DIRECTORS' REPORT Dear Members, Your Directors have pleasure in presenting the 25th Annual Report together with audited accounts of the Company for the year ended 31st March, 2015. DIVIDEND Your Directors are glad to recommend payment of dividend of Rs. 1.50/- per equity share of Rs. 10/- each to the equity shareholders (@ 15% of the paid up capital). REVIEW OF OPERATIONS The overall turnover of the Company has decreased by 2.50% in turnover as compared to the previous year, mainly due to lower off take of finished goods in the market. There is no change in the nature of Business of the Company. Spinning Division During the year under review, the Spinning Mills produced 22054.34 tonnes (20700.32 tonnes) inclusive of purchased quantity 885.25 tonnes (1378.53 tonnes) of Yarn and sold 20818.38 tonnes (21050.40 tonnes) of Yarn. The sales include 11195.79 tonnes (10732.84 tonnes) by way of Export. The total sales of this division amounted to Rs. 48931.22 Lakhs 52366.13 Lakhs) of which export sales amounted to Rs. 25398.85 Lakhs 25454.37 Lakhs) constituting 51.91% (48.60%) of the total sales. Weaving Division The Weaving Division specializes in manufacturing wider-width cotton fabric. During the year under review, 96.40 Lakh Metres (76.23 Lakh Metres) of Fabric were produced and 88.85 Lakh Metres (71.59 Lakh Metres) of Fabric were sold. Knitting Division During the year under review, 3176.25 tonnes (1672.42 tonnes) of Knitted fabric were produced and 3224.01 tonnes (1529.40) tonnes were sold. The total sales of this division amounts to Rs. 7367.93 Lakhs 3640.95 lakhs) of which export sales amounted to Rs. 1370.13 Lakhs 806.07 lakhs). Processing Division and Technical Textiles Division During the year under review, 768.54 tonnes (583.32 tonnes) of fabrics were processed and the total processing charges of this division amounts to Rs. 614.62 Lakhs 464.13 lakhs). Garment Division During the year under review, 9.10 lakhs (7.46 lakhs) pieces of Garments were produced and sold 8.68 lakhs (7.09 lakhs) pieces. The total sales of this division amounts to Rs. 3572.56 lakhs 3192.49 lakhs) of which export sales amounted to Rs. 3533.38 lakhs 3143.25 lakhs). Wind Mill Division The company has 4 windmills of 1250 KW each totaling 5 MW in Radhapuram Taluk, Tirunelveli District, Tamilnadu, 25 Nos windmills, each of 800 KW capacity totaling 20 MW capacity in Dharapuram Taluk, Tirupur District and Palani Taluk, Dindigul District, Tamilnadu and 3 Windmills of 1650 KW each in Kongalnagaram, Udumalpet Taluk, Tirupur District, Tamilnadu. The total installed capacity of Windmills is 29.95 MW and the whole of the power generated is captively consumed by the Spinning and Weaving Unit. The windmills produced 449.40 Lakh units of power as against 492.39 Lakh units produced in the last year. PROSPECTS FOR THE CURRENT YEAR The parity between the cost of inputs and realization on finished products is expected to be favorable. Installation of new machinery in value added divisions will increase business volume and profit margin. Overall performance of your company is expected to be satisfactory. EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS There are no material changes and commitments affecting the financial position of the Company, subsequent to the end of the Financial Year. PUBLIC DEPOSITS The company has no public deposits outstanding at the beginning of the year and the Company has not accepted any deposits within the meaning of Section 73 to 76 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 during the year under review. CORPORATE GOVERNANCE In line with requirements of Clause 49 of the Listing Agreement our Company is committed to the principles of good Corporate Governance and continues to adhere good corporate governance practices consistently. A separate section on Corporate Governance, Management Discussion and Analysis alongwith a certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms part of this Annual Report. EXTRACT OF ANNUAL RETURN An extract of the Annual Return as on Financial Year Ended on 31st March, 2015, pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 and forming part of the report, in Form MGT - 9 is enclosed as Annexure - I DIRECTORS Smt S Sihamani (DIN 06945399), was appointed as Additional Director (Woman Director) u/s 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with effect from 1.9.2014. She holds office upto the date of ensuing Annual General Meeting and being eligible, offers herself for re-appointment. Further, Smt S Sihamani, fulfills the criteria required for being appointed as an Independent Director and recommended to be appointed as an Independent Director of the Company for a term of five consecutive years from date of the ensuing Annual General Meeting. Sri S V Arumugam, Managing Director (DIN 00002458) is required to retire by rotation at the ensuing Annual General Meeting, he is eligible and seeks re-appointment. The term of office of Sri S V Arumugam as Managing Director expires on 26.6.2015. The Board of Directors on the recommendation of Nomination and Remuneration Committee, have appointed him for a further period of 5 years and approved the remuneration payable to him. Such appointment and payment of remuneration are subject to approval of shareholders in the ensuing Annual General Meeting. All Independent Directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. KEY MANAGERIAL PERSONNEL The Company has appointed the following persons as Key Managerial Personnel during the year. AUDIT COMMITTEE The Audit Committee comprises of 1. Sri C S K Prabhu - Chairman (Non- Executive Independent Director) 2. Sri K N V Ramani - Member (Non- Executive Independent Director) and 3. Sri S Palaniswami - Member (Non- Executive Independent Director) The Board has implemented the suggestions made by the Audit Committee from time to time. EVALUATION OF BOARD OF DIRECTORS Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, Independent Directors at their meeting without participation of non-independent directors and management considered and evaluated the Boards' performance, performance of the Chairman and Managing Director. The Board has carried out an annual evaluation of its own performance, of the individual directors as well as the Committees of Directors. BOARD MEETINGS During the year under review, four Board Meetings were conducted. The details of the same have been given in the Corporate Governance Report of Clause 49 of the Listing Agreement forming part of this Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The Company has not given any loans or guarantees governed under the provisions of Section 186 of the Companies Act, 2013. The details of the investments made by Company are given in the notes to the financial statements. ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has established a Vigil Mechanism for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics. The policy has been posted in the website of the Company: www.bannarimills.com POLICY ON NOMINATION AND REMUNERATION COMMITTEE The Board of Directors have framed a policy setting out the framework for payment of Remuneration to Directors, Key Managerial Personnel and Senior Management Personnel of the Company. The policy is explained as part of the Corporate Governance Report. The Committee ensures 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. Relationship of remuneration to performance is clear and meets appropriate performance benchmarks and c. Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals. RELATED PARTY TRANSACTIONS All the related party transactions that were entered into during the financial year in the ordinary course of business and the prices were at arm's length basis Hence, the provisions of Section 188 of the Companies Act, 2013 are not attracted. Further no materially significant related party transactions were made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. Hence reporting in AOC-2 is not required. Approval of Audit Committee was obtained for transactions of repetitive nature on annual basis. All related party transactions are placed before the Audit Committee and Board of Directors for their review. The policy on Related Party Transactions is available in the website www.bannarimills.com SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status and the Company's operation in future. DIRECTORS' RESPONSIBILITY STATEMENT As stipulated in Section 134 (5) of the Companies Act, 2013 your Directors confirm that: a) Your Directors have followed in the preparation of the annual accounts, the applicable accounting standards with proper explanation relating to material departures; b) Your 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 at the end of the financial year and of the profit and loss of the Company for that period; c) Your Directors have 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) Your Directors have prepared the annual accounts on a going concern basis; e) Your Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and Your Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. AUDITORS The present Auditors of the Company M/s P.N.Raghavendra Rao & Co., Chartered Accountants, Coimbatore, were appointed for a term of 3 years, pursuant to the resolution passed by the members at the Annual General Meeting held on 25th August, 2014. A resolution ratifying their appointment in terms of Section 139 is also placed before the shareholders for their approval at the ensuing Annual General Meeting. SECRETARIAL AUDIT Pursuant to provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed Mr R Dhanasekaran, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The report is annexed herewith as Annexure - II No adverse qualifications/comments have been made in the said report by the Practicing Company Secretary. COST AUDITOR Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, the Board of Directors, on the recommendation of Audit Committee, has appointed Sri M Nagarajan, Cost Accountant, Coimbatore as Cost Auditor to conduct Cost Audit of the Company for the financial year 2015 - 2016 with remuneration. As required under the Companies Act, 2013, a resolution seeking members' approval for the remuneration payable to the Cost Auditor forms part of the Notice convening Annual General Meeting. SUBSIDIARY During the year under review, Abirami Amman Mills Private Limited ceased to be a subsidiary of your company. Further the policy determining 'material' subsidiary is available in the website www.bannarimills.com INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee & to the Chairman & Managing Director. The Company has an Internal Audit Department which monitors and evaluates the efficiency and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, corrective actions are taken in the respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. STATEMENT ON RISK MANAGEMENT POLICY Pursuant to Section 134(3)(n) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The Committee has developed a Risk Management Policy and implemented the same. The details of the Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Boards Report. At present the Company has not identified any element of risk which may threat the existence of the Company. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE The Company has constituted Corporate Social Responsibility Committee which shall recommend to the Board, the activities to be undertaken by the Company as specified in Schedule VII, recommend the amount of expenditure to be incurred on such activities and monitor the CSR policy of the Company. The Company has partially spent the amount stipulated under the requirements of the Act. Corporate Social Responsibility Committee constituted consisting of the following Directors with effect from 21.5.2014. Sri S V Arumugam - Managing Director Sri S Palaniswami - Independent Director Sri K Sadhasivam - Independent Director The CSR activities and its related particulars is enclosed as Annexure III STATUTORY DISCLOSURES I. Conservation of Energy and others - The particulars required to be included in terms of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 for the year ended 31st March 2015 relating to Conservation of Energy, etc., is enclosed as Annexure IV. II. Remuneration of Directors and other details- The information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors' Report for the year ended 31st March, 2015 is provided in Annexure V. HUMAN RESOURCES AND INDUSTRIAL RELATIONS During the year under review the human relations continued to be very cordial. The Company wishes to acknowledge the contribution of the employees at all levels of the organisation. The Company has placed an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints for sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The Company has not received any complaints received for disposal off during the year. ACKNOWLEDGEMENT Your Directors acknowledge with gratitude the timely assistance and help extended by the Bankers for having provided the required bank facilities. Your Directors wish to place on record their appreciation of the contributions made by the employees at all levels for the excellent performance of your company. By Order of the Board S V ARUMUGAM Chairman & Managing Director Date : 30th May, 2015 Place : Coimbatore |