Dear Shareholders,
Your Directors hereby present the 60th Annual Report of your Company
along with the financial results for the year ended 31st March, 2022.
State of affairs of the company
a. Financial results
(Rs In lakhs)
| Particulars |
31.03.2022 |
31.03.2021 |
| Revenue from operations |
99,328 |
66,514 |
| PBIDT |
18,877 |
9,314 |
| Less: Finance cost |
2,898 |
3,272 |
| Profit from Operations |
15,979 |
6,042 |
| Other Income |
649 |
570 |
| PBDT |
16,628 |
6,612 |
| Less: Depreciation and Amortisation |
3,253 |
3,317 |
| PBT (Before Exceptional item) |
13,375 |
3,295 |
| Exceptional item |
- |
- |
| PBT (After Exceptional item) |
13,375 |
3295 |
| Less: Tax expenses |
2,280 |
- |
| Deferred Tax |
553 |
- |
| Profit After Tax |
10,542 |
3,295 |
| Other Comprehensive Income |
(291) |
(149) |
| Total Comprehensive Income |
10,251 |
3,146 |
| Add: Opening balance in Retained Earnings including OCI |
15,685 |
12,539 |
| Less: Transfer to General Reserve |
- |
- |
| Closing balance in Retained Earnings |
|
|
| including OCI |
25,936 |
15,685 |
b. Dividend
The Board is glad to recommend a dividend of Rs 6 /-per share (60% on
face value of Rs.10/-each) for the financial year 2021-22.
Industry Overview
FY 2021-22 was a good year for your Company, as well as the Indian
Textile and Clothing Industry. Despite the impact of the second wave of the pandemic in
the first quarter of the financial year, demand remained robust for textile products
throughout the year. That led a to a sustained demand for yarn from both the export and
domestic markets which resulted in significantly better price realization and operating
margins for spinners. While the utilization of our capacities was affected in the first
quarter due to the impact of the second wave of Covid in India, performance remained
strong in the other quarters.
The technical textile division continues to grow in revenues although
the sharp escalation in freight, logistics and packaging costs impacted the bottom line.
The company has entered new markets, notably Canada and Vietnam and expanded its market
share in countries such as Australia and the UK. With utilization of current machines at
close to optimal capacity utilisation, the Company is investing in modern machinery to
increase capacity of finished products.
Review of operations
Your Company registered a turnover of Rs.99,328 Lakhs during FY
2021-22, an increase of 49% compared to the previous year. Turnover increased on account
of better capacity utilization in all units and higher yarn prices. Profit from operations
increased to Rs. 15,978 Lakhs compared to Rs.6,042 Lakhs in the previous year. During the
year under review, Precot has continued to reap the benefits of the improvements in
productivity and product mix that were done in the spinning business during the past few
years. The spinning division continues to reduce reliance on commodity products and
increase production of value-added yarns. Your company has completed the planned
investments in compact spinning and spindle monitoring systems. The technical textiles
division achieved a turnover of Rs.15,704 Lakhs as compared to Rs.13,887 Lakhs in the
previous year.
Outlook for the current year
The abnormal increase in cotton prices is a serious cause for concern.
Lower production in India, logistics problems for shippers and merchants and the 10% duty
levied on the import of cotton are the major reasons for the doubling of Indian cotton
prices in less than a year. Margins of spinning mills are being squeezed as they are not
able to pass on increases in cotton prices since March, 2022 to their buyers. Demand
destruction is also happening for cotton products as retailers are hesitant or unable to
proportionately increase prices and are looking at cheaper alternatives to cotton
products.
Price of commodities other than cotton have also registered sharp
increases which have resulted in higher transport, power, packaging and warehousing costs.
With inflation on the rise, central banks around the world are raising interest rates.
With higher borrowing costs and lower consumer confidence, consumption is bound to be
affected. With most economies and countries opening up post Covid, the service industry
especially travel and hospitality has rebounded sharply. Services will garner a bigger
share of expenditure going forward which will in turn affect spending on manufactured
goods.
Personnel
The Company has been able to continuously maintaining cordial relations
with its labour force in all its units. The Company has 1445 permanent employees on the
roll as on 31s1 March, 2022.
Internal Control Systems & Risk Management
The Company has adequate internal control systems to monitor business
processes, financial reporting and compliance with applicable Regulations. The systems are
periodically reviewed, by the Audit Committee of the Board, for identification of
deficiencies and necessary timely corrective actions were taken to improve the controls at
all levels. The committee also reviews the statutory auditors report, key issues,
significant processes and accounting policies.
Risk Management is an integral part of the business process. The
Company has constituted a Risk Management Committee and adopted a policy on risk
management for identifying, mitigating and managing risk. The Audit Committee of the Board
reviews the risk management policy periodically. The details about composition of the risk
management committee, policy and its terms of reference have been provided in the
Corporate Governance Report attached to this report.
Number of meetings of the Board
Details of number of meetings of the Board and Committees thereof and
the attendance particulars of the Directors in such meetings are provided under the
Corporate Governance Report.
Declaration by Independent Directors
The Independent Directors have submitted their disclosures to the Board
confirming that they fulfill the requirements enumerated under Section 149(6) of the
Companies Act, 2013 (hereinafter "the Act"), and Regulation 25 of The Securities
Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations,2015.
Directors and Key Managerial Personnel (KMP) Appointments, Retirements
and Resignations
Mr. A.P Ramkumar, Chief Financial Officer, resigned on 31st August,
2021 and Mr. Kuppu Dhandapani was appointed as Chief Financial Officer effective from 1st
September, 2021. However, Mr Kuppu Dhandapani sadly passed away on 5th November, 2021 due
to complications after heart surgery. Thereafter Mr J Govind Raju, Head - Accounts, Audit
and Tax has been designated as the Chief Financial Officer of the company effective from
10lh February 2022.
There is no change in the constitution of the board during the year
under review. However, Mr Prashanth Chandran, Managing Director retired by rotation, and
being eligible, offered himself for reappointment and was reappointed as Director at the
AGM held on 17.09.2021.
The Board of Directors at their meeting held on 25 th May, 2022 on the
recommendation of the Nomination and Remuneration committee re-appointed Mr Ashwin
Chandran, as the Chairman and Managing Director, Mr Prashanth Chandran as Vice Chairman
and Managing Director and Mr T Kumar as Executive Director of the company for a term of
three years effective from 01-Apr-2023. Necessary resolutions are being moved at the
ensuing annual general meeting for shareholders approval.
Mr Arun Selvaraj and Dr Vinay Balaji Naidu have been appointed as
Additional Directors (Non-Executive and Independent) of the company by the Board of
Directors at their meeting held on 25th May, 2022 on the recommendation of the Nomination
and Remuneration committee. The Board has recommended the appointment of Mr Arun Selvaraj
and Dr Vinay Balaji Naidu as Additional Directors of the company to hold office till the
conclusion of the ensuing Annual General Meeting. Suitable resolutions are also moved for
the approval of the shareholders for their appointment as Independent Directors for a
period of five years from the date of AGM. Detailed explanatory statement and brief bio
data of the directors are annexed to the notice of AGM.
The following are the whole-time key managerial personnel of the
Company as per Section 203 of the Act as on 31st March,2022,
(i) Mr Ashwin Chandran, Chairman and Managing Director
(ii) Mr J Govind Raju, Chief Financial Officer & (iii) Mrs S
Kavitha, Company Secretary.
Performance Evaluation
The Board of Directors at their meeting held on 9th February, 2022, had
carried out an annual evaluation of its own performance and the performance of the
Committees of the Board and the individual Directors pursuant to the provisions of the Act
and the corporate governance requirements as prescribed by Securities and Exchange Board
of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (hereinafter
"Listing Regulations").
The performance of the Board was evaluated by the Board of Directors
after seeking inputs from all the Directors on the basis of criteria such as Board
composition and structure, effectiveness of the Board meetings and process and
contributions made by the Directors.
The performance evaluation of each Director was done by the entire
Board of Directors, excluding the Director being evaluated, taking into consideration
inputs received from the other Directors, covering various aspects of the Boards
functioning such as active participation and contribution during discussions, effective
deployment of knowledge and expertise towards the growth and betterment of the Company,
impact and influence on the growth of the Company and performance of specific duties,
obligations and governance.
The performance of the committees was evaluated by the Board after
seeking inputs from the committee members on the basis of criteria such as the composition
of the committees and effectiveness of the committee meetings.
In a separate meeting of Independent Directors held on 23rd March, 2022
performance of the non-independent Directors, performance of the Board as a whole and
performance of the Chairman were evaluated, taking into account the views of the executive
Directors and non-executive Directors.
The Board also carried out an evaluation on the performance of the
Independent Directors and also verified the fulfilment of the criteria for independence as
specified under listing Regulations and their independence from the management. This
evaluation of
Independent Directors was done by the entire Board, excluding the
Independent Directors being evaluated.
Policy on Directors appointment and remuneration and other details
The Companys policy on Directors appointment and
remuneration and other matters provided in Section 178(3) of the Act has been disclosed in
the Corporate Governance Report.
Auditors report and Secretarial Auditors report
The auditors report and secretarial auditors report do not
contain any qualifications, reservation or adverse remarks.
During the year under review, neither the Statutory auditors nor the
Secretarial Auditor have reported to the Audit Committee, any instances of fraud committed
against the Company by its officers or employees.
The report of the Secretarial Auditor is furnished as Annexure A and
forms part of this report.
Receipt of commission by Whole Time Directors from the Company or
receipt of commission/remuneration from subsidiary Company
During the year under review all the Executive Directors have received
commission from the Company. They have not received any commission/ remuneration from
subsidiaries during the year under review.
Annual Return
The extract of the annual return pursuant to Section 92 read with rule
12 of the Companies (Management and Administration) Rules, 2014 is available on the
website of the Company www.precot.com under investors.
Secretarial Standards
The Company complies with all the applicable mandatory secretarial
standards issued by the Institute of Company Secretaries of India.
Particulars of Employees
The particulars as required under rule 5 of Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, is provided in Annexure B.
Consolidation of Accounts
The Company has control over "Suprem Associates", a
partnership firm by holding majority of the shares in the firm. The accounts of the said
firm are consolidated as per the requirement of Indian Accounting Standards (IndAS).
Maintenance of Cost Records
The Company is maintaining the cost records as specified under Section
148(1) of the Companies Act, 2013.
Audit Committee
The Company has constituted an Audit Committee as per Section 177 of
the Act and Listing Regulations.
The details pertaining to vigil mechanism, composition and meetings of
the Audit Committee are included in the Corporate Governance Report.
Energy Conservation, Technology Absorption and Foreign Exchange
Earnings and Outgo
The details as required under Section 134(3)(m) of the Act read with
Rule 8 of the Companies (Accounts) Rules, 2014, is detailed in Annexure C.
Corporate Governance
A report on Corporate Governance is furnished as Annexure D and
forms part of this report. This includes other disclosures as required under the
provisions of the Act. The Company has complied with the conditions relating to corporate
governance as stipulated in Regulation 34 of the Listing Regulations.
Corporate Social Responsibility (CSR)
The CSR Committee comprises of 1. Mr Ashwin Chandran, 2. Mr Prashanth
Chandran and 3. Mr Sumanth Ramamurthi. This committee takes care of CSR policy execution
to ensure that the CSR objectives of the Company are met. The CSR policy deals with
allocation of funds, activities, identification of programmes, approval, implementation,
monitoring and reporting. .
For the financial year 2021-22, the Company spent Rs.3.8 lakhs on CSR
activities as per the provisions of the Companies Act. Annual report on Corporate Social
Responsibility is provided in
Annexure E.
The CSR policy is available on the Companys website
http://www.precot.com/investors.
Particulars of Loan, Guarantees or Investments
Details as per the provisions of Section 186 of the Act, is given under
notes to financial statements.
Related Party Transactions
None of the transactions with related parties falls under the scope of
Section 188(1) of the Act. Information on transactions with related parties pursuant to
Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014
are given in Annexure F in Form AOC-2 and the same forms part of this report.
The Board has approved a policy for related party transactions which is
available on the Companys website http://www.precot.com/investors.
Directors responsibility statement
Your Directors confirm that:
a) The applicable accounting standards have been followed and proper
explanations provided relating to material departures, if any,
b) The Company has adopted prudent and consistent accounting policies
so as to give a true and fair view of the state of affairs of the Company,
c) Proper and sufficient care has been taken for maintenance of
adequate accounting records under the provisions of the Companies Act for safeguarding the
assets of the Company and for preventing and detecting fraud and other irregularities,
d) The annual accounts of the Company have been prepared on a going
concern basis,
e) The internal financial controls are adequate and are operating
effectively, and
f) A proper system for ensuring compliance of all the applicable laws
are put in place and are operating effectively.
Statutory Auditors
M/s VKS Aiyer & Co., Chartered Accountants (Firm Registration No.
000066S), pursuant to the provisions of Section 139 of the Act, were appointed as the
statutory auditors of the Company for a term of 5 years from the conclusion of the 56lh
AGM till the conclusion of the 61st AGM to be held in the year 2023. They have confirmed
that they are not disqualified and are eligible to continue in the office for the year
2022-23.
Cost Auditor
Pursuant to Section 148 of the Act, read with the Companies (Cost
Records and Audit) Rules 2014, the Board of Directors, on the recommendation of the Audit
Committee, appointed Mr. R Krishnan, Cost Accountant (Associate regn. no. 7799), as the
cost auditor of the Company for the financial year 2022-23.
Accordingly, a resolution seeking members ratification for the
remuneration payable to Mr R Krishnan, Cost Auditor is included as Item No.12 of the AGM
notice.
Secretarial Auditor
Pursuant to Section 204 of the Act, the Board of Directors has
appointed Mr K Duraisami, Practicing Company Secretary, Coimbatore as the secretarial
auditor of the Company for the financial year 2022-23.
Insider Trading Regulations
Based on the requirements under SEBI (Prohibition of Insider Trading)
Regulations, 2015, the Insider Trading Code to regulate, monitor and report
trading by insiders and the Code of
Practices and Procedures for fair disclosure of Unpublished Price
Sensitive Information are in force.
Change in nature of business
There was no change in the nature of the business of the Company during
the year under review.
Deposits from public
The Company has not accepted any deposits from public and as such, no
amount on account of principal or interest on deposits from public was outstanding as on
the date of the balance sheet.
Debentures
In April, 2022 your company has issued 700 Nos of Unlisted Secured
Redeemable Non-convertible Debentures of 10 lakh each aggregating to 70 crores on
private placement basis to refinance existing term loans and to meet capital expenditure
and for general corporate purpose.
Material Changes
No material changes or commitments affecting the financial position of
the Company occurred between the end of the financial year (i.e.31st March, 2022) and the
date of this report.
Vigil Mechanism/ Whistle Blower Policy
The Company has formulated and published a Whistle Blower Policy to
provide Vigil Mechanism for employees including Directors of the Company to report genuine
concerns and to ensure strict compliance with ethical and legal standards across the
Company. The provisions of this policy are in line with the provisions of the Section
177(9) of the Act and Listing Regulations, are available on the website of the Company at
http://www.precot.com/investors. The details of Whistle Blower Policy forms part of the
Corporate Governance Report annexed with this report.
Disclosure under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
The Company has constituted an internal complaints committee to address
the complaints regarding sexual harassment. All employees are covered under this policy.
The Company has not received any complaints during the year under review. The details
relating to Complaints forms part of the Corporate Governance report.
Details of Application made or any proceeding pending under The
Insolvency and Bankruptcy Code, 2016 during the year
No applications have been made and no proceedings are pending against
the Company under the Insolvency and Bankruptcy Code, 2016 during the year under review.
Details of difference between amount of the valuation done at the time
of one time settlement and the valuation done while taking loan from the banks or
financial institutions along with the reasons thereof
The disclosure under this clause is not applicable as the Company has
not undertaken any one-time settlement with the banks or financial institutions during the
year under review.
Unclaimed Shares
In accordance with the requirement of Regulation 34(3) and Schedule V
Part F of Listing Regulations, the details in respect of equity shares lying in the
suspense account is as follows.
| Particulars |
Number of share holders |
Number of Equity Shares |
| Aggregate number of shareholders and the outstanding shares
in the suspense account as on 01-Apr-2021 |
231 |
44725 |
| Number of shareholders approached the Company for transfer of
shares from suspense account during the year |
25 |
3975 |
| Number of shareholders to whom shares were transferred from
suspense account during the year |
25 |
3975 |
| Aggregate number of shareholders and outstanding shares in
the suspense account as on 31-Mar-2022. |
206 |
40750 |
The voting rights on the shares outstanding in the suspense account as
on 31st March, 2022 shall remain frozen till the rightful owner of such shares claims the
shares.
Acknowledgment
Your Directors thank the Shareholders, Customers, Suppliers and Bankers
for their continued support during the year. Your Directors also place on record their
appreciation for the contributions made by Employees at all levels towards the growth of
the Company.
|
By order of the Board |
| Coimbatore |
Ashwin Chandran |
| 25-May-2022 |
Chairman and Managing Director |
+91-9892691696
