Sri Ramakrishna Mills (Coimbatore) Ltd Directors Report.

Dear Shareholders,

Your Directors submit the following Report on the working of the Company for the year ended 31.03.2020.

After meeting all working expenses, interest, repairs to machinery and buildings, the working result of the company for the year 2019-20 is given below :-

Financial results:

Year Ended

31.03.2020 31.03.2019
Rs.in lakhs Rs.in lakhs
Profit before Interest and Depreciation 1480.97 1089.92
Less / Add : Interest 259.53 296.77
Depreciation 27.93 34.79
(Loss) / Profit before Exceptional items 1193.51 758.36
Exceptional Items 69.53 (14.24)
Current Tax 24.48 --
Deferred Tax Credit 556.48 379.96
Surplus/(Deficit) after Exceptional Item 543.02 364.16
Surplus/(Deficit) carried over to Balance Sheet 543.02 364.16

* Figures of 31.03.2019 have been regrouped to conform to accounting Standard Ind AS.

Performance:

The turnover of the company for the year 2019-20 had been Rs.31.40 crores against Rs.27.36 crores in the previous year. The above figure includes Rs.26.08 crores relating to Real Estate Income. After charging depreciation, interest and other overheads and adjustment of Exceptional items the company recorded a profit of Rs.11.26 crores which had resulted into Rs.5.45 crores Net Profit after adjustment on account of Current Tax and Deferred Tax.

Future

The Cotton Spinning Industry which had already been facing multiple challenges - low demand, unfavourable duty structure and volatile cotton fibre prices - is confronting another trouble in the form of the COVID-19 pandemic.

The shut down of manufacturing units and weak demand are expected to take a heavy toll on cotton yarn industry in the next two quarters. This will lead to a drop in revenue and a fall in profit margin. For the past few years, cotton yarn exports have taken a hit, mainly on account of subdued demand from China, a leading importer of Indian Cotton yarn. Cotton prices have fallen drastically, making Indian Cotton the cheapest fibre globally. But, it is not possible to take advantage of this. Owing to subdued demand, yarn prices also started to crash squeezing the spreads.

The rural economy is doing better than most other sectors and will play a crucial role in the revival of the Countrys economy.

Real Estate Development

After complying with all the statutory requirements of the Directorate of Town and Country Planning and Real Estate (Regulations and Development) Act, the project was launched on 17th August 2018. So far about 50% of the Villas has been completed.

Construction activity came to a complete halt during the lock down. It is expected that the entire project would be completed by middle of 2021. The company is optimistic of disposing of the Villas as there is good response.

Management Discussion and Analysis

In terms of the provisions of Regulation 34(3) and Schedule-V of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, the Management Discussion and Analysis is set out in this report. It contains an analysis on the performance of the industry, the Company, Internal Control System and Risk management policy.

Board of Directors:

The composition of the Board of Directors of the Company is furnished in the Corporate Governance Report annexed to this Report.

Sri.Ravichandran Dhamodaran (DIN : 00054538), Sri.R.Guru Chandrasekar (DIN : 0008421861) and Sri.A. Surendran (DIN : 00765292) are appointed as Independent Directors at the 72nd Annual General Meeting for a period of 5 years with effect from 27.09.2019. All the Independent Directors have affirmed that they satisfy the criteria laid down under Sec.149(6) of the Companies Act, 2013 and Regulations 16(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Further, the Companys code of conduct suitably incorporates the duties of Independent Directors as laid down in the Act.

In the opinion of the Board, the Independent Directors of the Company fulfill the conditions specified in the Act and SEBI (LO & DR) Regulations 2015 and are independent of the Management.

The Ministry of Corporate Affairs, Govt. of India has launched the Independent Directors databank and it has entrusted the Indian Institute of Corporate Affairs with creating and operating such a data bank under the Notification No.GSR804(E), dt.22nd October 2019. All the existing Independent Directors are required to register themselves in the data bank. Accordingly, the Companys Independent Directors have got themselves registered in the data bank for 5 (five) years.

Reappointment :

Consequent to the expiry of the three year term of Sri.D.Lakshminarayanaswamy, Managing Director and Smt.L. Nagaswarna, Wholetime Director, it is proposed to reappoint them. Necessary resolutions have been included in the Agenda of the ensuing Annual General Meeting for members approval.

Retirement by rotation:

Sri.P Muthuswamy (DIN : 02651331), who has been appointed as a Director-Operations, retires by rotation at the ensuing Annual General Meeting of the Company, as per the terms of his appointment. The place so vacated by him has to be filled up at the same meeting. The retiring Director is eligible for re-appointment at the ensuing Annual General Meeting. Accordingly, a resolution to this effect is included in the Agenda for consideration of members at the ensuing Annual General Meeting of the Company.

Board Meetings:

During the year Five (5) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening period between two consecutive meetings was within the period prescribed under the Act.

Meeting of Independent Directors:

Pursuant to the provisions of the Companies Act, 2013 (Para-VII(1) of Schedule-IV, one separate meeting of independent directors without the attendance of Non-Independent Directors and Members of Management was held during the year and all the independent directors were present at this meeting. In the said meeting, the independent directors assessed the quality, quantity and timeliness of flow of information between the management and the Board and expressed that the current flow of information and contents were adequate for the Board to effectively perform its duties.

Board Evaluation

The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been framed by the Nomination and Remuneration Committee and approved by the Board. A questionnaire consisting of certain criteria is adopted for reviewing the functioning and effectiveness of the Board and for identifying possible areas for improvement. Each Board member is requested to evaluate the effectiveness of the Board dynamics and relationships, information flow, decision making of the Directors, relationship with Stakeholders. Company performance, company strategy and effectiveness of the whole Board and its various committees on a scale of one to five.

Necessary feed back is provided for improvement in the performance of the Directors and the functioning of the overall Board and the various committees.

Familiarisation Programme for Independent Directors :

In compliance with the requirements of Regulation 25(7) of the SEBI (LO & DR) Regulations 2015, the company has put in place a Familiarization Programme for the Independent Directors to familiarize them with the company their roles, rights, responsibilities in the company, nature of the industry in which the company operates, business models, Regulatory matters, etc.

Key Managerial Personnel:

Sri.D.Lakshminarayanaswamy (DIN:00028118), Managing Director, Smt.LNagaswarna, Wholetime Director (DIN:00051610), Sri.P Muthuswamy, Director-Operations (DIN : 02651331), Sri.S.A.Subramanian and Sri.G.Krishnakumar as Company Secretary and Chief Financial Officer respectively constitute Key Managerial Personnel of the Company.

Remuneration Policy:

The policy on appointment, remuneration and evaluation criteria for Directors and Senior Management is as per the recommendation of the Nomination and Remuneration Committee of the Board. The Company recognized that Compensation Policy is an important and strategic tool in the achievement of vision and goals of the company. It is in keeping with the performance of the individuals, internal equity, market trends and industry practices, legal requirements and appropriate governance standards.

The Nomination and Remuneration Committee recommends the remuneration of Directors and Senior Management personnel which is approved by the Board of Directors, subject to the approval of shareholders, where necessary.

Audit Committee:

In terms of the provisions of Section 177 of the Act and Regulation 18 of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, the Audit Committee of the Board was constituted to act in accordance with the terms of reference prescribed therein. Detailed disclosure on composition, terms of reference and meetings of the Audit Committee are furnished in the Corporate Governance Report.

Statutory Auditors:

M/s.C.S.K.Prabhu & Co, Chartered Accountants, Coimbatore were appointed as Statutory Auditors at the 70th Annual General Meeting held on 28.09.2017 to hold such Office for a term of five consecutive financial years from the conclusion of 70th Annual General Meeting to the conclusion of the 75th Annual General Meeting to be held in the year 2022, pursuant to the provisions of Section 139, 141 and 142 of the Act, read with companies (Audit & Auditors) Rules 2014. Under the Companies (Amendment) Act 2017 the Clause relating to ratification of auditors appointment by members has been deleted.

Cost Audit:

Ministry of Corporate Affairs (MCA) has vide Notification dated 31st December 2014 amended the Companies (Cost Records and Audit) Rules 2014. Accordingly, the rules apply to the Companies which have turnover exceeding the prescribed limits. Since the Companys turnover is less than the prescribed limit, the company is exempt from maintenance of Cost Records and Audit thereof.

Secretarial Audit:

Smt.C.Jayanthi, Practising Company Secretary was appointed to conduct the Secretarial Audit of the Company for the Financial year 2019-20 as required under Sec.204 of the Act, and Rules made thereunder. The Secretarial Audit Report for the Financial Year 2019-20 forms part of the Annual Report as annexure to the Boards Report.

The Board has appointed Smt.C.Jayanthi, Practising Company Secretary as Secretarial Auditor of the Company for the Financial Year 2020-21.

Internal Auditor :

The Company continues to engage Smt.Sasirekha Vengatesh, Chartered Accountants as Internal Auditors of the Company. The scope of work includes review of processes for safeguarding the assets of the company, review of operational efficiency, effectiveness of systems and processes and assessing the strength and weaknesses of internal control. Internal Auditors reports are placed before the Audit Committee on a regular basis for taking suitable action for improvement, wherever required.

Directors Responsibility Statement:

As required under section 134 of the Act, it is stated

a. that in the preparation of the annual accounts, the applicable accounting standards had been followed alongwith proper explanation relating to material departures.

b. that the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are 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 (i.e)31st March 2020 and of the profit of the company for that period.

c. that 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. that the directors had prepared the annual accounts on a “going concern” basis.

e. that 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.

f. that 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.

Related Party Transactions:

All contracts / arrangements / transactions entered into by the company during the Financial Year with related parties were in the ordinary course of business and on arms length basis. During the year, the company had not entered into any contracts / arrangements / transactions with related parties which could be considered material in accordance with the policy of the company on materiality of related party transactions.

Statement giving details of the Contacts / arrangements / transactions with related parties is placed before the Audit Committee and the Board of Directors for their approval on quarterly basis.

Corporate Social Responsibility :

The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with the provisions of Section 135 of the Companies Act, 2013 comprising of three Directors including an Independent Director.

During the current Financial Year 2019-20 as the average net profit of the three immediately preceding financial years is negative, the company is not required to spend any amount on Corporate Social Responsibility. As and when the average Net Profit of three immediately preceding Financial Years in future records positive, necessary investment in CSR activities will be made as required by law.

Subsidiary and Associate Companies :

Doral Real Estates Private Ltd is a subsidiary of the company since 02.06.2017. Pursuant to the provisions of Sec.129 of the Act, the consolidated financial statements of the company and the subsidiary had been prepared in the Annual Report for laying before the ensuing Annual General Meeting.

Further, along with the financial statement of the company, a separate statement containing the salient features of the financial statement of the subsidiary is attached to the Annual Report in form AOC1.

Pursuant to Regulation 24(1) of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, Sri.R.Guru Chandrasekar (DIN : 0008421861) an Independent Director of the company has been appointed as Director in the subsidiary company during the year.

The company does not have any Associate Company.

Fixed Deposits:

The Company has not accepted any deposits within the meaning of Section 73 of the Act, and the Rules framed thereunder.

Effect of Covid-19 Pandemic :

The effect of Covid-19 pandemic on the company is detailed in the Annexure to “Management Discussion & Analysis Report. A copy of the same was filed with BSE and also hosted in the companys website.

Energy Conservation, Technology Absorption and Foreign Exchange earnings & outgo :

The information on the above stipulated under Sec.134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure-II.

Particulars of Directors, Key Management Personnel and Employees:

The information required pursuant to Sec.197 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of Directors, Key Management Personnel and employees of the Company are provided in the Annual Report.

Corporate Governance

A separate Report on Corporate Governance is attached to this report. A certificate from the Practising Company Secretary of the company confirming compliance with the conditions of Corporate Governance as stipulated under Regulation 27 and Part-E of Schedule-II of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, is attached to this report.

Other Disclosures:

a. Details of loans, guarantees and investments under the provisions of Sec.186 of the Act are given as Annexure.

b. The internal control systems and its adequacy are discussed in the Management Discussion and Analysis annexed to the Directors Report.

c. There was no significant material order passed by the Regulators / Courts which would impact the going concern status of the company and its future operations.

d. The details forming part of the extract of the Annual Return in Form MGT-9 is annexed to the Directors Report.

e. The Company has adopted the Whistle Blower Policy for Directors and Employees of the Company to report concerns about the unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct and ethics. The policy is provided pursuant to Reg. 22 and Reg.46(2)e of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015. It also provides for adequate safeguard against victimization of Directors / Employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The policy is also disclosed in the Companys Website.

f. The Company has adopted a code of conduct for the Board of Directors and Senior Management of the company and all of them have affirmed compliance of the same.

g. The Company has in place an Anti Sexual Harassment Fblicy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition &

Redressal) Act, 2013. Necessary mechanism has been put across the company in this regard to cover all the women employees in the company.

h. As contemplated under Regulation 17(8) of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, certificate from MD/CEO Sri.D.Lakshminarayanaswamy & CFO Sri.G.Krishnakumar was placed before the Board of Directors at the meeting held on 30.06.2020.

i. Pursuant to Sec.134(3)(l) of the Act, there was no significant material changes and commitments affecting the financial position of the Company has taken place between the end of the financial year of the company and the date of Directors Report, excepting the effect of Covid-19 pandemic.

General:

Our thanks are due to The South Indian Bank Ltd., for their support and assistance to meet our business needs.

The Directors appreciate the services rendered by the Officers, Staff and the employees of the Company.

We pray for the Grace of Almighty Sri Jaganatha Pferumal for the prosperity of the Company.

For and on behalf of the Board of Directors of Sri Ramakrishna Mills (Coimbatore) Limited
Place : Coimbatore D. LAKSHMINARAYANASWAMY
Date : 30.06.2020 Chairman of the meeting
(DIN : 00028118)