance on the Industrial Relations front continues to be quitesatisfactory.
Certain statements in the "Management Discussion and AnalysisReport" may be forward looking and are as required by applicable laws andregulations. Many factors may affect the actual results which could be different fromwhat the Directors envisage in terms of the future performance and outlook - the everpresent risk factors.