2016-2017
FINANCIAL SUMMARY
Your Directors have pleasure in presenting their report and audited accounts for the
financial year 2016-2017.
|
|
(Rs. In lakhs) |
|
2016-17 |
2015-16 |
| Sales/Other Operating Income |
405.89 |
388.12 |
| Other Income |
87.14 |
76.28 |
| Gross Income |
493.03 |
464.40 |
| Profit before Tax |
12.47 |
16.35 |
| Provision for Taxation / Deferred Tax |
-0.71 |
10.30 |
| Profit/Loss for the year |
13.13 |
6.05 |
| Add: Loss brought forward |
2111.86 |
2117.92 |
| Add Transfer to Capital Reserve \ Remission of Secured Loan |
|
- |
| Accumulated Loss as on 31st March |
2098.73 |
2111.87 |
REVIEW OF OPERATIONS
Your Company could achieve a gross revenue of Rs. 493.03 lakhs (Note no.:14&15
(464.40 lakhs), consisting of (i) Sales revenue of Rs. 405.89 lakhs (388.12 lakhs), (ii)
Rental income of Rs. 78.3 lakhs (74.19 lakhs) and (iii) Miscellaneous income of Rs.8.84
lakhs (2.09 lakhs). (Figures in brackets for the previous year). Your Companys net profit
stands at Rs.13.13 lakhs against Rs.6.05 lakhs for the previous year.
In regard to trading, the problem of uncertainty of demand for our limited conventional
products is accelerated by availability of cheap and duplicate products flooding the
market more so during festival seasons. Despite our best efforts to ensure consistency of
monthly sales, the trend of sales is festival and season related which is evident from the
following statement.
| Period |
Sale value |
Average sale value per month |
| 01-04-2015 to 30-09-2015 |
Rs. 232 Lakhs |
Rs. 38.7 Lakhs |
| 01-10-2015 to 31-03-2016 |
Rs. 174 Lakhs |
Rs. 29 Lakhs |
In the distinctly developed culture of preference for readymade items, which often are
available on reduced rates on reduction sales, the merely bleached mull items bear lowest
priority in demand and are used presently for exceptional occasions as traditional ware.
Also the number of players as competitors to our products are increasing every day mainly
from Tamil Nadu.
Despite confronting such significant challenges emanating from a deficient product
profile and proliferation of competitors with cheap items and general decline in textile
business, your Company has been able to achieve a sales turnover of Rs. 405.89 lakhs
compared to Rs.388.12lakhs for the previous year.
In our continuous efforts to add some more products to the product profile, your
Company has recently introduced bed sheets as sourced items with a hope to increase the
sales income. .
In the past the Company had the benefit of some orders for specially made up items both
internal and export oriented, demanding intricate specifications which were executed
through the inbuilt technological competence of the Company. The demand for such items
stands considerably reduced and during the year there was virtually no export of any made
up items. The income from internal special products sales during the year stands at Rs.
101.2 Lakhs. The resultant adverse effect on earnings through trading is that the surplus
generated during the initial months of the year is consumed by the losses occurred during
the last months of the year.
In regard to renting of godown space in the Mill premises, considering the present
trend of lean trading activities the immediate alternative has been to generate some
income from godown renting of the large area in the Mill premises by carrying out
essential repairs in the existing old buildings to suit modern godown facilities.
Recordically the buildings appear to have been constructed about 80 years ago with wood
and tiled roofs which were maintained mainly from the point of view of preventing leakage
and changing broken tiles and battens. Even this minimum maintenance was not done since
2003 after suspension of manufacturing activities of the Mill, which is being attended to
during the last four years.
The buildings being more than seven decades old demanding repair / replacement of roofs
and floors after dismantling the old heavy machines, for preparing the same to suit the
minimum warehousing requirements, logistics conveniences and protecting from rains, the
expenditure incurred during the year 2016-17 was Rs.26 lakhs against a rental income of
Rs.78.3 lakhs. However with these major repairs undertaken, normal general maintenance has
to be ensured for upkeep of the building and protection of the stored goods
After vacating the godown having an area of 23,500 sq ft by the KSBC, owing to
centralised warehousing arrangements done by some Companies resulting in direct delivery
from the main storage area and general decline in business, another about 20,000 sq ft of
godown space has since been vacated during the year.
A new problem has emerged due to the classification of our building as "for
Industrial use" by the Panchayath. Due to this classification new trade licenses are
not being issued by the Panchayath. This problem emerged when a new tenant, with whom we
entered into an agreement in December, 2016 approached the Panchayath for a Trade License.
Their application was rejected by the authorities due to the classification of the
building as ‘for industrial use. Hence till the classification is changed to
‘warehousing category, new trade licenses will not be issued by the authorities. To
overcome this problem, we are in the process of preparing the application for conversion
of classification of buildings to Warehouse category. This process will entail
considerable preparatory work, expenses and time as the final approving authority is the
Chief Town Planner in Trivandrum. In view of this problem no godown could be rented for
the last 7 months despite enquiries therefor.
Despite above difficulties, all out efforts are being made to find out new parties for
renting the built-up godown space after sorting out the conversion of classification
problem, which is taken up on priority basis.
The Company continues its honest efforts to maintain average monthly sales of about
Rs.40 lakhs which alone in the present circumstances allows a breakeven and a comfortable
surplus in operation. Despite the limited trading activities, the Company has to meet the
huge operational expenses including expenses related to an ongoing Company. Though income
from renting activities has been Rs. 78.3lakhs during the year, repair and maintenance of
old buildings to suit the minimum warehousing requirement carved a major portion of the
earning. Also one old building had to be thoroughly renovated with a godown space of 12300
sq ft. costing Rs. 12.6 lakhs which has since been certified by Chartered Engineer for
more than 15 years life.
Despite these factors, your Company has been able to earn a profit of Rs.‘13.13
lakhs, which is attributable to the strength of the Company derived through its reputation
and business acumen. Having discharged major liabilities, its strength lies in its
non-dependence on outside finance.
During 2016-17 your Company strived to improve its performance despite confronting
significant challenges emanating from circumstances explained above. The Company
surmounted these challenges through strategic initiative and healthy corporate governance.
With the intended improvement in trading business and attempted increased income
through rent on solving the conversion issue, there is definite scope for improved
turnover and profitability in future.
MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANY
WHICH HAVE OCCURRED DURING THE END OF FINANCIAL YEAR AND THE DATE OF THE REPORT.
There are no material changes and commitments, affecting the financial position of the
Company which has occurred between the end of the financial year of the Company i.e. March
31, 2017 and the date of the Directors Report i.e. 8th August, 2017.
PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY UPGRADATION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO.
The report required to be made pursuant to section 134(3) (m) of the Companies Act,
2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is given in Annexure A to
this report.
DIRECTORS:
Your Company has six directors including the Managing Director and a Woman Director and
until November, 2016 the Company had two Independent Directors. However, pursuant to the
provisions of section 149 of the Companies Act, which came into effect from April 1, 2014,
every listed public company is required to have at least one-third of the total number of
directors as independent directors, who are not liable to retire by rotation. The
requirement at that time with 5 Directors on the Board was two Independent Directors,
which was fulfilled in time. Subsequently as required under Companies Act 2013 a Woman
Director was appointed making the total strength on the Board as six Directors.
We have now been instructed by the BSE limited that as our Chairman of the Board is not
a Non Executive Director and the number of Directors being six, the Independent Directors
should be 50% of the Board strength, meaning that the Board shall have three independent
Directors. As this is an essentiality under the SEBI (Listing and Other Disclosure
Requirements) Regulations 2015, the Board has appointed one more Independent Director
effective November, 2016.
All the Directors have filed Form MBP-1 regarding disclosure of concern or interest in
any Company as required under Section 184(1} read with Rule 9(1) of the Companies Act,
2013.
RETIREMENT OF DIRECTORS
Mrs. Nadeera Shameem has to retire by rotation and is eligible for re-appointment.. The
Board reviewed her performance and recommended her reappointment for consideration of the
Members.
PERFORMANCE EVALUATION OF INDEPENDENT DIRECTORS BY THE BOARD
In terms of the provisions of Schedule IV (Para VII) and section 134(3) (p) of the
Companies Act, 2013, performance evaluation of the Independent Directors shall be done
annually by the Board of Directors. An evaluation of the Independent Directors was
conducted by the Board in the absence of the concerned Directors. The Chairman of the
Review Committee made a note of the result of such reviews which forms the basis for
recommending for retention / extension/ reappointment of the concerned Director.
PERFORMANCE REVIEW OF NON-INDEPENDENT DIRECTORS AND THE CHAIRMAN BY INDEPENDENT
DIRECTORS.
In terms of the provisions of schedule IV (Para VIII) of the Companies Act, 2013,
Independent Directors shall hold an Annual Meeting without the attendance of Non-
Independent Directors and members of the Management and review the performance of
Non-Independent Directors including the Chairman. Accordingly a review was held by the
Independent Directors and their opinion minuted and placed before the Board of Directors.
PERSONNEL:
There were no employees drawing remuneration in excess of the limits specified under
section 134 of the Companies Act 2013 read with Rules of the Companies (Appointment and
Remuneration of Managerial Personnel) Rule 2014, during the year under report.
APPOINTMENT OF KMP
Shri. Suneed Hashir is appointed as the Chief Financial Officer of the Company with
effect from 1.1.2015
CONTRACT WITH RELATED PARTIES
There is no instance of any contract with related parties reportable during the year
under review.
CORPORATE GOVERNANCE
Your Company is committed to adopting the best corporate governance practices. It
believes that proper corporate governance is not just a requirement for regulatory
compliance, but also a facilitator for enhancement of stakeholders value. The details of
your Companys corporate governance practices are given in this Annual Report as a
separate section, under Report on Corporate Governance as Annexure ‘B.
EXTRACT OF THE ANNUAL RETURN
Extract of the Annual Return in Form MGT 9 forms part of this Report and is given at
Annexure ‘C.
DIRECTORS RESPONSIBILITY STATEMENT:
Your Directors hereby confirm:
1. That in the preparation of Accounts for the period ended 31st March 2017; applicable
accounting standards have been followed along with proper explanation relating to material
departures, wherever necessary.
2. That the directors have 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 for the financial year
ended 31st March 2017 and of the profit/loss of the Company for that period.
3. 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, 2013,
for safeguarding the assets of the company and for preventing and detecting fraud and
other irregularities
4. That the statements of Profit and Loss and Balance Sheet have been prepared on a
going concern basis.
5. 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; and
6. 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.
THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE
FINANCIAL STATEMENTS.
The Company has an elaborate internal financial controls and processes policy in place
which provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements. These controls and processes are applied strictly
and reviewed periodically. The Company has not revised any Financial Statements or Boards
Report during the preceding three years. The Company has not maintained any charges with
the MCA.
COMPLIANCE CERTIFICATE - SECRETARIAL AUDIT
In terms of the provisions 204 of the Companies Act, 2013, Secretarial Audit Report
obtained from Shri. Murali Kanniyath, Practicing Company Secretary, Kannur, for the year
ended 31st March 2017 is given in Annexure ‘D and forms part of this report
AUDITORS:
M/S.T K Menon & Co., Chartered Accountants, Calicut, the Statutory Auditors, were
appointed by the Shareholders until the completion of audit for the AGM of 2017 and would
retire after the Annual General Meeting, 2017. Owing to the criteria of mandatory rotation
of statutory auditors, M/s.T.K.Menon & Co. having completed ten years and cannot
continue as Statutory Auditors, your Directors recommend M/s.Varma & Varma, Chartered
Accountants for appointment as Statutory Auditors on retirement of T.K.Menon & Co.
after the Annual General Meeting, 2017. This item is included in detail in the notice for
the Annual General Meeting 2017.
INSURANCE:
The Companys Assets have been adequately insured.
DIVIDEND:
Though your Company has earned small amounts of operational profits during the years
2010-2011 onwards, owing to accumulated losses of Rs.2098.73 lakhs as on 31st March 2017,
no dividend could be declared under the Companies Act.
Also, as the Company has huge accumulated loss, which is not set off in full against
the current profits, there is no amount to be carried to reserves.
CORPORATE SOCIAL RESPONSIBILITY
Though your Company is not covered by Corporate Social Responsibility as per the
Companies Act 2013, yet in its culture of being actively involved in social
responsibilities, emphasis will continue to be laid on this aspect.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:
During the year under review there has been no such significant and material orders
passed by the regulators or courts or tribunals impacting the going concern status and
companys operations in future.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:
During the year under review, the Company has not advanced any loans/ given guarantees/
made investments.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION
AND REDRESSEL) ACT, 2013.
All employees of the Company having gone on voluntary retirement, the small scale
trading activity is conducted with ten number of contract male employees. Internal
Complaints Committee is constituted to redress complaints received regarding sexual
harassment. The Company has not received any complaint of sexual harassment during the
year 2016-17.
ACKNOWLEDGEMENT
Your Directors place on record their thanks and appreciation to the employees of the
Company at all levels, shareholders, agents and other business associates for their
dedication and contribution to the Companys operations.
Your Directors place on record their thanks to The ICICI Bank Ltd., The Federal Bank
Ltd., The State Bank of India, The Bank of India and The IDBI Bank for their valuable
co-operation and support to the Company.
| Place: Kannur |
On behalf of the Board |
| Date: 08.08.2017 |
Managing Director |
Annexure - A to Directors Report
Particulars required as per Companies (Disclosure of particulars in the report of the
Board of Directors) Rules, 1988.
CONSERVATION OF ENERGY (Not applicable for the year ended 31.03.2016 and 31.03.2017 as
there were no manufacturing activities.)
FORM B
FORM OF DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION OF RESEARCH AND
DEVELOPMENT (R&D), TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION.
Though the Company is not in the field of manufacturing, yet the Company avails of
internet facility and contributes to various Textile Technology publications which render
the latest technological aspects and research outcome in the textile industry
FOREIGN EXCHANGE EARNINGS AND OUTGO
| 1. Activities relating to Export initiatives taken to increase exports and development
of new export markets for products and services |
Steps are being taken to increase exports by exploration through internet facilities |
| 2. Expenditure in Foreign Exchange |
|
| A) Used on account of travelling |
NIL |
| Activities relating to Exports |
|
| - On import of spares etc |
NIL |
| - Others (Commission) |
NIL |
| Total |
NIL |
| 3. B) Total Earnings in foreign exchange |
|
| - On Account of sales |
NIL |
| Place: Kannur |
On behalf of the board |
| Date: 08.08.2017 |
Managing Director |
ADDENDUM TO DIRECTORS REPORT
Based on the Qualified Opinion mentioned in the Auditors Report to the Members dated
8.8.2017.
1. Confirmation of balances:
As per the normal practice letters were sent to the debtors, holders of advances
(except statutory bodies) and liabilities, for confirming the balances directly to the
Statutory Auditors with a specific mention that if no reply was received, the balance
mentioned in the Companys communication would be construed as correct. In many cases the
debtors were also reminded by personal contacts while on sales visit and over the
telephone. Being parties of small transactions they do not take care to meet the said
requirement. Yet some replies have been received through the Auditors. However having
actively pursued the matter, in many cases the amounts outstanding has since been
realized.
2. Segment information required to be disclosed as per accounting standard AS 17 not
disclosed in the financial segment.
The relevant item pertains to leasing of godown space in the Mill premises which had
gathered momentum only for a while. Though there was mentionable improvement in leasing
out godown space during the early part of 2014 -15 there was a reduction to the extent of
about 50,000 square feet by bringing down the rent income from about Rs.10.0 lakhs p.m. to
almost half of it owing to shifting of godown by the parties and centralizing their
warehousing system wherefrom goods are directly delivered. The trend continues even now
and some more godown space was vacated during the year. Thus there is considerable
instability and uncertainty in declaring the rental activity as a separate segment for
accounting purposes. Depending upon the trend of progress during the year, appropriate
action will be taken for considering this activity as a separate segment for accounting
purposes if the growth so permits.
3. AS 28 Impairment of assets:
Owing to the nature of our assets, impairment of assets does not apply on our assets as
the carrying cost does not exceed their recoverable value.
| Place: Kannur |
On Behalf of the Board |
| Date: 09.08.2017 |
Managing Director |
+91-9892691696
