TO THE MEMBERS OF
THE SRI GANAPATHY MILLS COMPANY LTD FOR THE FINANCIAL YEAR ENDED 31st MARCH
2016
To the Members,
Your directors have pleasure in presenting their 68th Annual Report on the
business and operations of the company together with the Audited Statement of Accounts for
the year ended 31st March, 2016
Financial Highlights:
During the year under review, performance of your company as under:
|
|
(Rupees in Lakhs) |
| Particulars |
Year ended 31st March 2016 |
Year ended 31st March 2015 |
| Turnover |
865.96 |
1305.40 |
| Operating Expenses |
675.37 |
1533.16 |
| Operating Profit / Loss |
190.59 |
–227.76 |
| Financial Cost |
109.25 |
169.02 |
| Depreciation |
31.52 |
61.81 |
| Net Profit / Loss before exceptional items |
49.82 |
-458.59 |
| Amortization / Exceptional item |
27.87 |
30.38 |
| Net Profit / Loss |
21.95 |
-488.97 |
GENERAL PERFORMANCE
The company’s main business activity is manufacture of Cotton / Blended Polyester
yarn. During the current financial year under review, the company has resumed its
manufacturing operations from January 2016 after a holiday period of four months and also
sold its one of the undertaking(s) with prior consent from bankers and members. The entire
sale proceeds have been adjusted against the loan liability with our Bankers M/s The Karur
Vysya Bank Ltd resulted to restrict our finance cost to Rs. 109.25 lacs when compared with
Rs. 169.02 lacs in the previous year. Due to the sale, the company had showed a net profit
of Rs. 21.95 lacs as against a net loss of Rs. 488.97 lacs in the previous year. However,
the severe recession in the textile industry, no change in the government policies
favouring the industry, mismatch in cotton and yarn prices, are still remaining in force
for the operating loss of the company.
RISK MANAGEMENT POLICY
During the year, your Directors have constituted a Risk Management Committee which has
been entrusted with the responsibility to assist the Board in (a) Overseeing and approving
the Company’s enterprise wide risk management framework; and (b) Overseeing that all
the risks that the organization faces such as strategic, financial, credit, market,
liquidity, security, property, IT, legal, regulatory, reputational and other risks have
been identified and assessed and there is an adequate risk management infrastructure in
place capable of addressing those risks. A Group Risk Management Policy was reviewed and
approved by the Committee. The Company manages, monitors and reports on the principal
risks and uncertainties that can impact its ability to achieve its strategic objectives.
The Company’s management systems, organisational structures, processes, standards,
code of conduct and behaviors together form the Ganapathy Management System (GMS) that
governs how the Group conducts the business of the Company and manages associated risks.
The Company has introduced several improvements to Integrated Enterprise Risk Management,
Internal Controls Management and Assurance Frameworks and processes to drive a common
integrated view of risks, optimal risk mitigation responses and efficient management of
internal control and assurance activities. This integration is enabled by all three being
fully aligned across Group wide Risk Management, Internal Control and Internal Audit
methodologies and processes.
Details of Directors and Key Managerial Personnel
Smt. Amutharajendran has resigned from the Board as Non-Executive Director with effect
from 18/04/2016 after a long term association with the company. The Board of Directors
records their deep appreciation for the enormous contribution made by Smt. Amutharajendran
as Director of the company. The company and board benefitted immensely from Smt.
Amutharajendran’s vast experience, knowledge and insights of the Industry and
operations of the company.
Sri. K.Balaji has resigned from the Board as Non-Executive Director – Independent
with effect from 20/04/2016 due to his pre occupation in the other business. The Board of
Directors records their appreciation for his contribution to the company.
Smt. Niranjani Kousigan, retire by rotation in the ensuing Annual General Meeting and
being eligible she offer her selves for reappointment.
Sri. A.Jerard, has been appointed as "Additional Director" of the company in
the Board Meeting held on 03rd August 2016 and being eligible and offering
himself for appointment, is proposed to be appointed as an Independent Director for five
consecutive years.
| Key Managerial Personnel |
|
| K.Vee.Rajenthiran |
- Managing Director |
| R.Karthikeyan |
- Whole Time Director |
| R.Santhosh Kumar |
- Chief Financial Officer |
Statement in Respect of Adequacy of Internal Financial Control with Reference to the
Financial Statements
The Company has in place adequate internal financial controls with reference to
financial statements. During the year, such controls were tested and no reportable
material weakness in the design or operation was observed.
Receipt of any commission by MD / WTD from the Company or for receipt of Commission /
remuneration from it Holding or subsidiary
The Managing Director/ Whole Time Director are not receiving any commission from the
company.
Declaration by Independent Director
The Company has received declarations from all the Independent Directors of the Company
confirming that they meet the criteria of independence as prescribed both under the Act
and Clause 49 of the Listing Agreement with the Stock Exchanges. The Company has devised a
Policy for performance evaluation of Independent Directors, Board, Committees and other
individual Directors which include criteria for performance evaluation of the
non-executive directors and executive directors.
FUTURE PROSPECTS
The company has proposed to dispose of some of the vacant lands admeasuring 5.04 acres
at Tirunelveli for the pupose of reducing further liability with banks, to renovate or
modernise need based machineries at unit A to improve the quality of the product to the
global standard and also improve the working capital. The company has got prior consent
from the bankers and members for the sale proposal. The said proposal will definitely
reduce the overall cost of the product substantially and thereby gets better margin for
our product in the global market to earn improved turnover and better profit in the coming
years.
Dividend
In view of the losses during the financial year, your directors are unable to recommend
any dividend for the year ended 31st March 2016
| Changes in Share Capital, if any |
Nil |
| Disclosure regarding Issue of Equity Shares with Differential Rights |
Nil |
| Disclosure regarding issue of Employee Stock Options |
Nil |
| Disclosure regarding issue of Sweat Equity Shares |
Nil |
Extract of Annual Return
The extract of Annual Return, in format MGT -9, for the Financial Year 2015-16 has been
enclosed with this report, vide Annexure I
Number of Board Meetings
During the Financial Year 2015-16, 11 meetings of the Board of Directors of the company
were held. 15-05-2015, 17-07-2015, 14-08-2015, 07-09-2015, 28-09-2015, 14-11-2015,
30-11-2015, 15-12-2015, 12-02-2016, 26-02-2016 & 30-03-2016.
Particulars of Loan, Guarantees and Investments under Section 186
During the year under review, the company has not given any loan, guarantee and made
any investment as prescribed under section 186 of the companies Act,2013
Particulars of Contracts or Arrangements with Related Parties
The particulars of contracts and arrangements with related parties are given in Form
AOC 2 which is annexed with this report vide Annexure II
Explanation to Auditor’s Remarks
With regard to the auditor’s report para no 9a in Annexure I, we wish to report
that the company could not pay the provident fund and employees state insurance dues on
the respective due dates regularly mainly because of the paucity of funds. However, the
Company has not permission from the department for making payment by installments.
With respect to the opinion in the auditor’s report regarding AS 15 in respect of
provisioning of gratuity, all the employees are not attaining the eligibility of gratuity
because of the 5 years service limitation and for eligible few staffs, the company is
making payment of gratuity as and when they leave on cash basis. However, your directors
are taking necessary steps to get the actuarial valuation and provisioning will be done
accordingly.
Material Changes Affecting the Financial Position of the Company
In order to withstand in the existing scenario of the industry, it is proposed deploy
funds from own sources, for which the Company has to sell, lease, mortgage or otherwise
dispose of the whole of or substantially the whole of the undertakings including movable /
immovable of the company at such time and on such terms and conditions as the Board may
deem fit, in the best interest of the company. The Unit B at Virudhunagar had been
disposed off and thereby reduced substantial portion of the liabilities with our bankers.
In respect of 5.04 acres of land at Tirunelveli is proposed to dispose off to improve the
working capital, moderate changes in the machinery and further reduction of liabilities
with Bankers to reduce finance cost to that extent.
Conservation of Energy, Technology, Absorption, foreign exchange earnings and outgo.
The details are given in Form A vide Annexure III
Secretarial Audit Report
The Board has appointed Sri. S.Muthuraju B.Sc., F.C.A, A.C.S, Practising Company
Secretary, as Secretarial Auditor of our company, to conduct Secretarial Audit for the
financial year 2015-16. The Secretarial Audit Report for the financial year ended March
31, 2016 is annexed herewith marked as Annexure IV to this Report. With respect to the
observation made in the Secretarial Audit Report, regarding non filing of MGT 14 for
disclosure of interest by the Directors, it is mainly due to ambiguity and uncertainty of
the applicability of the same for the relevant period. In respect of the appointment of
company secretary, despite sincere efforts made by the company for appointment of full
time company secretary the efforts turnout to be in vain as none of the company secretary
is being prepared to work in a remote rural area at Sankar Nagar. Regarding the suspension
of listing by BSE Limited, the company has submitted required details to BSE and requested
BSE to revocate the suspension. The company is making full efforts to restore the listing
at the earliest. However the company is being supported with prompt and proper advises at
the times of need of the same from Mr. S.Muthuraju, Secretarial Auditor. Further the
company would ensure in future that all the provisions will be complied as per the rules.
Audit Committee
The Audit Committee comprises Independent Directors namely, Mr. E.Gabriel
Jesudasan(Chairman), Mr. D.Anand Samuel and Mr. S.Kanthimathi Nathan as other members. All
the recommendations made by the Audit Committee were accepted by the Board.
Statement Indicating the Manner in which Formal Annual Evaluation has been made by the
Board of its own Performance, its Directors, and that of its Committees
The Company has devised a Policy for performance evaluation of Independent Directors,
Board, Committees and other individual Directors which include criteria for performance
evaluation of the non-executive directors and executive directors. The Company had engaged
two consultants for looking at the best practices prevalent in the industry and advising
with respect to evaluation of Board members. On the basis of recommendations of the
consultants and the Policy for performance evaluation of Independent Directors, Board,
Committees and other individual Directors, a process of evaluation was followed by the
Board for its own performance and that of its Committees and individual Directors.
Nomination & Remuneration Committee Policy
The Company has constituted Remuneration Committee comprising of three independent
Non-Executive directors. The remuneration payable to the Managing Director and Whole Time
Directors as recommended by the remuneration Committee is determined by the Board subject
to the approval of the shareholders.
| Name |
Designation |
Salary & Perquisites (Rs in lacs) |
| K.Vee.Rajenthiran |
Managing Director |
19.10 |
| R.Karthikeyan |
Whole Time Director |
9.00 |
Disclosure on Establishment of a Vigil Mechanism
The Vigil Mechanism of the Company, which also incorporates a whistle blower policy in
terms of the Listing Agreement, includes an Ethics & Compliance Task Force comprising
senior executives of the Company. Protected disclosures can be made by a whistle blower
through an e-mail, or dedicated telephone line or a letter to the Task Force or to the
Chairman of the Audit Committee.
Corporate Governance
Report on Corporate Governance is enclosed herewith vide Annexure V and it forms part
of this Directors Report.
Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition
& Redressal) Act, 2013 –
The Company has been employing about 75 women employees in various cadres within the
factory premises. The Company has in place an Anti harassment policy in line with the
requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013. Internal Complaint Committee are set up at shop floor level to
redress complaints received regularly and are monitored by women line supervisors who
directly report to the Chairman & Managing Director. All employees (permenant,
contractual, temporary , trainees) are covered under the policy. There was no compliant
received from any employee during the financial year 2015-16 and hence no complaint is
outstanding as on 31.03.2016 for redressal.
Statutory Auditors
The Company’s Statutory Auditors M/s Krishnan & Raman, Chartered Accountants
retire at the ensuing Annual General Meeting. They have confirmed their eligibility for
reappointment in terms of the provisions of Companies Act, 2013 and rules made there
under.
The Audit Committee and the Board of Directors recommend appointment of M/s Krishnan
and Raman as the Company’s Statutory Auditors for the residual period of one year
from the conclusion of the ensuing Annual General Meeting. However, such re-appointment is
to be confirmed in every Annual General Meeting to be held thereafter on a yearly basis.
Cost Records
In terms of the provisions of Section 148 and all other applicable provisions of the
Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the company
is maintaining cost records and the same is reviewed periodically.
Management Discussion and Analysis Report
The management discussion and analysis, which forms part of this report is given as
Annexure VI to this report
Directors Responsibility Statement
In accordance with the provisions of Section 134(5) of the Companies Act 2013, your
directors confirm that:
a) in the preparation of the annual accounts for the financial year ended 31st March,
2016, the applicable accounting standards had been followed along with proper explanation
relating to material departures;
b) the directors 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 at 31st March, 2016 and of the profit
/loss of the Company for that period;
c) the directors had taken proper and sufficient care 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 fraud and other
irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors had devised proper systems to ensure compliance with the provisions of
all applicable laws and that such systems were adequate and operating effectively.
f) The directors had laid down internal financial controls to be followed by the
company and that such internal financial controls are adequate and were operating
effectively.
GENERAL
Your Directors state that no disclosure or reporting is required in respect of the
following items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under
any scheme.
4. No significant or material orders were passed by the Regulators or Courts or
Tribunals which impact the going concern status and Company’s operations in future.
5. Your Directors further state that during the year under review, there were no cases
filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 and also pursuant to any fraud by and against the company.
ACKNOWLEDGEMENT
Your Directors express their gratitude for the wholehearted support rendered by the
suppliers, The Karur Vysya Bank Ltd, NBFC’s and other Statutory Bodies in all the
activities of your Company.
The Board expresses its warm appreciation for its dedicated employees whom it considers
as its valuable asset.
MAY THE LORD GANAPATHY SHOWER HIS BLESSINGS ON THE PROSPECTS OF
YOUR COMPANY IN THE YEARS TO COME
+91-9892691696
