TO THE MEMBERS
Your Directors have pleasure in presenting their 88th Annual Report and the Audited Accounts of the Company for the year ended 31st March, 2024.
1. FINANCIAL RESULTS
The financial results for the year ended 31st March, 2024 after charging all expenses but before deducting finance cost and depreciation have resulted in operating profit (EBITDA) of
Rs. 10,718.45 Lakhs against Rs. 15,253.40 Lakhs for the previous financial year 2022-23. Summary of Separate Financial Results of the Company is furnished below:
(Rs. in Lakhs)
Financial Results - Separate |
Year ended 31-03-2024 | Year ended 31-03-2023 |
Revenue |
87,579.86 | 88,231.85 |
Operating Profit : |
||
Profit before Interest, Depreciation and Tax (PBIDT) |
10,718.45 | 15,253.40 |
Less: Interest |
7,403.01 | 5,505.72 |
Profit before Depreciation and Tax (PBDT) |
3,315.44 | 9,747.68 |
Less: Depreciation |
6,733.13 | 5,661.90 |
Profit / (Loss) before Exceptional Items |
(3,417.69) | 4,085.78 |
Exceptional Items |
5,762.02 | 742.49 |
Profit Before Tax |
2,344.33 | 4,828.27 |
Less: Tax Expenses |
||
Current Tax |
| 155.00 |
Excess Income Tax Provision related to earlier years withdrawn |
(0.25) |
(15.56) |
Deferred Tax Expenses / (Savings) |
(485.72) | 450.60 |
Profit After Tax |
2,830.30 | 4,238.23 |
Other Comprehensive Income / (Loss) for the Year (Net of |
Tax) 78.98 | (23.31) |
Total Comprehensive Income for the Year (TCI) |
2,909.28 | 4,214.92 |
2. SHARE CAPITAL
The Paid-up Capital of the Company is Rs. 922.02 Lakhs (PY: Rs. 922.02 Lakhs) consisting of 92,20,200 Shares of Rs. 10/- each.
3. DIVIDEND
Your Directors have pleasure in recommending a Dividend of Rs. 0.60 per share (PY: Rs. 1/- per share). The total amount of Dividend outgo for the year will be Rs. 55.32 Lakhs (PY: Rs. 92.20 Lakhs).
As per Income Tax Act, 1961, the dividend will be taxable in the hands of the Shareholders and the Company will make the payment of dividend after deducting applicable TDS. The distribution of dividend works out to 2% of Net Profit after tax for the financial year 2023-24.
As per the Dividend Distribution Policy of the Company, it shall strive to distribute atleast 5% of the post-tax profit as Dividend in each financial year. The Company proposes a Dividend payout at 2% of the Net Profit after tax in order to conserve cash for repayment of term loan and to fund the incremental working capital requirements caused by wide fluctuation in the cotton and yarn prices. The Policy is available on the website of the Company under web link: https://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/dividend-distribution-policy.pdf
4. TRANSFER TO GENERAL RESERVE
After appropriations, a sum of Rs. 2,000 Lakhs (PY: Rs. 2,500 Lakhs) has been transferred to General Reserve for the financial year 2023-24. As on 31-03-2024, the General Reserve stands at
Rs. 29,500 Lakhs (PY: Rs. 27,500 Lakhs).
5. TAXATION
The Company has opted to pay tax under Section 115BAA of the Income Tax Act, 1961. The Company is not liable to pay income tax and not provided any amount towards current tax provision. However, the Company has withdrawn an excess provision of taxes of Rs. 0.25 Lakhs (PY: Rs. 15.56 Lakhs). Deferred Tax of Rs. 485.72 Lakhs has been withdrawn for the financial year 2023-24 (PY: Deferred Tax Provided for Rs. 450.60 Lakhs).
6. MANAGEMENT DISCUSSION AND ANALYSIS
TRADE CONDITIONS 6.1 COTTON
The cotton production in India for the cotton season 2022-23 (October to September) was 319 Lakh bales (170 Kgs), compared to 307 Lakh bales produced in the previous cotton season, representing a 4% increase. However, due to sluggish market demand for cotton yarn, the cotton price remained range-bound between Rs. 57,000 to Rs. 62,000 per candy.
At the beginning of the cotton season 2023-24, the CAI estimated the cotton crop for the new season to be 294 Lakh bales (compared to the previous years 319 Lakh bales). However, the actual cotton arrivals in the market reached 310 Lakh bales. The Cotton Corporation of India (CCI) covered 33 Lakhs bales during 2023-24 and further increased the MSP price per quintal of medium staple cotton and long staple cotton by 9% and 10% respectively. Despite some price correction in cotton, the fall in yarn prices was much sharper, leading to a wider disparity that affected the margins of yarn spinners across India.
The Company strategically shifted its focus to more value-added counts, and imported more high-quality cotton when prices were at reasonable levels. This strategy helped the company procure diversified varieties of cotton from across the globe and offer competitive prices for its yarn. In February 2024, the Government of India exempted Customs duty on the import of Extra Long Staple Cotton exceeding 32 mm, enhancing the competitiveness of Indian exporters for premium products.
6.2 YARN PRODUCTION
The production volume has decreased to 128.67 Lakhs Kgs during the financial year 2023-24 as against 137.60 Lakhs Kgs of last year due to drop in capacity utilization.
6.3 SALE OF YARN
During FY 2023-24, the Companys sale volume was 127.24 Lakh Kgs as against 127.51 Lakh Kgs of previous year. The sale value of yarn has decreased to Rs. 656.97 Crores during the FY 2023-24 as compared to Rs. 678.64 Crores of last year.
Due to geopolitical challenges and sluggish market demand for cotton yarn, there was severe hit in margins for Spinning Mills. This situation forced many spinning mills across India to operate at lower capacity, with many spinning mills cutting down their production due to huge losses in yarn production. However, the Companys focus on producing a flexible and wide range products helped it to protect its sales volume during this sluggish period. Further, the red sea crisis has caused significant impact on Exports resulting higher freight cost, insurance cost and shipping delays.
The Companys focus on strengthening its infrastructure to produce diverse products, including various high-quality value-added yarn and collaborating with customers to manufacturer innovative products helped it maintain capacity utilization and sales volume in export market. Sales volume of value-added yarn such as Elitwist, Gassing, High twist, Melange, Core yarn and Mercerized yarn increased to 2,945 Tonnes during the FY 2023-24, a 11% growth from 2,650 Tonnes during the previous year.
6.4 EXPORTS
The Company has made export of Cotton Yarn (including merchant exports) during the financial year 2023-24 with a value of Rs. 279.74 Crores compared to Rs. 325.99 Crores in the previous year. The Companys focus on Product enhancement through technology advancement, traceability of entire production process, continuous customer-centricity and production of unmatched quality helped it to maintain export volume.
Your Directors are thankful to M/s. Asahi Kasei Advance Corporation, M/s. Doko Spinning Co. Ltd., and M/s. Unitika Ltd., Japan for their continued support and efforts towards promoting exports to Japan.
6.5 FABRIC DIVISION
The Fabric Unit, commissioned during FY 2020-21, is currently operational with a capacity of 154 looms. During the year, the Company expanded its loom capacity by installing an additional 174 looms and commenced commercial production on 01-09-2023. Furthermore, it established fabric finishing capacity capable of producing 50,000 meters of finished fabrics per day.
In terms of production and sales, the Fabric unit manufactured 119 Lakhs Meters of Fabric (compared to the previous years 96 Lakhs Meters) and sold 122 Lakhs Meters of Fabrics (compared to the previous years 95 Lakhs Meters). The total revenue generated by the Fabric unit for the financial year 2023-24 amounted to Rs. 190.82 Crores (compared to the previous years Rs. 170.93 Crores). The increase in volume can be attributed to the expansion of loom capacity. Additionally, the export turnover of Fabric for the financial year 2023-24 was
Rs. 69.38 Crores (compared to the previous years Rs. 64.45 Crores).
The quality of fabric produced by the Company has been well accepted both in domestic and export markets, leading to numerous enquiries from leading brands across the globe for the supply of processed fabric. Given the encouraging demand for the Companys quality fabric, the Company is confident that the new expansion will achieve full utilization of machinery within a short period.
6.6 POWER COST
During the financial year 2023-24, the Company was able to consume power from its own wind farms to the extent of 56% (PY: 55%) of the total power requirement. The power cost increased during the financial year 2023-24 to Rs. 53.17 Crores, compared to Rs. 50.95 Crores in the previous year, due to increase in power consumption on account of enhanced fabric capacity and increase in the power tariff by Tamil Nadu Electricity Board (TNEB). In order to mitigate the higher power cost, the Company made arrangements with Solar Power developers for supply of 17 MW of power on long term basis at a fixed cost under group captive arrangement, which is cheaper as compared to TNEBs Rate. The expected full potential of Solar power will be reflected in the next financial year.
6.7 FINANCE COST
The finance cost of the Company increased to Rs. 74.03 Crores during the financial year 2023-24 from Rs. 55.06 Crores in the previous financial year. The increase is attributed to additional borrowings for expansion and modernization programs and general trend of increasing interest rates. A similar trend was observed globally, which made the cost of foreign currency denominated borrowings equal to working capital loans availed in Indian Rupee.
In addition to the increase in interest rates, additional working capital requirements, enhanced Fabric capacity and additional term loan borrowings had resulted in an increased outflow of finance costs during the FY 2023-24 compared to FY 2022-23.
6.8 DIVIDEND INCOME
During the financial year 2023-24, the Company received dividend income of Rs. 7.24 Crores (PY: Rs. 11.56 Crores) and the particulars of dividend received are provided under Note No.50(a) (ix).
6.9 KEY FINANCIAL RATIOS
Pursuant to Schedule V(B) of SEBI (LODR) Regulations, 2015, the Key Financial Ratios for the year 2023-24 are given below:
S. No. Particulars |
31-03-2024 |
31-03-2023 |
Variation in % |
Formula adopted |
1 Debtors Turnover Ratio (Days) |
69 |
56 |
23 |
365 Days / (Net Revenue / Average Trade Receivables) |
2 Inventory Turnover Ratio (Days) |
146 |
130 |
12 |
365 Days / (Net Revenue / Average Inventories) |
3 Interest Coverage Ratio |
1.12 |
1.52 |
-26 |
(Profit Before Tax + Interest) / (Interest + Interest Capitalised) |
4 Current Ratio |
1.04 |
0.98 |
6 |
Current Assets / (Total Current Liabilities |
- Other Financial Liabilities - Current maturities of Long Term Debt) |
||||
5 Debt - Equity Ratio |
2.23 |
2.44 |
-9 |
Total Debt / Total Equity |
6 Operating Profit Margin |
12% |
18% |
-33 |
EBITDA / Net Revenue |
7 Net Profit Margin |
3% |
5% |
-40 |
Net Profit / Net Revenue |
8 Return on Net worth |
6% |
10% |
-40 |
Total Comprehensive Income / Average |
Net worth |
||||
9 Total Debt / EBITDA |
10.08 |
7.27 |
39 |
Total Debt / EBITDA |
10 Return on Capital Employed |
6% |
6% |
- |
(TCI + Interest)/ (Average of Equity plus |
Total Debt) |
||||
11 Price Earnings Ratio |
29 |
12 |
142 |
Market Price per share as at 31st March |
/ Earning per share |
Note: EBITDA denotes Profit Before Tax + Interest + Depreciation
Reason for variations in excess of ? 25%:
a) The decline in Interest Coverage Ratio, Operating Profit Margin, Net Profit Margin, Return on Net worth and Increasing in Total Debt / EBITDA Ratio is due to reduced operating margin on account of general slowdown in the textile industry.
b) PE Ratio increased due to decrease in profitability and increase in Market price per share as at 31st March, 2024.
7. MODERNISATION / EXPANSION
As previously reported, the implementation of looms expansion and establishment of fabric processing unit has been completed and both the projects were commissioned during the current fiscal year 2023-24. After considering the above expansion of 174 Looms, the present Loom capacity is 328 Looms and Fabric finishing capacity is 50,000 meters of finished fabric per day. The Company has invested an amount of Rs. 334 Crores for loom expansion and establishment of fabric processing unit.
In addition to this, the Company has also invested an amount of Rs. 37 Crores in modernizing textile machines / equipment which includes replacement of back process machineries, civil structures for Mercerization plant and improvement of electrical infrastructure (110KV Sub-station).
The total capital expenditure spent by the Company during the FY 2023-24 for these projects was
Rs. 374 Crores which has been funded from proceeds of Rights Issue, internal accruals and term loan from Banks.
8. PROSPECTS FOR THE CURRENT YEAR
The volatility in cotton prices continues, with prices of both cotton and yarn experiencing wide fluctuations. According to data published by the Foreign Agricultural Service of USDA, world cotton production for the 2024-25 season is expected to increase by 3.30%, while global cotton consumption is projected to grow by 3.10%. This is expected to be supported by better crop availability of imported cotton, especially extra-long staple cotton, which will benefit exporters producing premium value-added products.
The company is continuously monitoring various process parameters and implementing various system controls to deliver consistent quality yarn and fabric to end customers and leading brands. Strengthening its product lines with more value-added customized yarn counts such as Mercerized Yarn, M?lange Yarn, and Core Yarn will help the Company mitigate the impact of falling demand for commodity counts. Over the last 5 years, the volume of value-added products has increased from 12% to 37%.
The companys modernization of spinning mills and forward integration by setting up fabric manufacturing and fabric processing facilities are expected to drive top-line growth and protect margins during the current year. The companys efforts to adopt sustainable manufacturing processes, including the reuse of water, zero-liquid-discharge systems, and bio-treatment of wastewater for recycling, ensure environmental sustainability, positioning the Company among the top-rated textile companies globally. The synergies between the companys spinning and fabric capacities are expected to enable the offering of a wide range of textile products with quick turnaround times in the coming years. The Company has secured "A Grade" in Social Audit Compliances and leading brands in domestic and international markets are approaching the company for sourcing yarn and fabric. The company is confident that these measures will contribute to decent growth in its top line and sustainable profitability in the years ahead.
9. WINDMILL
The Company has windmills with installed capacity of 35.15 MW for its captive power consumption. During the financial year 2023-24, the wind farm generated 608 Lakhs Kwh, which is higher than 578 Lakhs Kwh generated in the previous year. This was due to good wind availability / velocity during the current year. All the units generated by the windmills were adjusted for captive consumption at the Companys Spinning / Fabric Division. The income generated by the windmill division during the year was Rs. 43.77 Crores, as compared to Rs. 39.09 Crores in the previous year.
10. ASSOCIATE COMPANY
The Company has three Associate Companies: M/s. The Ramco Cements Limited, M/s. Ramco Industries Limited and M/s. Ramco Systems Limited.
As per Rule 5 of Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial statements of the Companys Associates is attached in Form AOC-1 as Annexure - I.
CONSOLIDATED FINANCIAL STATEMENTS
As per provisions of Section 129(3) of the Companies Act, 2013 and Regulation 34 of SEBI (LODR) Regulations, 2015, Companies are required to prepare consolidated financial statements of its Subsidiaries and Associates to be laid before the Annual General Meeting of the Company.
Accordingly, the consolidated financial statements incorporating the accounts of Associate Companies, viz. M/s. The Ramco Cements Limited, M/s. Ramco Industries Limited, M/s. Ramco Systems Limited, along with the Auditors Report thereon, form part of this Annual Report. As per Section 136 (1) of the Companies Act, 2013, the Financial Statements including Consolidated Financial Statements are available on the Companys website at the following link:https://www.rajapalayammills.co.in
The consolidated profit of the Company amounted to Rs. 4,436.42 Lakhs for the year ended 31st March, 2024 as compared to Rs. 8,188.36 Lakhs of the previous year.
The Consolidated Total Comprehensive Income for the year under review is Rs. 6,083.37 Lakhs as compared to Rs. 8,253.23 Lakhs of the previous year.
11. INTERNAL FINANCIAL CONTROLS
In accordance with Section 134(5)(e) of the Companies Act, 2013, the Company has Internal Financial Controls Policy by means of Policies and Procedures commensurate with the size & nature of its operations and pertaining to financial reporting. In accordance with Rule 8(5)(viii) of
Companies (Accounts) Rules, 2014, it is hereby confirmed that the Internal Financial Controls are adequate with reference to the financial statements. The ERP System developed by Ramco Systems Limited has been installed for online monitoring of all functions and management information reports are being used to have better internal control system and to make timely decisions.
12. VIGIL MECHANISM / WHISTLE BLOWER POLICY
In compliance with Section 177(9) and (10) of the Companies Act, 2013 and Regulation 22 of SEBI (LODR) Regulations, 2015, the Company has established a Vigil Mechanism and Whistle Blower Policy. The Policy provides a mechanism for the receipt, retention and treatment of complaints and to protect the confidentiality and anonymity of the stakeholders. The complaints can be made in writing and dropped into Whistle Blower Drop Boxes or sent through e-mail to dedicated e-mail addresses accessible only by the Corporate Ombudsman. The Policy also provides complainants with access to the Chairman of the Audit Committee. The web link for the Vigil Mechanism is disclosed in the Corporate Governance Report.
13. DIRECTORS
During the year, Shri B. Gnanagurusamy resigned from the position of Chief Financial Officer & Key Managerial Personnel of the Company with effect from 30-09-2023. Shri A. Arulpranavam demit the office of Company Secretary with effect from 10-11-2023 and based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors appointed Shri A. Arulpranavam as Chief Financial Officer & Key Managerial Personnel of the Company with effect from 11-11-2023. Based on the recommendation of the Nomination and Remuneration Committee and the Board of Directors Shri K. Maheswaran has been appointed as Company Secretary & Compliance Officer with effect from 09-01-2024.
The following Independent Directors retired on 31-03-2024 after completing their term of two consecutive five years each in the office:
1. Justice Shri. P.P.S. Janarthana Raja (DIN: 06702871)
2. Shri N. K. Ramasuwami Raja (DIN: 00432698)
3. Shri V. Santhanaraman (DIN: 00212334)
Based on the recommendations of the Nomination and Remuneration Committee and the Board of Directors, the Shareholders through Postal Ballot process have approved the appointment of following Independent Directors for a term of 5 consecutive years from 01-04-2024 to 31-03-2029:
1. Shri M. Rathinasamy (DIN: 10391134)
2. Shri Sivaguru Chellappa (DIN: 01309727)
3. Shri N.S. Krishnamma Raja (DIN: 01655571)
In the opinion of the Board, the above Independent Directors possess integrity, expertise and experience for being appointed as an Independent Director.
According to the provisions of the Companies Act, 2013 and the Memorandum and Articles of Association of the Company, the following Directors will retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment:
1. Shri S.S. Ramachandra Raja (DIN: 00331491)
2. Shri A.V. Dharmakrishnan (DIN: 00693181)
Pursuant to Rule 8(5)(iii) of Companies (Accounts) Rules, 2014, there have been no changes in the Directors or Key Managerial Personnel during the year, except as mentioned above.
The Independent Directors hold office for a fixed term of 5 years from the date of their appointment and are not liable to retire by rotation.
The Company has received necessary declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013, stating that they met the independence criteria provided in Section 149(6) of the Companies Act, 2013.
Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013. The Company has formulated a Code of Conduct for the Directors and Senior Management personnel, which has been complied with.
The Audit Committee has four members, out of which three are Independent Directors. Pursuant to Section 177(8) of the Companies Act, 2013, it is reported that there has not been an occasion, where the Board had not accepted any recommendation of the Audit Committee.
The Company has a policy relating to appointment and remuneration of Directors, Key Managerial Personnel and other employees duly approved by the Board of Directors, based on the recommendation of the Nomination and Remuneration Committee, in accordance with Section 178(3) of the Companies Act, 2013.
As per Provision to Section 178(4), the salient features of the Nomination and Remuneration Policy should be disclosed in the Boards Report. Accordingly, the following disclosures are given:
Salient Features of the Nomination and Remuneration Policy:
The objective of the Policy is to ensure that:
(a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully;
(b) the relationship of remuneration to performance is clear and meets the appropriate performance benchmarks;
(c) remuneration to directors, key managerial personnel and senior management involves balance between fixed and incentive pay reflecting short and long term performance objectives shall be appropriated to the working of the Company and its goals.
The Nomination and Remuneration Committee and this Policy are in compliance with the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The web address of the Policy is https://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/nomination-and-remuneration-policy.pdf
As required under Regulation 25(7) of SEBI (LODR) Regulations, 2015, the Company has programmes for familiarisation for the Independent Directors about the nature of the industry, business model, roles, rights and responsibilities of Independent Directors and other relevant information. As required under Regulation 46(2)(i) of SEBI (LODR) Regulations, 2015, the details of the Familiarisation Programme for Independent Directors are available at the Companys website, at the following link -
https://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/familiarisation-programme-for-independent-directors-31-03-2024.pdf
The details of familiarization programme are explained in the Corporate Governance Report also.
14. EVALUATION OF BOARD
Pursuant to Section 134(3)(p) of the Companies Act, 2013, and Regulation 25(4) of SEBI (LODR) Regulations, 2015, Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, Performance of the Board as a whole and its Members and other required matters.
Pursuant to Schedule II, Part D of SEBI (LODR) Regulations, 2015, the Nomination and Remuneration Committee has laid down evaluation criteria for performance evaluation of Independent Directors, which will be based on attendance, expertise and contribution brought in by the Independent Director at the Board Meeting, which shall be taken into account at the time of re-appointment of Independent Director.
Pursuant to Regulation 17(10) of SEBI (LODR) Regulations, 2015, the Board of Directors have evaluated the performance of Independent Directors and observed the same to be satisfactory and their deliberations beneficial in Board / Committee meetings.
As per Section 178(2) of the Companies Act, 2013, the Board of Directors have evaluated the performance of the Committees of the Board.
Pursuant to Regulation 4(2)(f)(ii)(9) of SEBI (LODR) Regulations, 2015, the Board of Directors have reviewed and observed that the evaluation frame work of the Board of Directors was adequate and effective.
The Boards observations on the evaluations for the year under review were similar to their observations for the Previous year. No specific actions have been warranted based on current year observations. The Company would continue to familiarize its Directors on the industry, technological and statutory developments, which have a bearing on the Company and the industry, so that Directors would be effective in discharging their expected duties.
15. MEETINGS
During the year, six Board Meetings were held. The details of the Meetings of the Board and its various Committees held during the financial year including the number of meetings attended by each Director are given in Corporate Governance Report.
16. SECRETARIAL STANDARD
As required under Clause 9 of Secretarial Standard 1, the Board of Directors confirms that the Company has complied with applicable Secretarial Standards.
17. PUBLIC DEPOSITS
Pursuant to Rule 8 (5)(v) & (vi) of Companies (Accounts) Rules, 2014, it is reported that the Company has not accepted any deposit from public during the financial year under review. There was no outstanding of deposits as on 31-03-2024 (Previous year: NIL). The Company has no deposit, which is not in compliance with the Chapter V of the Companies Act, 2013.
18. ORDERS PASSED BY REGULATORS
Pursuant to Rule 8(5)(vii) of Companies (Accounts) Rules, 2014, it is reported that, no significant and material orders have been passed by the Regulators or Courts or Tribunals, impacting the going concern status and Companys operations in future.
19. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
Pursuant to Section 186(4) of the Companies Act, 2013, it is reported that:
(a) the particulars of loans are provided under Note No. 50(b)(i).
(b) the particulars of the guarantees and investments are provided under Note No. 50(b)(iii) and Note No. 12 & 13 respectively of Notes forming part of financial statements. The guarantees are provided to secure the loans from Banks / Financial Institutions at a competitive pricing by the borrowers.
20. CORPORATE SOCIAL RESPONSIBILITY
In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors have constituted a Corporate Social Responsibility (CSR) Committee and adopted a CSR Policy which is based on the philosophy that "As the Organization grows, the Society and Community around it also grows."
The Company has undertaken various projects in the areas of eradication of hunger, promotion of healthcare including preventive healthcare, education, restoration of buildings and sites of historical importance etc., largely in accordance with Schedule VII of the Companies Act, 2013.
The CSR obligations pursuant to Section 135(5) of the Companies Act, 2013, for the year 2023-24 is Rs. 20.89 Lakhs. As against the requirement, the Company has spent an amount of
Rs. 7.31 Lakhs. Corporate Social Responsibility Committee and the Board of Directors had accorded its approval for set-off of excess amount spent under CSR activities against the future CSR obligations and pursuant to such approval the Company has set-off an amount of Rs. 13.58 Lakhs from the excess spent in the FY 2021-22 against the obligation of current year. The Company had also spent a sum of Rs. 4.64 Lakhs (PY: Rs. 5.53 Lakhs) on other social causes and projects, which do not qualify as CSR expenditure under the classifications listed out in Schedule VII of the Companies Act, 2013.
The CSR policy is available at the Companys website at the following link:
https://www.rajapalayammills.co.in/wp-content/uploads/2022/07/corporate-social-responsibility-policy.pdf
The Annual Report on CSR activities as prescribed under Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as Annexure - II.
21. AUDITS
STATUTORY AUDIT
M/s. N.A. Jayaraman & Co. Chartered Accountants (FRN: 001310S) and M/s. SRSV Associates, Chartered Accountants (FRN: 015041S), whom have been appointed as the Statutory Auditors of the Company for second term of five consecutive years at the 86th Annual General Meeting, would be the Auditors of the Company till the conclusion of 91st Annual General Meeting to be held in the year 2027.
As required under Regulation 33(1)(d) of SEBI (LODR) Regulations, 2015, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
The report of the Statutory Auditors for the year ended 31st March, 2024 does not contain any qualification, reservation or adverse remark and no instance of fraud has been reported by Auditors under Section 143(12) of the Companies Act, 2013.
SECRETARIAL AUDIT
Shri M.R.L. Narasimha, a Practicing Company Secretary is the Secretarial Auditor of the Company. Pursuant to Section 204(1) of the Companies Act, 2013, the Secretarial Audit Report submitted by the Secretarial Auditor for the year ended 31st March, 2024 is attached as Annexure - III. The report does not contain any qualification, reservation or adverse remark.
COST AUDIT
As per Section 148(1) of the Companies Act, 2013 read with Rule 3 of Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost records and accordingly such records and accounts are made and maintained.
The Board of Directors had approved the appointment of Shri M. Kannan, Cost Accountant as the Cost Auditor of the Company to audit the Companys Cost Records relating to manufacture of textile products for the year 2024-25 at a remuneration of Rs. 2,25,000/- (Rupees Two Lakhs Twenty-Five Thousand only) exclusive of GST and out-of-pocket expenses.
The remuneration of the cost auditor is required to be ratified by the members in accordance with the provisions of Section 148(3) of the Companies Act, 2013 and Rule 14 of Companies (Audit and Auditors) Rules, 2014. Accordingly, the matter would be placed before the Members for ratification at the ensuing Annual General Meeting.
The Cost Audit Report for the financial year 2022-23 due to be filed with Ministry of Corporate Affairs by 08-09-2023, had been filed on 01-09-2023. The Cost Audit Report for the financial year 2023-24 due to be submitted by the Cost Auditor within 180 days from the closure of the financial year will be filed with the Ministry of Corporate Affairs, within 30 days thereof.
There are no changes in the Statutory, Cost and Secretarial Auditors of the Company during the year under review and upto the date of this report.
22. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Pursuant to Section 134(3)(m) of the Companies Act, 2013 and Rule 8(3) of Companies (Accounts) Rules, 2014, the information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is attached as Annexure - IV.
23. ANNUAL RETURN
In Accordance with Section 92(3) of the Companies Act, 2013, read with Rule 12 of Companies (Management and Administration) Rules, 2014, the copy of the Annual Return for the year ended 31-03-2023 has been placed on the website of the Company and web link of such Annual Return is- https://www.rajapalayammills.co.in/wp-content/uploads/2023/11/Annual-Return-31-03-2023.pdf
24. CORPORATE GOVERNANCE
The Company has complied with the requirements regarding Corporate Governance as stipulated in SEBI (LODR) Regulations, 2015. As required under Schedule V(C) of SEBI (LODR) Regulations, 2015, a Report on Corporate Governance being followed by the Company is attached as Annexure - V.
As required under Schedule V(E) of SEBI (LODR) Regulations, 2015, a Certificate from the Auditors confirming compliance of conditions of Corporate Governance is also attached as Annexure - VI to this Report.
As required under Regulation 34(3) read with Schedule V Para C (10)(i) of SEBI (LODR) Regulations, 2015, Certificate from the Secretarial Auditor that none of the Companys Directors have been debarred or disqualified from being appointed or continuing as Directors of Companies, is enclosed as Annexure - VIA.
During the year under review, no complaints had been received regarding sexual harassment. The relevant statutory disclosure related to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, are available at Point No.12(xii) of Corporate Governance Report.
25. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The disclosures in terms of provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1), (2) and (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, relating to remuneration are provided in Annexure - VII.
26. INDUSTRIAL RELATIONS AND PERSONNEL
The Company has 4,809 employees as on 31-03-2024 (PY: 4,713). Industrial relations with employees remained cordial during the year. The Company focused more on Human Resources Development activities and imparted training to develop the skill-set of the employees to enable them to face the challenges in the work environment.
The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
27. RELATED PARTY TRANSACTION
Prior approval / Omnibus approval is obtained from the Audit Committee for all related party transactions and the transactions are periodically placed before the Audit Committee for its approval. No transaction with the related party is material in nature, in accordance with Companys "Related Party Transaction Policy" and Regulation 23 of SEBI (LODR) Regulations, 2015. In accordance with Indian Accounting Standard - 24 (Related Party Disclosure), the details of transactions with the related parties are set out in Note No: 50 of disclosures forming part of Financial Statements.
As required under Regulation 46(2)(g) of SEBI (LODR) Regulations, 2015, The Companys Related Party Transaction Policy is disclosed in the Companys website and its web link is: https://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/related-party-transaction-policy-2022.pdf
28. RISK MANAGEMENT POLICY
Pursuant to Section 134(3)(n) of the Companies Act, 2013 and Regulation 17(9) of SEBI (LODR) Regulations, 2015, the Company has developed and implemented a Risk Management Policy. The Policy envisages identification of risk and procedures for assessment and minimization of risk thereof. The Risk Management policy of the Company is available at the Companys website at the following web link-https://www.rajapalayammills.co.in/wp-content/themes/ramco/pdf/risk-management-policy.pdf
29. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Dividend amount remaining unclaimed / unpaid for a period of over 7 years was transferred to IEPF as detailed below:
Dividend Details |
Amount Transferred (in Rs.) | Date of Transfer to IEPF |
Interim Dividend 2015-16 |
8,43,564 | 10-04-2023 |
Shares corresponding to the said dividend were transferred to IEPF, as detailed below: |
||
No. of Shares |
Date | of Transfer to IEPF |
2,300 |
13-04-2023 |
Year wise amount of unpaid / unclaimed dividend lying in the unpaid account and corresponding shares, which are liable to be transferred to IEPF and due dates for such transfer, are tabled below:
Year |
Type of Dividend | Date of Declaration of Dividend | Last date for claiming Unpaid Dividend | Due date for transfer to IEP Fund | No. of Shares of Rs.10/- each | Amount of unclaimed / unpaid Dividend as on 31-03-2024 - Rs. |
2016-2017 |
Dividend | 10-08-2017 | 09-08-2024 | 08-09-2024 | 2,77,097 | 11,08,388 |
2017-2018 |
Dividend | 10-08-2018 | 09-08-2025 | 08-09-2025 | 1,06,727 | 4,26,908 |
2018-2019 |
Dividend | 14-08-2019 | 13-08-2026 | 12-09-2026 | 1,07,600 | 4,30,400 |
2019-2020 |
Dividend | 15-09-2020 | 14-09-2027 | 14-10-2027 | 1,27,937 | 1,27,111* |
2020-2021 |
Dividend | 25-08-2021 | 24-08-2028 | 23-09-2028 | 2,45,129 | 1,21,718* |
2021-2022 |
Dividend | 20-08-2022 | 19-08-2029 | 18-09-2029 | 2,28,008 | 2,24,293* |
2022-2023 |
Dividend | 18-08-2023 | 17-08-2030 | 16-09-2030 | 1,74,074 | 1,72,593* |
* Net of TDS
30. MATERIAL CHANGES SINCE 1ST APRIL, 2024
There have been no changes affecting the financial position of the Company between the end of the financial year (31-03-2024) and till the date of this report (29-05-2024).
31. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that:
(a) they had followed the applicable accounting standards along with proper explanation relating to material departures, if any, in the preparation of the annual accounts for the year ended 31st March, 2024;
(b) they had 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 as on 31st March, 2024 and the profit of the Company for the year ended on that date;
(c) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) they had prepared the Annual Accounts on a going concern basis;
(e) they had 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 applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENT
The Directors are grateful to the various Departments and agencies of the Central and State Governments for their help and co-operation. They are thankful to the Financial Institutions and Banks for their continued help, assistance and guidance. The Directors wish to place on record their appreciation of employees at all levels for their commitment and their contribution.
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