DIRECTORS' REPORT TO THE MEMBERS OF AMARJOTHI SPINNING MILLS LIMITED Your Directors have pleasure in presenting the Twenty Seventh Annual Report together with the audited accounts of your Company for the year ended 31st March 2015. STATE OF COMPANY'S AFFAIRS AND FUTURE OUTLOOK : OPERATIONS The Company's sales increased slightly by 1.70% to Rs.20147.89 Lacs during the year under review as against Rs.19810.92 Lacs in the previous year. i) YARN DIVISION Your Directors inform you that yarn division continues to perform well. Production and sales increased more than last year level. However due to raw material price fluctuation and Power cost, the profitability of the yarn Division have not improved much. ii) PROCESSING UNIT The performance of the Processing unit has improved and problems arising from the effluent Treatment plants are being sorted out. FUTURE PROSPECTS The Company will continue to perform well in the domestic market. The Company is in the process of implementing several cost saving measures, which will make the product more competitive. CHANGE IN NATURE OF BUSINESS, IF ANY : There were no changes in Nature of Business during the year 2014-2015 DIVIDEND Your Directors are glad to recommend a dividend of Rs. 2.00 per share (20% on the Equity Capital) for the year ended 31st March 2015 absorbing a sum of Rs.1,35,00,000/- for the approval of the share holders at the ensuing Annual General Meeting. The dividend will be free of tax in the hands of shareholders since the Company will be paying the Dividend Distribution Tax at the prescribed rate. GENERAL RESERVE During the year, your Company has transferred an amount of Rs.1,32,20,000.00 to the General Reserve. CHANGES IN SHARE CAPITAL : There were no changes in Share Capital of the Company during the Financial Year 2014-2015. DISCLOSURE REGARDING ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS : The Company has not issued any Equity Shares with Differential Rights during the Financial Year 2014-2015. DISCLOSURE REGARDING ISSUE OF EMPLOYEE STOCK OPTIONS : The Company has not provided any Stock Option Scheme to the employees during the year Under Review. DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES : The Company has not issued any Sweat Equity Shares during the year under review. EXTRACT OF ANNUAL RETURN : As required pursuant to Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in the Form MGT-9 is annexed as a part of this report vide "ANNEXURE VI". NUMBER OF BOARD MEETINGS : During the Financial Year 2014-15, 14 (Fourteen) Meetings of the Board of Directors of the company were held. The details of Board Meeting and Attendance of Directors are disclosed in the Corporate Governance Report. PARTICULARS OF LOAN, GUARANTEES AND INVESTMENTS UNDER SECTION 186 : The Company has not provided any Loan/Guarantee during the year under review. RELATED PARTY TRANSACTIONS : All contracts / arrangements / transactions entered by the company during the financial year with related parties where 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. Hence the requirement for furnishing details under section 134(3) (h) in prescribed Form No AOC 2 is not applicable. Further, the Company's policy on Related Party Transactions is attached as part of this report vide "ANNEXURE III". EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS : Based on the Secretarial Audit Report, we have observed that few aspects are not in compliance with Companies Act and Listing Agreement entered into with Stock Exchange which is purely unintentional and the necessary actions have been taken to resolve the issue. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT : No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this report. CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO : The information relating to Conservation of Energy, Foreign Exchange Earning and Out Go, Technology Absorption pursuant to section 134(3) (m) of the act, read with rule 8 sub rule 3 of the companies (accounts) rules, 2014 is attached as ANNEXURE I which forms part of the report. RISK MANAGEMENT POLICY : Availability of quality raw material and at competitive prices continuous to be a major factor of concern because India is basically an agrarian economy depending mostly on natural resources like water for its crops. The rising interest rates, increasing fuel prices, power shortage, labour scarcity are causes of the concern for the industry as a whole. The effluent treatment related problem faced by the Processing Division and the non-drawal of wind mill generated power by the TNEB are Company-specific causes of concern. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES : The Company does not have any Subsidiary, Joint venture or Associate Company. SECRETARIAL AUDIT : In terms of Section 204 of the Companies Act, 2013 and the rules thereunder, the Company has appointed Mr. R.Ramchandar B.com, ACS, LLB as the Secretarial Auditor of the Company. Secretarial Audit Report in Form MR-3 as provided by Mr. R. Ramchandar is annexed to this Report vide "ANNEXURE V". REMUNERATION OF DIRECTORS & KMP : Disclosure pursuant to Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed vide "ANNEXURE VII". DETAILS OF DIRECTORS APPOINTMENT AND RESIGNATION : i) Smt. Meiyappan Amutha (DIN: 07137884) who was appointed as Additional Director of the company w.e.f. 27th Day of March 2015 and who holds office upto the date of this Annual General Meeting of the Company be and is hereby appointed as an Independent Director of the Company. ii) Sri. S. Sathyanarayanan, Independent Director has resigned from the board on 09.09.2014 DIRECTORS RETIRE BY ROTATION : Mr. N. Rajan and Mr. R. Premchander retire by rotation and, being eligible, offer themselves for reelection. ANNUAL EVALUATION BY THE BOARD The Board has made a formal evaluation of its own performance and that of its committees and individual directors as required under Section 134(3) (p) of the Companies Act, 2013. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL : During the year 2014-15, no significant and material Orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and company's operations in future STATEMENT IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THE FINANCIAL STATEMENTS : The Company has a well-established internal financial control and risk management framework, with appropriate policies and procedures, to ensure the highest standards of integrity and transparency in its operations and a strong corporate governance structure, while maintaining excellence in services to all its stakeholders. Appropriate controls are in place to ensure: (a) the orderly and efficient conduct of business, including adherence to policies, (b) safeguarding of assets, (c) prevention and detection of frauds / errors, (d) accuracy and completeness of the accounting records and (e) timely preparation of reliable financial information. DEPOSITS : The Company has neither accepted nor renewed any deposits during the year under review. RECEIPT OF ANY COMMISSION BY MD/WTD FROM A COMPANY OR FOR RECEIPT OF COMMISSION/ REMUNERATION FROM ITS HOLDING OR SUBSIDIARY : NIL REAPPOINTMENT OF INDEPENDENT DIRECTOR : NOT APPLICABLE DECLARATION BY INDEPENDENT DIRECTOR : The Company has received necessary declaration from each Independent Director of the Company under Section 149 (7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149 (6). BOARD & AUDIT COMMITTEE : The details regarding number of board meetings held during the financial year and composition of Audit Committee is furnished in the Corporate Governance Report. NOMINATION AND REMUNERATION COMMITTEE POLICY : The details regarding Nomination and Remuneration Committee Meeting held during the financial year is annexed to the Corporate Governance Report. DISCLOSURE ON ESTABLISHMENT OF A VIGIL MECHANISM : During the year, the Company adopted a Whistle Blower Policy and established the necessary vigil mechanism for Directors and Employees to report concerns about unethical behavior. The mechanism provides for adequate safeguards against victimization. Further, no person has been denied access to the Audit Committee. The Whistle Blower Policy is available under the following web site: <http://www.amarjothi.net> AUDITORS : Mr. V. Narayanaswami M.A., F.C.A., Chartered Account, Coimbatore, (Membership No.023661), retires and is eligible for re-appointment for a term of five years. A certificate from the Auditors that they satisfy the conditions prescribed under the Companies Act, 2013 and the Rules made thereunder (including satisfaction of criteria under section 141 of the Companies Act, 2013), has been received from them. CORPORATE GOVERNANCE A detailed report on corporate governance, together with a certificate from the Statutory Auditors, in compliance with clause 49 of the Listing Agreement, is attached as part of this report vide "ANNEXURE II". CORPORATE SOCIAL RESPONSIBILITY Based on last three years average Net Profit, the Company is required to spend a sum of Rs. 24,89,413 in the year 2014-15. The Company is working out for schemes that could result in enduring benefits to the community at large. The Company shall find out ways and means to spend the same in the coming months and shall submit the relevant report in the ensuing year. The Company could not spend the money before finalising this report as the time was too short to identify suitable projects for spending the same. List of CSR Activities and Composition of CSR Committee is annexed herewith as "ANNEXURE IV". CORPORATE SOCIAL RESPONSIBILITY POLICY PREAMBLE Through Amarjothi Spinning Mills Limited, long standing commitment to service to the society, we strive to attain leadership in our business through a socially and environmentally responsible way, while taking care of the interests of our stakeholders. We work with the primary objective of contributing to the sustainable development of the society and creating a greener and cleaner environment around us. Towards achieving these objectives, Amarjothi Spinning Mills Limited has initiated Sanitation Programme for providing toilets, a program which executes various social and environmental development activities in and around its operational locations. CORPORATE SOCIAL RESPONSIBILITY PURPOSE STATEMENT The Company shall seek to impact the lives of the disadvantaged by supporting and engaging in activities that aim to improve their wellbeing. We are dedicated to the cause of empowering people, educating them and in improving their quality of life. While we will undertake programmes based on the identified needs of the community, education and healthcare shall remain our priority. Across the different programme areas identified by the company, it would be our endeavour to reach the disadvantaged and the marginalised sections of the society to make a meaningful impact on their lives. We are committed to identifying and supporting programmes aimed at: • Empowerment of the disadvantaged sections of the society through education, access to and awareness about financial services and the like; • Provision of access to basic necessities like healthcare, drinking water & sanitation and the like to underprivileged; • Work towards eradicating hunger and poverty, through livelihood generation and skill development; • Supporting environmental and ecological balance through afforestation, soil conservation, rain water harvesting, conservation of flora & fauna, and similar programme; • Promotion of rural sports, nationally recognized sports, paralympic sports and Olympic sports through training of sportspersons; • Undertake rural development projects; • Any other programme that falls under CSR purpose listed in Schedule VII of the Companies Act, 2013 amended from time to time and which are aimed at the empowerment of disadvantaged sections of the society. SCOPE This policy will apply to all projects/programmes undertaken as part the Company's Corporate Social Responsibility and will be developed, reviewed and updated periodically with reference to relevant changes in corporate governance, international standards and sustainable and innovative practices. The policy will maintain compliance and alignment with the activities listed in Schedule VII and Section 135 of the Companies Act 2013 and the rules framed there under. GOVERNANCE The approval of the CSR policy and oversight is the responsibility of the Company's Board of Directors. The responsibility of the CSR committee is to formulate the policy and to administer the policy through implementing partner(s) or via self-implementation. The CSR Committee shall provide guidelines for projects/partner selection to the respective HR or CSR teams, wherever applicable. The CSR committee is to ensure that projects/programmes are compliant with regulations and are monitored and reported effectively. As the Company's CSR activities evolve, the policy may be revised by the CSR committee and approved by the Board of Directors. CSR EXPENDITURE The CSR Committee shall recommend to the Board the amount of expenditure to be incurred on the CSR activities to be undertaken by the company as approved by the Board. In case of any surplus arising out of CSR projects, the same shall not form part of business profits of the Company. IMPLEMENTATION The Company shall undertake CSR project/programmes identified by the CSR Committee and approved by the Board of Directors in line with the CSR Policy. The Company shall implement its CSR programmes/projects: a) Through an implementation partner that can be a public charitable trust or a society registered under applicable Acts or a Company registered under Section 8 of the Companies Act 2013; or b) On its own, through the relevant HR or CSR department or through its own foundation (if applicable) specifically created for implementing its CSR initiatives. The Company may enter into partnerships or alliances with NGOs, Trusts, or other Corporate Foundations etc. to effectively implement its CSR programmes/projects. The Company can also implement programme(s) in collaboration with other company(ies), if permissible and feasible in such a manner that the CSR Committee is in a position to report separately on such projects / programs. The Company shall formulate criteria and procedure for selection, screening and due diligence of its implementing partners. MONITORING AND REPORTING The CSR Committee will oversee the implementation and monitoring of all CSR projects/ programmes and periodic reports shall be provided for review to the Board. The Company will institute a well-defined, transparent monitoring and review mechanism to ensure that each CSR project/programme has: 1. Clear objectives developed out of the societal needs that may be determined through need assessment studies and research (secondary or primary); 2. Clear targets, time lines and measurable indicators, wherever possible; A progress monitoring and reporting framework that is aligned with the requirements of Section 135 of the Companies Act 2013 and the CSR Rules. PERSONNEL : In term of the provision of Section 197(12) of Act read with rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are annexed to this report as "ANNEXURE VIII". DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaints were received during the year 2014-15. DIRECTORS' RESPONSIBILITY STATEMENT : Your directors confirm that : 1. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; 2. 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 at the end of the financial year and of the profit of the Company for that period; 3. 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; 4. The directors had prepared the annual accounts 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. ACKNOWLEDGEMENT : Your directors gratefully acknowledge the support and co-operation extended to your Company by all the customers, shareholders and bankers. Your directors also place on record their appreciation of the tireless efforts of Team Amarjothi, a dedicated and loyal band of people who have displayed unswerving commitment to their work in these challenging times and helped the Company deliver good results. MAY LORD VENKATESWARA SHOWER HIS BLESSINGS FOR THE CONTINUED PROSPERTIY OF THE COMPANY. By Order of the Board (Sd/-) N. RAJAN Chairman (Sd/-) R. PREMCHANDER Managing Director Place : Tirupur Date : 30.07.2015 |