sri jayalakshmi spinning mills ltd Directors report

SRI JAYALAKSHMI SPINNING MILLS LIMITED ANNUAL REPORT 2003-2004 DIRECTORS REPORT DEAR SHAREHOLDERS, Your Directors have pleasure in presenting the Tenth Annual Report together with the Audited Statements of Accounts for the 15 months period ended 30th June 2004. 1. FINANCIAL RESULTS (Rs.in Lakhs) 2003-04 (15 Months) Sales including other income 2805.318 Profit for the year before interest, Depreciation 459.48 Less :Interest 14.59 Depreciation 259.87 Net Profit 185.05 2. PERFORMANCE Under report (i.e., 15 months) the Company could produce 17.26 Lakhs Kgs of Cotton Yarn as against a quantity of 15.05 Lakhs Kgs in the previous year of 12 months. During the year, the Company has exported to an extent of Rs. 121.71 Lakhs compared with Rs. 508.10 Lakhs during the previous year. The performance during the year has resulted in the net profit of Rs. 185.05 Lakhs. As a result of economic purchase of raw materials and austerity measures undertaken by the Company, the Company has turn round and earned profit. Further, the local demand for finer counts has been increased and the company is able to sale its finer counts yarn at remunerative price. 3. EXPORTS During the year under report the company could export cotton yarn to a tune of 0.93 Lakhs Kgs and earned a foreign currency equivalent to Rs.121.71 Lakhs. 4. DIRECTORS Sri R.Sambashiva Rao and Sri G.Kanakaiah retire by rotation in the ensuing Annual General Meeting and being eligible they offer themselves for re- appointment. 5. AUDITORS The Company Auditor Sri G. V. Suryanarayana Murthi, Chartered Accountant will retire at the ensuing Annual General Meeting of the Company and being eligible offers himself for re-appointment. 6. COST AUDITORS Sri.S.P.Sarma, Cost Auditor, Hyderabad has been proposed to be appointed as Cost Auditor for the year 2003-04 as per Section 233 (B) of the Companies Act 1956. 7. Corporate Governance Your Company has complied with the provisions of the Corporate Governance Code as per Clause 49 of the Listing Agreement with the Stock Exchanges. A report on the implementation of the Corporate Governance Code of the Listing Agreement by the Company is furnished below i) Board of Directors The Board consists of 2 Executive Directors, 3 Non-Executive Directors and Four Independent Directors : The constitution of Board as follows: Director Executive/Non- No.of other Executive/Independent* Directorships Sri.R.Sambashiva Rao Chairman, Executive Director # 7 Sri G Kanakaiah Vice-Chairman, Executive # 7 Director Dr.R.Srinivas Non-Executive Director # 7 Sri.R.Gopalakrishna Non-Executive Director # 7 Sri.R.Hanumantharao Non-Executive Director # 6 Sri.D.Seetharam Independent Director - Sri.G.Rambabu Independent Director - Sri M Anil Kumar Independent Director - Sri Ch Sridhar Independent Director - * An Independent Director is a director who does not have any material pecuniary relationship or transactions with the Company, with its promoters or its management or with its subsidiaries, which in the judgment of the. Board may affect the Independence of judgment. # This includes directorships held in Public Limited Companies and excludes directorships held in Private Limited Companies. ii) Meetings of the Board of Directors. During the year 2003-04 the Board of Directors met 12 times on the following dates : 30.04.2003, 03.05.2003, 31.07.2003, 11.08.2003, 31.10.2003, 05.11.2003, 06.12.2004, 24.01.2004, 31.01.2004. iii) Audit Committee As a measure of good Corporate Governance and to provide assistance to the Board of Directors in fulfilling the Boards responsibilities as per provisions of the Companies Act 1956 and as per clause 49 of the Listing Agreement with Stock Exchanges, an Audit Committee has been constituted with one Non-executive Director along with two independent Directors. The functions of the Audit Committee include: * Reviewing the adequacy of internal control systems and the Internal Audit Report, and their compliance thereof. * Overseeing of the Companys financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible. * Recommending the appointment of external auditors and fixation of their audit fee, and also approval for payment for any other services. * Reviewing with management the quarterly and annual financial statements before submission to the Board. iv) Composition and other Details The Audit Committee of the Company was constituted with two Independent Directors along with one non-executive Director, and Chief Executive as shown below: 1. Sri.R.Gopalakrishna - Non Executive Director Chairman 2. Sri.D.Seetharam - Independent Director Member 3. Sri.G.Rambabu - Independent Director Member 4. Sri R.Ranga Rao - Chief Executive Member During the year under review, the Audit Committee met 6 times i.e., on 30.04.2003, 31.07.2003, 31.10.2003, 06.12.2003, 30.04.2004 and 06.12.2004. The meetings of the Audit Committee were attended by the head of Finance, Internal Auditor and Statutory Auditor as invitees. Members held discussions with Statutory Auditors during the meetings of the Committee and the quarterly and annual audited financial statements of the Company were reviewed by the Audit Committee before consideration and approval by the Board of Directors. v) Investors Grievance Committee: The Board has constituted an Investors Grievance Committee, which looks into shareholders and investors grievances. The following are the members of the Committee. 1. Sri.R.Gopalakrishna - Non Executive Director 2. Dr.D.Seetharam - Independent Director 3. Sri.R.Ranga Rao, - Chief Executive The committee focuses on strengthening the investors relations. a) Compliance Officer : Sri.R.Ranga Rao - Chief Executive b) Details of complaints received during the year 2003-04 Nil c) There are no valid requests pending for share transfers as at the year end d) M/s. Aarthi Consultants Pvt. Ltd., are the Registrars attending to the investors calls. vi) Venue and time of the last Three Annual General Meetings Year Date & Time Venue 1999-2000 27th September,2000 at 11.00 a.m. Regd.Office 2000-2001 27th September,2001 at 11.00 a.m. Regd.Office 2001-2002 26th September,2002 at 11.00 a.m. Regd.Office 2002-2003 27th September,2003 at 04.00 p.m. Regd.Office The resolutions were passed on show of hands with requisite majority. The venue of the Annual General Meeting of the Company is the Registered Office of the Company, Tobacco Colony, Guntur which is centrally located. vii) Disclosures There are no materially significant related party transactions i.e., transactions, material in nature with it promoters, the Directors or the Management their subsidiaries or relatives etc., having potential conflict with the interests of the Company at large. There has not been any non-compliance by the Company and no penalties or strictures imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any matter related to capital markets, during the last three years. The audited financial results of the company are generally published in Indian Express, the English newspaper and in the Andhra Prabha, the vernacular (Telugu) newspaper. viii) General Shareholders information a) As indicated in the notice to our shareholders, the 10th Annual General Meeting of the Company will be held on Monday, the 27th September, 2004 at 11.00 a.m. at Registered Office of the Company. b) Tentative calendar of events for the financial year 2004-05 (April March) as given below i) Publication of Un-audited financial results for : First Quarter July, 2004 Second Quarter October, 2004 Third Quarter January, 2006 Fourth Quarter April, 2006 c) Book Closure : From 21.09.2004 to 27.09.2004 (both days inclusive) for the purpose of Annual General Meeting. d) (i) The shares of the Company are listed on : Hyderabad regional Stock Exchange, Mumbai and Chennai Stock Exchanges. e) The listing fee for the year 2004-05 is being paid to all the stock exchanges where the Companys shares are listed. f) Stock Code : 531141 g) Market Data : The monthly high and,low stock quotations during the last financial year. The Scrips are not actively traded. ix) Share Transfer Agents The share transfers, transmissions, investors grievances will be taken care of by share transfer Agents i.e., M/s. Aarthi Consultants Pvt. Ltd., (Cat-1) Registrar & Share Transfer Agents, 1-2-285, Domalguda, Hyderabad - 500 029 x) Corporate Governance Certificate Auditors Report regarding the compliance of Corporate Governance is separately enclosed during the year under report. xi) Corporate Governance in Directors Report The Company has complied with the mandatory provisions of Corporate Governance as prescribed in the Listing Agreement with the Stock Exchanges. Auditors Report on Corporate Governance is separately enclosed. 09. Employees No employee of the Company is Covered under the provisions of Section 217 (2A) of the Companies Act, 1956 for disclosure in this report. 10. Fixed Deposits The Company has not accepted any fixed deposits from the public during the year. 11. Qualification to any adverse remarks in the Auditors Report There are no adverse remarks in the Auditors Report dated 02.08.2004. 12. Conservation of Energy Particulars relating to Conservation of Energy, technology absorption, foreign exchange earnings and out go pursuant to the companies (Disclosure of particulars in the report of the Board of Directors) Rules 1988 are appended separately and it forms part of this Report. 13. DIRECTORS RESPONSIBILITY STATEMENT: Pursuant to the requirements under Section 217 (2AA) of the companies Act, 1956, with respect to Directors Responsibility statement, it is hereby confirmed: (i) That in the preparation of the accounts for the financial year ended 30th June, 2004, the applicable accounting standards have been followed along with proper explanation relating to material departures; (ii) That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for the year under review; (iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. (iv) That the Directors have prepared the accounts for the financial year ended 30th June, 2003 on a "going concern" basis. 14. ACKNOWLEDGEMENTS The Directors would like to express their appreciation for the assistance and cooperation extended by ICICI and Indian Overseas Bank Ltd., to meet the financial needs of the Company. The Directors appreciate the services rendered by the officers, staff and workers of the Company and expect the same in future also. FOR AND ON BEHALF OF THE BOARD RAYAPATI SAMBASHIVA RAO CHAIRMAN Place : Guntur Date : 02.08.2004 Annexure - A A. CONSERVATION OF ENERGY: a. A Study on Energy conservation is being conducted at all the manufacturing levels and the proposals which are accepted after evaluation will be implemented. b. The consumption of Energy has been closely monitored and where ever possible the wastage is avoided. c. The energy consumption per unit of the production is mentioned below. POWER AND FUEL CONSUMPTION 1. ELECTRICITY 30.06.2004 31.03.2003 a. Purchased from APSEB and Others (Units in Lakhs) 114.61 Total amount Paid (Rupees in Lakhs) 502.96 421.68 Rate per unit (Rs) 3.68 b. Own Generation through Diesel Generator 14.33 Diesel oil consumed (in litres) 442531 Units generated per each Ltr of diesel oil 3.1 Cost of diesel (Rs) 5950220 Cost per litre (Rs) 13.45 2. COAL Nil Nil 3. FURNACE OIL Nil Nil 4. OTHER GENERATION Nil Nil B. CONSUMPTION PER UNIT OF PRODUCTION Electricity - Units per Kg of Yarn 0.00 7.93 C. TECHNOLOGY ABSORPTION As the unit is new and all the machines erected are new and from internationally reputed suppliers, no efforts are made in Technology absorption. D. FOREIGN EXCHANGE EARNINGS & OUT GO a. Efforts are being made to initiate and increase the Exports and development of new Export Martkets. b. Total Foreign Exchange earned and used 30.06.2004 31.03.2003 Rs. Rs. 1. Export of Yarn 12331688 50809805 II. Expenditure in Foreign Currency on account of: a. Commission on Sales 239061 1069171 b. Travels 24375 III. Value of imports calculated on CIF basis Components & Spares FOR AND ON BEHALF OF THE BOARD PLACE : GUNTUR Rayapati Sambashiva Rao DATE : 02.08.2004 Chairman Auditors Certificate on compliance of conditions of Corporate Governance as per Clause 49 of the Listing Agreement with Stock Exchanges To the Members of Sri Jayalakshmi Spinning Mills Limited I have examined the procedure for compliance with the provisions of Clause 49 regarding Corporate Governance of the Listing Agreement with the Stock Exchanges. The compliance of conditions of Corporate Governance is responsibility of the Management. My examination has been limited to a review of the procedures and implementation thereof adopted by the Company for ensuring compliance with the conditions of the certificate of Corporate Governance as stipulated in the said Clause. It is neither an audit nor an expression of opinion on the financial statements of the Company. No investor grievance(s) are pending for a period exceeding one month against the Company as per the records maintained by the Company. In my opinion and to the best of my information and according to the explanations given to me and the representations made by the Directors and the management, I certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement. I further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the Management has conducted the affairs of the company. Place : Guntur G. V. Suryanarayana Murthi Date : 02.08.2004 Chartered Accountant