The Directors have pleasure in presenting the Ninety Seventh (97)
Annual Report together with the Audited Accounts of the Company for the
year ended 31st March 2007.
Working Results 31.3.2007 31.3.2006 No. of days worked 356 355 (Rs. in
Lakhs) SALES Domestic 13130.01 14071.66 Export 1034.23 992.84 14164.24
15064.50 Processing Receipts - 23.66 Other Income 860.05 375.14
Increase/(Decrease) in Stocks 681.42 (176.11) 15705.71 15287.19 GROSS
PROFIT 1630.43 1599.19 Less : Depreciation 628.48 559.13 Interest
337.37 965.85 298.97 858.10 Profit before Tax 664.58 741.09 Less :
Taxation Current Tax (MAT) 29.00 45.00 Deferred Tax (Net) 60.64 37.94
Fringe Benefit Tax 17.15 106.79 15.67 98.61 NET PROFIT 557.79 642.48
Add : Transfer from Investment Allowance Reserve 4.25 0.00 Add :
Balance of Profit brought forward from previous year 837.07 413.55
Available for appropriation 1399.11 1056.03 Appropriation General
Reserve 989.20 100.00 Proposed Dividend 83.47 104.33 Corporate Tax on
Dividend 14.19 14.63 Balance carried forward 312.25 837.07 1399.11
The Company is operating around 1.54 lakhs Spindles, 672 Rotors and 245
Looms in three locations.
During the year, the Company achieved a net sales of Rs.141.64 crore.
There was drop in sale by around Rs.9 crore due to drop in production
in Palladam unit on account of modernizing the machines and also due to
very sluggish market conditions during the last quarter of the year.
CURRENT INDUSTRIAL TREND
Due to appreciation of rupee vis-a-vis dollar, export realization has
dropped considerably. We are not competitive enough in exports. Drop in
exports has resulted in domestic market being flooded with Yarn and
Fabrics. Prices have dropped down considerably and that there is huge
accumulation of stocks.
Industry is looking to the Government for support to overcome the
The first phase of modernization of 20160 spindles in Palladam unit has
been completed. The second phase of modernization of 21888 spindles in
Palladam unit is expected to be completed by the end of December 2007
and that the entire 42048 spindles will fully function from 1.1.2008.
Till such time, there will be disturbances in the capacity utilisation
in Palladam unit.
Your Company had entered into an agreement for the purchase of power at
a cost below the TNEB rate and that the power supply has commenced from
the last quarter of the current year. We will achieve savings in power
cost in 2007-2008.
Steps had already been taken to rationalize the work force and that
substantial progress is expected in 2007-08.
The Company has made very satisfactory progress in the marketing of
Micro Modal / Tencel yarns and that there is good demand for the
The marketing of TYCHE LIFE garments has been slow and is now improving
both in domestic and the export market.
Your Company has entered into an agreement with M/s. Noble Fiber
Technologies, USA for the production and marketing of X-Static yarn as
well as fabrics. Your Company is one of the few units which had been
licensed to import, manufacture and market X-static yarn. Quality of
yarn has already been approved and that orders for export of X-static
yarn are in the pipe line. Besides, Bedlinen fabrics and hospital
apparels from out of X-Static yarn has been developed and that approval
of quality is awaited. Fabrics produced out of X-static yarn are odour
free and have anti-bacterial effect and are suitable for hospital
industry. There are good prospects for marketing X-static yarn and
X-static fabrics in the second half of the current financial year.
Though the removal of quota has thrown open the market for global trade
without restriction, yet our competitiveness in prices appears to be a
serious stumbling block in our progress. Our manufacturing cost
continues to be high due to high power cost and low productivity in
labour. Serious steps are warranted in this direction. The industry is
feeling the impact of capacity building without adequate marketing
strategy. High quality yarn as well as fabrics are available but at a
cost which is not competitive in the international market.
Very tough challenges are ahead for the Indian Textile Industry in the
next couple of years. Only efficient Units could play effectively in
the industry beyond 2010.
Your Directors have recommended a Dividend of 12% for the year subject
to the approval of the Banks and Financial Institutions.
In accordance with the Companies Act 1956, and the Articles of
Association, Sri V. Jagannathan, Sri. V.S. Velayutham and Sri. Satish
Ajmera retire by rotation at the ensuing Annual General Meeting and
being eligible, offer themselves for re-appointment.
Sri. K. Sundarams tenure of appointment as Chairman and Managing
Director expires on 31.03.2008. Resolution for his re-appointment as
Chairman and Managing Director is proposed at this Annual General
DIRECTORS RESPONSIBILITY STATEMENT
On the basis of the information furnished by the Company Executives and
the Auditors, the Directors state that :
i. In the preparation of Profit and Loss Account for the period ended
31 st March 2007 and the Balance Sheet as on that date all the
applicable accounting standards have been followed.
ii. Accounting Policies, that are reasonable and prudent, have been
selected and applied consistently 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 the profit of the Company for the period ended 31st March 2007.
iii. The accounting records in accordance with the provisions of the
Companies Act, 1956 and for safeguarding the assets of the Company as
also for preventing and detecting fraud and other irregularities, have
been properly maintained and
iv. The Profit and Loss Account and Balance Sheet have been prepared on
a going concern basis.
Pursuant to clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis Report, Report on
Corporate Governance and Auditors Certificate regarding compliance of
conditions of Corporate Governance are made part of the Annual Report.
There is a disputed claim since 11.09.2000 on the deposit amount of Rs.
15,05,0007- between the legal heirs and is pending before the Principal
District Munsif Court, Coimbatore. Further an amount of Rs.5,000/-
The Companys Auditors, M/s. Subbachar & Srinivasan and M/s. Fraser &
Ross are to retire at the ensuing Annual General Meeting and are
eligible for re-appointment.
The Companys Assets have been adequately insured.
The particulars required to be furnished under the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules
1988 are set out separately and form part of this Report.
During the year under review, there was no employee drawing
remuneration in excess of the amount prescribed under section 217 (2A)
of the Companies Act, 1956.
The Board acknowledges the continued assistance from Industrial
Development Bank of India, Bankers, Cotton, Yarn and Cloth Dealers of
the Company, Shareholders and Depositors and appreciate the valuable
services rendered by the employees at all levels.
May the Goddess Lakshmi continue to shower her choicest Blessings for
the prosperity of the Company in the years to come.
By Order of the Board
For THE LAKSHMI MILLS CO. LTD.,
Coimbatore K. SUNDARAM
30th July 2007 Chairman