DIRECTORS' REPORT Ladies and Gentlemen, Your Directors have pleasure in presenting the Hundred and Fifth year Annual Report together with the audited accounts of the Company for the year ended 31.03.2015 OPERATIONS The Spindles capacity remained at the same level of 1.33 lac spindles throughout the year 2014-15. Overall utilisation remained around 95% - same as that of 2013-14. Your Company continued to outsource fabrics both for exports as well as for domestic markets. Export of yarn and fabric accounted for Rs. 4392 lakhs as against Rs. 1661 lakhs of previous year. The increase was around 164% over previous year performance. The Operational Performance of the Company in the fields of capacity utilisation, productivity and sales realisation were more or less maintained at the levels of last year's achievement. Easy availability of raw materials both Cotton and Polyester fibre throughout the year coupled with relatively favourable market conditions enabled your Company to have a healthy trend in its operations during the year. DIVIDEND The Directors have recommended a dividend of Rs. 15/- per Equity Share of Rs. 100/- each, at 15% for the financial year 2014-2015 (Previous Year - 15%). The Dividend of 15%, if approved at the forth coming Annual General Meeting, will result in the out flow of Rs. 104.33 lakhs to the company in addition to Rs. 21.24 lakhs by way of dividend distribution tax. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND In terms of the Companies Act, any unclaimed or unpaid dividend relating to the financial year 2007-08, will be transferred to the Investor Education and Protection Fund established by the Central Government, after the conclusion of this Annual General Meeting. SHARE CAPITAL The paid up Equity Share Capital as on March 31, 2015 was Rs.6,95,55,000/- comprising 6,95,550 shares of Rs. 100/- each. During the year under review the company has not made any fresh issue of shares. EXTRACT OF ANNUAL RETURN As per the requirements of the Companies Act, 2013, the extract of annual return in the prescribed Form MGT 9 is annexed hereto as Annexure - 1 forming part of this report. BOARD MEETINGS AND ITS COMMITTEES CONDUCTED DURING THE PERIOD UNDER REVIEW During the year under review, 4 Meetings of the Board of Directors, 4 Meetings of the Audit Committee, 3 Meetings of the Nomination and Remuneration Committee, 1 Meeting of the Corporate Social Responsibility Committee and 1 Meeting of the Stakeholders Relationship Committee were held. Further details of the same have been enumerated in the Corporate Governance Report annexed herewith. DIRECTORS' RESPONSIBILITY STATEMENT The Directors confirm that - (a) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from those standards. (b) they 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 of the Company for that period; (c) they have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) they have prepared the annual accounts on a going concern basis; (e) they 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) they had devised proper systems to ensure compliance with the provisions of all the applicable laws and such systems were adequate and operating effectively; DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12) OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT There were no instances of frauds identified or reported by the Statutory Auditors during the course of their audit pursuant to Section 143(12) of the Companies Act, 2013 DECLARATION OF INDEPENDENT DIRECTORS The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under both the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges. NOMINATION AND REMUNERATION COMMITTEE AND POLICY As per the requirements of the provisions of the Companies Act, 2013, a Nomination and Remuneration Committee was constituted by the Board of Directors and the details of the Members of the Committee are disclosed elsewhere in this Annual Report. The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The said Policy is annexed hereto as Annexure - 2 forming part of the Board's Report and the same can also be accessed on the Company's website in the link <http://www.lakshmimills.com/policies.html%23> EXPLANATION AND COMMENTS ON AUDITOR REPORTS The reports of the Statutory Auditors (annexed elsewhere in the Annual Report) and that of the Secretarial Auditors (annexed hereto as Annexure - 3) are self explanatory having no adverse comments. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. The details of the investments made by company are given in the notes to the financial statements. RELATED PARTY TRANSACTIONS All transactions entered into with related parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year 2014-15 were in the ordinary course of business and on an arm's length pricing basis. Since there are no transactions which are not on arm's length basis and material nature the requirement of disclosure of such related party transactions in Form AOC-2 does not arise. The Policy on Related Party Transactions as approved by the Board of Directors of the Company has been uploaded on the Company's website and may be accessed through the link at <http://www.lakshmimills.com/policies.html%23> MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY There is no material change or commitments after the closure of the financial year as on 31.03.2015 and till the date of this report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to conservation of energy, technology absorption, Foreign Exchange Earnings and Outgo as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached herewith as Annexure 4 to this report. RISK MANAGEMENT The Company has a structured risk management policy. The risk management process is designed to safeguard the organization from various risks through adequate and timely actions. It is designed to anticipate, evaluate and mitigate risks in order to minimize its impact on the business. The potential risks are inventoried and integrated with the management process such that they receive the necessary consideration during decision making. CORPORATE SOCIAL RESPONSIBILITY The Board has formed a Corporate Social Responsibility Committee comprising of Sri.S.Pathy, Sri.Aditya Krishna Pathy and Sri.D.Rajendran The Committee at its meeting held on 11th February, 2015, recommended a CSR policy for adoption by the Company in line with the provisions of Schedule VII of the Companies Act, 2013. The CSR policy deals with allocation of funds, activities, identification of programmes, approval, implementation, monitoring and reporting mechanisms for CSR activities. The Annual Report on Company's CSR activities of the Company is furnished in the prescribed format as Annexure 5 and attached to this report. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit and Nomination & Remuneration Committees. The Independent Directors of the Company have also convened a separate meeting for this purpose. All the results and evaluation has been communicated to the Chairman of the Board of Directors. All the Directors of the Board are familiar with the business of the Company. DIRECTORS & KEY MANAGERIAL PERSONNEL At the 104th Annual General Meeting of the company held on 15th September, 2014 the company had appointed Sri.V.Jagannathan, Sri.D.Rajendran, Sri.Satish Ajmera and Sri.V.S.Velayutham as independent directors under the companies Act, 2013 to hold office for five consecutive years or the date of 109th Annual General Meeting, whichever is earlier. Sri.Sanjay Jayavarthanavelu, Director retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. Smt.Suguna Ravichandran appointed as Additional Director of the Company with effect from 11.02.2015 holds office upto the date of this Annual General Meeting. Accordingly, necessary resolution proposing the appointment of Smt.Suguna Ravichandran as an Independent Director of the Company has been included in the Agenda of the Annual General Meeting for the approval of the Shareholders. Your directors recommend their appointment/ re-appointment. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES The Company does not have any joint venture or subsidiary company. However, the company has one associate company namely M/s. LCC Investments Limited. A report containing the salient features of the associate as required under Section 129(3) of the Companies Act, 2013 has been annexed herewith in Form AOC-1 and is attached as Annexure 6 to this report FIXED DEPOSITS Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Further, all the deposits accepted prior to the commencement of the Companies Act, 2013, i.e., 01.04.2014, were fully repaid and no amount remains unpaid as on 31.03.2015. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has adequate internal control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems are periodically reviewed for identification of control deficiencies and formulation of time bound action plans to improve efficiency at all the levels. The Audit Committee of the Board constantly reviews internal control systems and their adequacy, significant risk areas, observations made by the internal auditors on control mechanism and the operations of the Company and recommendations made for corrective action through the internal audit reports. The Committee reviews the statutory auditors' report, key issues, significant processes and accounting policies. AUDITORS STATUTORY AUDITORS M/s.Subbachar & Srinivasan (Firm Registration No.004083S), Chartered Accountants have been appointed as statutory auditors of the company for a period of three years at the Annual General Meeting held on 15.09.2014. Accordingly, pursuant to Section 139 of the Companies Act, 2013, the ratification of appointment of Statutory Auditors is being sought from the shareholders of the Company at the ensuing Annual General Meeting. The auditors have consented and confirmed their eligibility and willingness to continue as Statutory Auditors of the Company. SECRETARIAL AUDITORS Pursuant to the 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. M.D.Selvaraj, MDS & Associates, Company Secretary in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit report is annexed herewith as Annexure 3. COST AUDITORS Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Directors on the recommendation of the Audit Committee have appointed Sri A.R.Ramasubramania Raja, of M/s. A.R.Ramasubramania Raja & Co., a firm of Cost Accountants, as the Cost Auditor of the Company for the financial year 2015 - 16. Pursuant to Section 148 of the Companies Act 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the remuneration payable to the Cost Auditors is subject to the approval of the shareholders in a general meeting. The Board recommends the ratification of their remuneration. CORPORATE GOVERNANCE 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 provided elsewhere in this Report, forms part of the Directors' Report. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has devised a vigil mechanism in the form of a Whistle Blower Policy in pursuance of provisions of Section 177(10) of the Companies Act, 2013 and the policy is explained in corporate governance report and also posted on the website of company and can be accessed at the link <http://www.lakshmimills.com/policies.html%23>. During the year under review, there were no complaints received under this mechanism. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place a policy on Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Compliant Committee has been set up to redress complaints received. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints received from any employee during the financial year 2014-15. PARTICULARS OF EMPLOYEES Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of Companies Act, 2013 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been appended as Annexure 7 to this Report. ACKNOWLEDGEMENT The Board acknowledges the continued assistance from the Bankers, Cotton, Yarn and Cloth Dealers of the Company, Shareholders and Depositors and appreciates 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., S. PATHY Chairman and Managing Director (DIN 00013899) Place : Coimbatore Date : 29th July, 2015 |