The Directors have pleasure in presenting their 34th Annual Report
together with Audited Accounts for the year ended 31st March 2012
The financial results for the year under review are summarised below:
Rs.In 000 Rs. In 000
Turnover 12,15,18 34,06,39
Profit /(Loss) before depreciation
and taxation (453.49) 27,32
Depreciation 105,46 107,97
Profit/(Loss) Before Taxation (558.95) (80,65)
Net Profit/(Loss) (558,95) (80,05)
During the year under review, your company achieved a sales turnover of
Rs.1215 lakhs compared to the sales turnover of Rs.3406 lakhs achieved
in the previous year. The steep drop in sales turnover during the
current year can be attributed to non operating unit-l from
November''2011 onwards mainly on account of power problems, obsolete
machinery and non availability of labours. The Industry also faced
severe recession during the year due to change in Government policies
with respect to yarn exports which led to steep drop in yarn
realization compared to increasing cotton prices and non availability
of working capital. The Company made Cash loss of Rs.453 lakhs for the
financial year as against the Cash Profit of Rs.27 lakhs in the
previous year. The company made net loss of Rs.559 lakhs for the
financial year, as against net loss of Rs.81 lakhs for the previous
year. The profit was drastically affected due to steep increase in cost
of raw materials and power and low production caused by shortage of
working capital and stiff competition in the market.
The Company incurred loss in the financial year. In view of this and
the accumulated loss, your directors are unable to recommend any
dividend for the year. Your Directors are confident that, barring
unforeseen circumstances, the company will wipe out the accumulated
loss in a few years and start paying dividend thereafter.
Prospects and Future Plans
The year 2011-12 was a worst year for the Textile Industry. There was
steep increase in cost of raw materials and power, which mainly pushed
up the production cost. Production was low due to lack of working
capital and poor off take in the market caused by stiff competition.
Profit dwindled and performance resulted in loss due to lower selling
prices and the cumulative effect of all factors mentioned above. The
Government''s policy is not conducive to existence and growth of
Textile Industry and the prospects are quite uncertain. Further, the
existing plant and machinery of the company are old and have become
less efficient, compared to new modern machines. The position and
prospects of textile industry being most uncertain, it is not
worthwhile replacing the existing plant and machinery with new modern
machinery incurring huge cost. Your directors are, therefore, seriously
contemplating to delve into new lines of activities, within the Objects
of the company, so as to improve profit, for the benefit of the
shareholders. At the same time, till concrete plans crystallize, your
Directors will continue to run the company with the existing plant and
machinery in the best possible ways so as to improve performance in the
Your company has not accepted any deposits during the period.
There was no change in the Board of Directors during the financial
In accordance with the provisions contained in the Articles of
Association, Mr. Ashok P. Shah retires by rotation at the ensuing
Annual General Meeting and, being eligible, he offers himself for
Directors Responsibility Statement
The Directors confirm that in the preparation of the Annual Accounts
for the year ended 31st March, 2012
(i) the applicable accounting standards had been followed and there
were no material departures,
(ii) the selected accounting policies were applied consistently and
judgments and estimates that are reasonable and prudent were made so as
to give a true and fair view of the state of affairs of the Company at
the end of the financial year and of the loss of the Company for the
(iii) proper and sufficient care had been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities, and
(iv) the annual accounts were prepared on a ''going-concern'' basis.
In terms of listing agreement with the Stock Exchange, Compliance
Report on Corporate Governance is given at Annexure-ll. A certificate
from Auditors of the Company regarding compliance of conditions of
Corporate Governance is also placed as Annexure-lll.
Management Discussion and Analysis of the Operations
The management had a detailed discussion on the operational results for
the year ended 31st March 2012 and analysed the factors that affected
production, sales and profit. The management was satisfied with the
efforts taken in the situation faced by the company and the adverse
market conditions prevailed during the year.
The Auditors of the Company, Messrs. Sankaran & Krishnan, Chartered
Accountants, Chennai are due to retire at the ensuing Annual General
Meeting of the Company. They are eligible for re- appointment. They
have consented to act as the Auditors of the Company, if re-appointed.
a) Particulars of the cost auditors appointed for the Financial Year :
B.Venkateshwar, Cost Auditor, 31/3E, Ramakrishna Nagar,
Kavundampalayam, Coimbatore 641030.
b) Due date for filing of the Cost Audit Report: 30.09.2011.
c) Actual date of filing of the Cost Audit Report by the Financial Year
2010-2011 : 14.11.2011 Personnel
During the year under review, none of the employees of the Company was
in receipt of remuneration which in the aggregate was in excess of the
limits prescribed under Section 217(2A)ofthe Companies Act, 1956 and
the rules framed these under.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
In accordance with the Companies (Disclosure of Particulars in the
Report of the Board of Directors) Rules, 1988, a statement showing
details of Conservation of Energy, Technology Absorption, Foreign
Exchange Earnings and Outgo is enclosed as Annexure - I.
The industrial relations in the Company continued to be cordial during
Your Directors place on record their appreciation of the continued
co-operation and unstinted support extended to the Company by the
Company''s customers, suppliers, employees and shareholders.
By Order of the Board of Directors
for Thambbi Modern Spinning Mills Limited
SALEM Chairman & Managing Director
30th May 2012