DIRECTORS' REPORT Your directors have great pleasure in submitting the Twenty Seventh Annual Report together with the audited accounts for the year ended 31st March 2015. PERFORMANCE AND STATE OF AFFAIRS The Company's Total Income and Gross profit amounted to Rs.49583 Lakh (Previous year Rs. 47708 Lakh) and Rs.9310 Lakh (Previous year Rs.9128 Lakh). This represents growth in total income of 3.93% as compared to 19.85% in the previous year and growth in Gross Profit of 1.99% as against 34.06% in the previous year. For the year Company's Direct Export Turnover amounted to Rs.28532 Lakh as compared to Rs. 29582 Lakh in the previous year representing a marginal decline of 3.55 % (Previous Year growth of 20.87%) . In terms of percentage the export turnover constituted 58.98% of the net sales as against 64.38% in the previous year. The Company continued its emphasis on its core strength of making speciality yarn made up of superior cotton, offering products to the specific needs of the reputed customers, coupled with product innovation. This has largely contributed to the sustained financial performance of the company. It is relevant to note that the company's focus is to maximize its spindle EBITDA and its spindle EBITDA is one of the best in the standalone spinning industry. During the year the Company has invested Rs.7.88 Crores for further strengthening of the production base and other modernization works which are met out of internal accruals and considerably reduced its long term debt from Rs.61.64 Crores to Rs.16.78 Crores. The Company plans to setup another spinning unit of 30,000 spindles with 100% compact facility consisting of imported and indigenous machinery, together with required value addition in knitting facility at an estimated cost of Rs.130.00 Crores. The major cost of the scheme is proposed to be met out of internal accruals with minimum possible borrowing. TRANSFER TO RESERVES The Company proposes to transfer Rs.10.00 Crores to the General Reserve out of the amount available for appropriation. DIVIDEND The directors are pleased to recommend a dividend of 140% (Rs.14.00/ <http://Rs.14.00/>- per share) for the year ended 31 March 2015 for your approval. The outflow on account of Equity Dividend would be Rs.822.50 Lakh (Previous year Rs. 734.37 Lakh) and dividend tax Rs.167.44 Lakh (Previous year Rs. 124.81 Lakh). The total payout will be Rs.989.94 Lakh (Previous year Rs. 859.18 Lakh). The payout ratio for the year works out to 16.07% as compared to 15.26% (exclusive of dividend tax) on the basis of PAT of FY 2015 & 2014. DIRECTORS Pursuant to the provisions of Section 149 of the Act, Sri K. N. Sreedharan, Dr K. Venkatachalam & Sri R. Soundararaja Perumal, were appointed as Independent Directors at the Annual General Meeting of the Company held on 24th September 2014. IDBI has withdrawn its Nominee Director Sri G.Udayakumar with effect from 25.11.2014, consequent to repayment of its term loan. The Board wishes to place on record its appreciation of the services rendered by Sri G.Udayakumar during his tenure of office. Mrs.Bhavya Chandran retires by rotation and being eligible offers herself for re- appointment. DIRECTORS' RESPONSIBILITY STATEMENT In terms of Section 134 (3) (c) of the Companies Act 2013, your directors state that: - i. In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures; ii. Accounting policies selected have been applied consistently. Reasonable and prudent judgments have been made so as to give a true and fair view of the state of affairs of the Company as at the end of 31 March, 2015 and of the profit of the Company for the year ended on that date; iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; iv. The annual accounts have been prepared on a going concern basis; v. Internal financial controls have been laid down to be followed by the Company and such internal financial controls are adequate and operating effectively; vi. Systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively. MEETINGS OF THE BOARD During the year four Board Meetings were convened and held. The details thereof are given in the Corporate Governance Report. DECLARATION BY INDEPENDENT DIRECTORS The Independent Directors have submitted the Declaration of Independence, as required pursuant to Section 149(7) of the Companies Act,2013, stating that they meet the criteria of independence as provided in sub-section(6). MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis Report covering matters listed in Clause 49 of the Listing Agreement for the year under review is given as a separate statement in the Annual Report. DEPOSITS The Company has not accepted any deposits from the public and therefore furnishing of details in terms of Rule 8(v) &(vi) of Companies (Accounts) Rules ,2014 does not arise. AUDITORS The Auditors, M/ s L.Venkatasubbu & Co., Chartered Accountants, hold office until the conclusion of the ensuing Annual General Meeting. As per the provisions of the Companies Act, 2013, they are eligible to be appointed for a maximum further period of two years. Certificate from the Auditors has been received to the effect that they are eligible to act as auditors of the Company under Section 141 of the Companies Act, 2013 and further submitted the Peer Review Certificate dt: 13.11.2013 issued to them by Institute of Chartered Accountants of India (ICAI). The Board recommends the appointment of L.Venkatasubbu & Co, Chartered Accountants, as auditors of the Company from the conclusion of the ensuing AGM until the conclusion of the next AGM. AUDITORS' REPORT The Auditors' Report to the Shareholders does not contain any reservation, qualification or adverse remark. SECRETARIAL AUDIT The Secretarial Audit for the financial year ended March 31, 2015 is annexed herewith marked as Annexure A to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. INTERNAL FINANCIAL CONTROLS The Company has in place internal financial controls systems, commensurate with the size and nature of its operations to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory compliances. AUDIT COMMITTEE The Audit Committee was constituted by the Board at its meeting held on 31.01.2001. The Committee now comprises of Directors Sri. K.N.Sreedharan, Dr .K.Venkatachalam and Sri.R. Soundararaja Perumal and all of them are Independent Directors. VIGIL MECHANISM /WHISTLE BLOWERPOLICY The Company has in place a vigil mechanism /Whistle Blower Policy for Directors and Employees to report genuine concerns about any wrongful conduct with respect to the Company of its business or affairs. The details of the Vigil Mechanism / whistle Blower Policy are available on the Company's website www.acmills.in CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE The Corporate Social Responsibility Committee was constituted consisting of Directors Sri. P.V.Chandran, Dr.K.Venkatachalam and Sri.R.Soundararaja Perumal as members of the committee. The Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board, the details of the same are made available in the Company's website www.acmills.in. NOMINATION AND REMUNERATION COMMITTEE A Nomination and Remuneration Committee was constituted in place of earlier Remuneration Committee and presently the members of the Committee are Directors Dr. K.Venkatachalam, Sri. R. Soundararaja Perumal & Mrs. Bhavya Chandran. The Company has formulated the policy in this regard prescribing the criteria for determining qualifications positive attributes and independence of a director and the main attribute focused on is positive value creation and contribution in respect of ongoing activities of the Company and its value enhancement with adequate qualifications and independence. Details of the policy are made available in the Corporate Governance Report and in the Company's website www.acmills.in. <http://www.acmills.in.> RISK MANAGEMENT COMMITTEE The Risk Management Committee was constituted consisting of Directors Sri.P.V.Chandran, Dr.K.Venkatachalam and Mrs. Vidya Jyothish Pillai. The company has developed and adopted a detailed Enterprise Risk Management Policy to sustain the operations of the Company and the same is disclosed in the website of the Company, www.acmills.in. STAKEHOLDERS RELATIONSHIP COMMITTEE The Stakeholders relationship committee was constituted consisting of Directors Sri.R.Soundararajaperumal, Mrs. Vidya Jyothish Pillai & Mrs. Bhavya Chandran. The Company has formulated policy for early resolution of stakeholders' grievances and the same is made available in the company's website www.acmills.in. APPOINTMENT OF KEY MANAGERIAL PERSONNEL Sri. M.Vijayakumar was appointed as Chief Financial Officer (CFO) of the Company during the year. SUBSIDIARIES The company does not have any subsidiaries. SIGNIFICANT 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. LOANS, GUARANTEES AND INVESTMENTS The Company has not made any investments or given any loans or guarantees or provided any security in connection with a loan to any person or body corporate, covered under Section 186 of the Companies Act, 2013. RELATED PARTY TRANSACTIONS The Company does not have any related party transactions as defined in Section 188 of the Companies Act, 2013, hence, Form AOC - 2 is not enclosed. MATERIAL CHANGES AND COMMITMENTS There were no Material changes and Commitments affecting the financial position of the Company that have occurred between the end of the financial year 31.03.2015 to which the financial statements relate and the date of this report. CHANGE IN THE NATURE OF BUSINESS There were no changes in the nature of business during the year under review as prescribed in Rule 8(ii) of the Companies (Accounts) Rules, 2014. BOARD EVALUATION The exercise of Board evaluation is to be carried out during the current financial year , as the requirement of the Companies Act, 2013, in this respect is to have composition of Board to have atleast one - third of the total number of directors as Independent Directors by 31.03.2015 and the same has been complied with by the Company. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure - I. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO Particulars relating to Conservation of Energy, Technology absorption, Foreign Exchange Earning and outgo, as required to be disclosed under the Act, are set out in Annexure - II to this report. CSR EXPENDITURE The requirement to spend in this regard is Rs.88.31 lakhs @ 2% of 3 years average net profit of the Company and the Company has spent Rs.91.00 lakhs on various CSR activities which are into (i) Rural Development, (ii) Animal Protection, (iii) Education, (iv) Medical Support, (v) Relief to Poor and the details of expenditure are furnished in Annexure -III to this report. PARTICULARS OF EMPLOYEES: The statement relating to the employees who have drawn remuneration of the category specified in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed in Annexure -IV to this report . Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed in Annexure V to this Report. By order of the Board Sd/- (P.V.CHANDRAN) Chairman and Managing Director DATE : 08/08/2015 PLACE : Coimbatore |