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Bannari Amman Spinning Mills Directors Report, Bannari A Spg Reports by Directors
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Bannari Amman Spinning Mills

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Directors Report Year End : Mar '18    Mar 16

Dear Members,

The Directors have pleasure in presenting the 28th Annual Report together with audited accounts of the Company for the year ended 31st March, 2018.

FINANCIAL RESULTS : (Rs. in Lakhs)

2017-2018

2016-2017

Profit before Depreciation

3586.83

4402.52

Less : Depreciation

2823.26

2957.47

Less : Taxes

29.59

324.62

Add : Other Comprehensive Income

2.47

(34.06)

Profit after Tax

736.45

1086.37

Surplus brought forward from last year

3092.02

3309.04

Amount available for appropriation

3828.47

4395.41

DIVIDEND

Your Directors are glad to recommend payment of dividend of Rs.1.60/- per equity share of Rs.10/- each to the equity shareholders @16% of the paid up capital.

IMPLEMENTATION OF INDIAN ACCOUNTING STANDARD (Ind AS)

Financial Year 2017-18 is the first year of implementation of Indian Accounting Standard. The Financial Statements for the year ended 31.3.2018 have been prepared in accordance with the Indian Accounting Standard (Ind AS) notified under Section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 and other relevant provisions of the Act. The Financial Statements for the year ended 31.3.2017 have been restated in accordance with Ind AS for comparative purposes. Detailed information on the impact of the transition from previous GAAP to Ind AS is provided in the annexed Financial Statements.

REVIEW OF OPERATIONS

During the year under the review, the overall turnover of the company increased by 3.01% when compared with the previous year.

After a stable first quarter, the performance of Spinning Unit and Knitting Unit was affected in the second and third quarters due to demand and supply mismatch resulting in sales of finished goods produced out of higher priced cotton at lower values. The performance of the two divisions improved in the fourth quarter as the outlook for Textile sector turned positive.

The performance of Weaving unit and Processing unit was satisfactory during the year. The Home Textile unit of the Company has stabilised its operations and has registered a turnover of Rs.1833 Lakhs. The Company ventured into Retail marketing under brand name ‘Bitz’ for both innerwear and outer Garments. Though the scope is tremendous, the benefits will accrue only slowly due to the inherent nature of the business.

The unit wise performance of the company is furnished below:

Spinning Division

During the year under review, the Spinning mills produced 27617.98 tonnes (28173.57 tonnes) inclusive of purchased quantity 574.48 tonnes (2148.01 tonnes) of Yarn and sold 22701.45 tonnes (23504.00 tonnes) of Yarn.

The sales include 8233.75 tonnes (11006.80 tonnes) by way of Export. The total yarn sales of this division amounted to Rs. 48076.01 Lakhs (Rs.49587.71 Lakhs) of which export sales amounted to Rs.17293.56 Lakhs (Rs.22715.09 Lakhs) constituting 35.97% (45.81%) of the total yarn sales

The Spinning division produced 8217.57 tonnes (8011.01 tonnes) of saleable waste cotton and sold 7913.97 tonnes (8045.74 tonnes) and the total waste cotton sales of this division amounted to Rs.4884.75 Lakhs (Rs.3746.00 Lakhs ).

The Spinning division traded cotton and made a sales of 63.62 tonnes (234.00 tonnes) amounting to Rs. 95.05 Lakhs (Rs. 452.62 Lakhs ).

Weaving Division

The Weaving division specializes in manufacturing wider-width cotton grey woven fabric. During the year under review, 117.80 Lakh metres (117.39 Lakh metres) of Fabric were produced and 101.49 Lakh metres (112.50 Lakh metres) of fabric were sold.

The sales include 29.95 tonnes (30.46 tonnes) by way of Export. The total fabric sales of this division amounted to Rs.8218.19 Lakhs (Rs.9272.78 Lakhs) of which export sales amounted to Rs.2582.60 Lakhs (Rs. 2063.78 Lakhs).

Home Textile Division

During the year under review, the Home Textile division produced 10.81 Lakh pieces (9.73 Lakh pieces) of made ups and sold 10.69 Lakh pieces (10.13 Lakh pieces).

The total sales of this division amounted to Rs.1806.94 Lakhs (Rs.1206.22 Lakhs) which includes fabric sales 4.68 Lakh metres (2.30 Lakh metres) and the sales amounted to Rs. 691.39 Lakhs (Rs. 354.72 Lakhs)

Knitting Division

During the year under review, 8600.98 tonnes (6515.43 tonnes) of Knitted fabric were produced and 7968.18 tonnes (6341.31 tonnes) were sold. The total sales of this division amounted to Rs. 17405.17 Lakhs (Rs.12291.71 lakhs) of which export sales amounted to Rs.10898.44 Lakhs (Rs.6670.71 lakhs).

Processing and Technical Textiles Division

During the year under review, 3727.65 tonnes (2967.82 tonnes) of fabric were processed on job work basis and 709.54 tonnes (1236.55 tonnes) of fabric were produced and 631.27 tonnes (1137.57 tonnes) of fabric were sold. The total fabric sales of this division amounted to Rs. 2704.16 Lakhs (Rs.4711.83 lakhs).

Apparel Division

During the year under review, 33.29 Lakhs (14.93 lakhs) pieces of Garments were produced and sold 14.28 Lakhs (13.58 Lakhs) pieces. The total sales of this division amounted to Rs.1689.31 (Rs.2704.85 Lakhs).

Wind Mill Division

The Company has 4 windmills of 1250 KW each totaling 5 MW in Radhapuram Taluk, Tirunelveli District, Tamilnadu, 25 Nos windmills, each of 800 KW capacity totaling 20 MW capacity in Dharapuram Taluk, Tirupur District and Palani Taluk, Dindigul District, Tamilnadu and 3 Windmills of 1650 KW each in Kongalnagaram, Udumalpet Taluk, Tirupur District, Tamilnadu. The total installed capacity of Windmills is 29.95 MW and the whole of the wind power generated is captively consumed by the Spinning Units and Weaving Unit.

The windmills produced 549.11 Lakh units of power as against 583.71 Lakh units produced in the last year.

PROSPECTS FOR THE CURRENT FINANCIAL YEAR 2018-19

Investment to de-bottleneck the production process in Spinning division was undertaken during the year 2017-18 which will result in the yarn production increasing to 90 tonnes per day from the earlier production of 75 tonnes per day. The increased production has already been achieved from the first quarter of current year 2018-19 onwards and coupled with better product mix the profitability of the Spinning units will improve in the years to come. The contribution from Windmills on overall performance of the Company is dependent on availability of Wind of adequate velocity and its evacuation by TANGEDCO.

The performance of Knitting, Processing, Weaving and Home Textiles divisions have stabilized and hence will continue to contribute to the overall performance of the Company. The Company is focusing on Home Textiles as one of the growth area and developing a range of products to increase business volume and margins from this unit.

The Retail division of the Company set up under the brand name ‘Bitz’ commenced operations during the year 2017-18. The Company has appointed distributors in various cities to market the products. The products have been well accepted by the market for their quality. Though the Company is making all out efforts to increase volume, Retailing is a long term proposition and hence the benefits will accrue to the company gradually.

After the introduction of Goods and Service Tax (GST) from 1st July 2017 onwards, the Government rationalized the Duty Drawback rates, rates under Merchandise Exports from India Scheme (MEIS) and Rebate of State Levies (ROSL) enabling the Industry to revert to normal levels of apparel exports. The policy measures of the Government alongwith improved demand scenario for Textile and Apparel products both in domestic and export markets looks positive for the Company during the current financial year.

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

There are no material changes and commitments affecting the Financial position of the company, subsequent to the end of the Financial Year.

PUBLIC DEPOSITS

The company has no public deposits outstanding at the beginning of the year and, the company has not accepted any deposits within the meaning of Section 73 to 76 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 during the year under review.

CORPORATE GOVERNANCE

In line with requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 your company is committed to the principles of good Corporate Governance and continues to adhere good corporate governance practices consistently.

A separate section is given on Corporate Governance, Management Discussion and Analysis alongwith a certificate from a Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.

ANNUAL RETURN

Annual Return as on Financial Year ended on 31st March, 2018, pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 is posted on the website of the Company viz., www.bannarimills.com

DIRECTORS

During the period under review there were no changes in the Board of Directors.

Sri S V Arumugam, (DIN 00002458) is required to retire by rotation at the ensuing Annual General Meeting, he is eligible for re-appintment and seeks re-appointment.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Companies Act, 2013.

KEY MANAGERIAL PERSONNEL

The Company has appointed the following persons as Key Managerial Personnel :

Name of the person

Designation

Sri S V Arumugam

Managing Director

#

Sri S Seshadri

Chief Financial Officer

Sri N Krishnaraj

Company Secretary

# Appointed as Chief Financial Officer on 27.6.2018, in the casual vacancy caused by the death of Sri C S Balakumar, Chief Financial Officer on 10.6.2018.

The Audit Committee comprises of

1. Sri C S K Prabhu - Chairman (Non- Executive Independent Director)

2. Sri K N V Ramani - Member (Non- Executive Independent Director) and

3. Sri S Palaniswami - Member (Non- Executive Independent Director)

The Board has implemented the suggestions made by the Audit Committee from time to time.

EVALUATION OF BOARD OF DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 (10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Independent Directors at their meeting without participation of non-Independent Directors and management considered and evaluated the Boards'' performance, performance of the Chairman and Managing Director.

The Board has carried out an annual evaluation of its own performance of the individual Directors as well as the Committees of Directors.

BOARD MEETINGS

During the year under review, Six Board Meetings were conducted. The details of the same have been given in the Corporate Governance Report under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forming part of this Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has furnished Corporate Guarantee to Oriental Bank of Commerce by way of security for the credit facilities extended by the bank to Young Brand Apparel Private Limited for a sum of Rs. 11826 lakhs.

ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct or ethics. The policy has been posted in the website of the Company: www.bannarimills.com.

POLICY ON NOMINATION AND REMUNERATION COMMITTEE

The Board of Directors have framed a policy setting out the framework for payment of Remuneration to Directors, Key Managerial Personnel and Senior Management Personnel of the Company. The policy is explained as part of the Corporate Governance Report. The Committee ensures that

a. The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully

b. Relationship of remuneration to performance is clear and meets appropriate performance benchmarks and

c. Remuneration to Directors, Key Managerial Personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

RELATED PARTY TRANSACTIONS

All the related party transactions that were entered into during the financial year in the ordinary course of business and the prices were at arm''s length basis. Hence, the provisions of Section 188 of the Companies Act, 2013 are not attracted. Further no materially significant related party transactions were made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. Hence reporting in AOC-2 is not made. Approval of Audit Committee was obtained for transactions of repetitive nature on annual basis. All related party transactions are placed before the Audit Committee and Board of Directors for their review. The policy on Related Party Transactions is available in the website www.bannarimills.com.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS

There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status and the Company''s operation in future.

DIRECTORS’ RESPONSIBILITY STATEMENT

As stipulated in Section 134 (5) of the Companies Act, 2013 your Directors confirm that:

a) Your Directors have followed in the preparation of the annual accounts, the applicable accounting standards with proper explanation relating to material departures;

b) Your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent 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 profit and loss of the Company for that period;

c) Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) Your Directors have prepared the annual accounts on a going concern basis;

e) Your Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) Your Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

The present Auditors of the Company M/s Deloitte Haskins & Sells LLP, Chartered Accountants, Bangalore (Firm Registration No: 117366W/W-100018), were appointed for a term of 5 years, pursuant to the resolution passed by the members at the Annual General Meeting held on 25th September, 2017. Pursuant to Section 40 of the Companies (Amendment) Act, 2017, the proviso to Section 139 (1) relating to ratification of appointment of Auditors every year has been omitted. Accordingly, the term of office of present Auditors will be continued without ratification.

There is no audit qualification for the year under review.

SECRETARIAL AUDIT

Pursuant to provisions of section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed Mr R Dhanasekaran, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The report is annexed herewith as Annexure - I.

No adverse qualifications/comments have been made in the said report by the Practicing Company Secretary.

COMPLIANCE OF SECRETARIAL STANDARDS

The Company has complied with all applicable Secretarial Standards issued by the Institute of Company Secretaries of India from time to time.

COST AUDITOR

Pursuant to section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules 2014 as amended from time to time, the Board of Directors, on the recommendation of Audit Committee, has appointed Sri M Nagarajan, Cost Accountant, Coimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year 2018 - 2019. As required under the Companies Act, 2013, a resolution seeking members'' approval for the remuneration payable to the Cost Auditor forms part of the Notice convening Annual General Meeting.

JOINT VENTURE, ASSOCIATE AND SUBSIDIARIES

During the year the Company has invested Rs.304.95 lakhs in its Joint Venture Company viz., Young Brand Apparel Private Limited (YBA), thereby making YBA a subsidiary of our company.

The Company has three subsidiaries viz., Abirami Amman Mills Private Limited, Accel Apparel Private Limited and Young Brand Apparel Private Limited, as on 31.3.2018. In accordance with the Section 129 (3) of the Companies Act, 2013 the consolidated Financial Statements of the Company has been prepared which forms part of the Annual Report. A separate statement containing the salient features of the Financial Statements of Subsidiaries in Form AOC-1 (Part A ) is furnished :

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee and to the Chairman and Managing Director of the Company.

The Company has Independent Internal Auditor and an Internal Audit Department which monitors and evaluates the efficiency and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company.

Based on the report of internal audit function, corrective actions are taken in the respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

STATEMENT ON RISK MANAGEMENT POLICY

Pursuant to section 134(3) (n) of the Companies Act, 2013 and Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has constituted a Risk Management Committee. The Committee has developed a Risk Management Policy and implemented the same. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards Report. At present the Company has not identified any element of risk which may threat the existence of the Company.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted Corporate Social Responsibility Committee which shall recommend to the Board, the activities to be undertaken by the Company as specified in schedule VII, recommend the amount of expenditure to be incurred on such activities and monitor the CSR policy of the Company. The company has partially spent the amount stipulated under the requirements of the Act. Corporate Social Responsibility Committee constituted consisting of the following Directors

1. Sri S V Arumugam - Managing Director

2. Sri S Palaniswami - Independent Director

3. Sri K Sadhasivam - Independent Director

The CSR activities and its related particulars is enclosed as Annexure II

STATUTORY DISCLOSURES

I. Conservation of Energy and others - The particulars required to be included in terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 for the year ended 31st March 2018 relating to Conservation of Energy, etc., is enclosed as Annexure III.

II. Remuneration of Directors and other details - The information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors'' Report for the year ended 31st March, 2018 is provided in Annexure IV.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

During the year under review the human relations continued to be very cordial. The Company wishes to acknowledge the contribution of the employees at all levels of the organisation.

The Company has placed an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints for sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The Company has not received any complaints during the year.

ACKNOWLEDGEMENT

Your Directors acknowledge with gratitude the timely assistance and help extended by the Bankers for having provided the required bank facilities. Your Directors wish to place on record their appreciation of the contributions made by the employees at all levels for the excellent performance of your Company.

By Order of the Board

S V ARUMUGAM

Coimbatore Chairman & Managing Director

27th June, 2018 DIN 00002458

Source : Dion Global Solutions Limited
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