Your Directors have pleasure in presenting the Thirty first Annual Report together withAudited Accounts of the Company for the year ended 31st March, 2012.
| ||Rs. in lakhs |
|FINANCIAL RESULTS ||Financial Year |
| ||2011-2012 ||2010-2011 |
|Profit before Depreciation ||(992.85) ||5567.24 |
|Less: Depreciation ||1870.32 ||1765.98 |
|Profit before Tax ||(2863.18) ||3801.26 |
|Less : Provision for Tax || || |
|- Income Tax - Current year ||0.00 ||726.44 |
|Prior year ||0.00 ||85.81 |
|- Wealth Tax - Current year ||0.00 ||0.00 |
|Prior year ||0.00 ||2.22 |
|- Deferred Tax - Current year ||(920.83) ||1046.01 |
|- MAT Credit Entitlement - Current year ||0.00 ||(719.70) |
|Profit after Tax ||(1942.35) ||2660.48 |
|Add : Surplus brought forward from last year ||327.74 ||43.90 |
|Amount available for appropriation ||(1614.61) ||2704.38 |
|Appropriations : || || |
|Provision for Equity Dividend ||0.00 ||324.07 |
|Provision for Tax on Dividend ||0.00 ||52.57 |
|Transfer to General Reserve ||0.00 ||2000.00 |
|Surplus carried over to Balance Sheet ||0.00 ||327.74 |
|TOTAL ||(1614.61) ||2704.38 |
Your Directors regret to inform that no dividend has been proposed for the current year(last year Rs.376.64 lakhs including Distribution Tax on Corporate Dividend) as theCompany has incurred loss due to external factors .
REVIEW OF OPERATIONS
During the year under review, the textile mills produced 13280.94 tonnes (19066.18tonnes) of yarn and sold 10194.43 tonnes (18516.40 tonnes) of yarn. The sales include4317.22 tonnes (4031.09 tonnes) amounting to Rs.8530.92 lakhs (Rs.8111.76 lakhs) by way ofexport of yarn including Merchant Export. During the year, the Company exported WasteCotton to an extent of 1038.70 tonnes (1088.81 tonnes) amounting to Rs.795.55 lakhs(Rs.487.70 Lakhs). The total sales of the Spinning Division aggregated to Rs.30116.59lakhs (Rs.37729.60 lakhs) of which export sales including waste cotton export amounted toRs.9326.47 lakhs (Rs.8599.46 lakhs) constituting 30.96% (22.84%) of the total revenue.
The Knitting Division with 41 knitting machines produced 1355.56 tonnes of fabric(2101.31 tonnes) and sold 967.99 tonnes (2054.87 tonnes) including 387.91 tonnes (269.36tonnes) by way of export. The Garment Division produced 516288 pieces (423603 pieces) ofGarments and contributed revenue of Rs.1665.44 Lakhs (Rs.1571.41 Lakhs)
The Wind Mills, with an installed capacity of 28.795 produced 419.03 lakh units of WindElectricity as against 436.78 lakh units (28.345 MW) in the last year. Two Wind Mills witha capacity of 0.45 MW which were under sale to Tamil Nadu Electricity Board category, hasbeen shifted to Captive use category during the course of the year, as a result of whichthe entire power generation by Wind Mills is utilized for captive consumption.
Your Directors report that the performance of the textile spinning units was impactedseriously due to various adverse factors which affected the textile industry. The pricesof cotton (raw material) witnessed a wild fluctuation in the cotton season 2010-11.Frequent changes in the policies of the Central Government on yarn export and also exportof cotton, had adverse effect on price realized by sale of yarn and also on the prices ofraw materials. The severe economic crisis and recession in the overseas market had adverseimpact on producers of garments, resulting in subdued demand for yarn in the domesticmarket. Consequently the yarn and the fabric produced by the textile units out of highpriced cotton was sold at a loss during the first six months of the financial year2011-12. Even though the prices of cotton decreased substantially, during the second halfof the year, the Company could not recover the losses in full.
The restriction and control measures of Tamil Nadu Electricity Generation andDistribution Company (TANGEDCO) also caused disruption in production, affecting theutilization and efficiency of spinning production. The spinning units were to operate at ahigher power cost by purchase of power at a higher price from third party.
Hence the Textile Units incurred cash loss on account of reasons described above.Inspite of cash loss suffered, the Company honoured all financial commitments in time forservicing of term loans, by tight control on working capital.
PROSPECTS FOR THE CURRENT YEAR 2012 - 2013
The Spinning units with an aggregate capacity of 89472 spindles have reached optimumproduction level. The scope for increasing capacity utilization in Knitting division isbeing explored to maximise profits from the division. The Garmenting Division hasstabilized the operations and the volume of business is likely to further increase duringthe current year.
Your Company started to make cash profits from the last quarter of the financial year2011-12 and continues to improve upon its performance in the first quarter of 2012-13.With cotton prices expected to remain subdued due to lower offtake by spinning units allover the world, the Company will be able to make reasonable profits in the ensuing period.
However the prospects of the textile industry depends upon revival of the economy anddemand from garment making units both in the domestic and export market, which will stepup the demand for cotton yarn produced by spinning units. Steps have been taken by yourCompany to ensure that the spinning units are insulated from supply constraints ofTANGEDCO to supply electricity. Further steps are being explored to produce value addedyarn and fabrics.
As at the close of the year, there were 50 public deposits involving an amount ofRs.12.06 lakhs remained unclaimed pending receipt of instructions from the depositholders. Subsequently 2 deposits involving an amount of Rs.0.37 lakhs have been repaid orrenewed as per claims received from the deposit holders. As on date 48 deposits involvingan amount of Rs.11.69 lakhs still remain unclaimed for which regular follow up is beingmade to obtain instructions from the deposit holders for repayment. As a policy no freshPublic deposits are accepted and no renewals are made.
In accordance with the provisions of the Companies Act, 1956 the following Directorsretire by rotation at the ensuing Annual General Meeting and are eligible forre-appointment :
(i) Sri S V Arumugam
(ii) Sri S K Sundararaman
(iii) Sri S Marusamy
The Directors recommend their re-appointment.
Dr. S V Balasubramaniam ceased to be a Director of the Company by resignation witheffect from 28.12.2011. The Board wishes to place on record its appreciation for thevaluable services rendered by Dr. S V Balasubramaniam during his long tenure of office asDirector and Chairman and for his guidance in the development and growth of the Company.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Companies Act, 1956 read withCompanies (Particulars of Employees) Rules, 1975 and forming part of the Director's reportis not furnished as none of the employees were drawing remuneration in excess of limitsspecified therein.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars required to be included in terms of Section 217(1) (e) of the CompaniesAct, 1956 with regard to conservation of energy, technology absorption, foreign exchangeearnings and outgo is furnished in Annexure - I and forms part of this report.
DIRECTORS' RESPONSIBILITY STATEMENT
As stipulated in Section 217 (2AA) of the Companies Act, 1956 your Directors confirmthat:
(i) Your Directors have followed the applicable Accounting Standards in the preparationof Annual Accounts;
(ii) Your Directors have selected such accounting policies and applied themconsistently and made judgments' and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year 2011 -2012 and of the Loss incurred by the Company for that period;
(iii) Your Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; and
(iv) Your Directors have prepared the annual accounts on a going concern basis.
A separate section on Corporate Governance, Management Discussion and Analysis and acertificate from the Auditors of the Company regarding compliance of conditions ofCorporate Governance as stipulated under Clause 49 of the Listing Agreement form part ofthis Annual Report.
M/s V K S Aiyer & Co, Chartered Accountants, Coimbatore, the present Auditors ofthe Company retire at the ensuing Annual General Meeting and are eligible forre-appointment.
Sri M Nagarajan, Cost Accountant, Coimbatore has been appointed as Cost Auditor toconduct Cost Audit of the Company for the financial year 2012-2013, subject to approval ofCentral Government.
The relationship with employees continued to remain cordial throughout the year underreview.
Your Directors place on record their sincere thanks to the Bankers who have grantedfinancial assistance to the Company by way of Term Loans, Working Capital Loan and CashCredits and for their continued support. Your Directors also thank the customers anddepositors of the Company for their support and confidence reposed in the Company and tothe employees at all levels for their co-operation and dedication.
| ||By Order of the Board |
|Coimbatore ||S V ALAGAPPAN |
|28th May, 2012 ||CHAIRMAN & MANAGING DIRECTOR |
Annexure to Directors' Report
Annexure - I
Information Pursuant to Companies (Disclosure of Particulars in the Report of Board ofDirectors) Rules, 1988.
A) CONSERVATION OF ENERGY
(a) Energy Conservation Measures taken -
During the year energy saving measures were taken in all sections of the spinning unitsto optimize energy consumption.
(b) Additional Investments and Proposals, if any, being implemented for reduction ofconsumption of energy.
Reduction in consumption of energy is planned and implemented on a continuous basis.
(c) Impact of the measures (a) and (b) above for reduction of energy consumption andconsequent impact on cost of production of goods.
The benefits will be realised over a period of time.
B) Form A-Particulars with respect of energy conservation
I. POWER AND FUEL CONSUMPTIONS
|1 Electricity ||Current Year ||Previous Year |
|(a) Purchased : || || |
|Units(in Lakhs) ||148.10 ||145.21 |
|Amount spent (Rs. in Lakhs) ||982.90 ||779.32 |
|Rate per unit (Rs) ||6.64 ||5.37 |
|b) Own Generation:- || || |
|i) Through Diesel Generator:- || || |
|Total Units produced (in Lakhs) ||27.16 ||62.59 |
|Units produced per litre of diesel (Units) ||4.42 ||3.28 |
|Amount spent (Rs. in Lakhs) ||269.38 ||631.97 |
|Cost per unit (Rs) ||9.92 ||10.10 |
|ii) Through steam turbine/generator ||Nil ||Nil |
|iii) Through Wind Turbine Generator :- || || |
|Total Units produced (in Lakhs) ||369.00 ||371.68 |
|Cost of generation (Rs. in Lakhs) ||1502.70 ||1131.20 |
|Cost per unit (Rs) ||4.07 ||3.04 |
|iv) Through Furnace Oil Generator :- || || |
|Total Units produced (in Lakhs) ||Nil ||0.90 |
|Cost of generation (Rs. in Lakhs) ||Nil ||10.24 |
|Cost per unit (Rs) ||Nil ||11.38 |
|2 Coal || |
|3 Furnace oil || |
|4 Others /Internal Generation ||Nil ||Nil |
II. CONSUMPTION PER UNIT OF PRODUCTION
|Product: COTTON YARN || || |
|Production in MT ||13280.94 ||19066.17 |
|Production in MT converted into 40s count ||9066.24 ||10026.52 |
|Electricity consumed in units (in Lakhs) ||544.25 ||580.38 |
|Electricity consumed per Kg of yarn (Units) ||6.00 ||5.78 |
C) TECHNOLOGY ABSORPTION
Form B-Particulars with respect to absorption of Research and Development (R&D)
|1. Specific areas in which R&D carried out by the Company ||Nil ||Nil |
|2. Benefits derived as a result of above R & D ||Nil ||Nil |
|3. Future Plan of Action || |
|4. Expenditure on R & D ||Nil ||Nil |
|5. Technology absorption, adaptation and innovation || || |
|(i) Efforts in brief, made towards technology absorption, adaptation and innovation ||Nil ||Nil |
|(ii) Benefits derived as a result of above effects ||Nil ||Nil |
|(iii) Imported Technology ||Nil ||Nil |
|D) FOREIGN EXCHANGE EARNINGS AND OUTGO ||Current Year ||Previous Year |
| ||(Rs. in lakhs) ||(Rs. in lakhs) |
|i) Total Foreign Exchange used (CIF Value) ||162.70 ||967.84 |
|ii) Total Foreign Exchange earned (FOB Value) ||10744.60 ||8479.96 |
| ||By Order of the Board |
|Coimbatore ||S V ALAGAPPAN |
|28th May, 2012 ||CHAIRMAN & MANAGING DIRECTOR |