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EQUITY - MARKET SCREENER

Bannari Amman Spinning Mills Ltd
Industry :  Textiles - Cotton/Blended
BSE Code
ISIN Demat
Book Value()
532674
INE186H01022
59.6488086
NSE Symbol
P/E(TTM)
Mar.Cap( Cr.)
BASML
7.35
432.17
EPS(TTM)
Face Value()
Div & Yield %
9.07
5
0
 

As on: May 25, 2022 11:38 AM

Dear Members,

Your Directors have pleasure in presenting the 31st Annual Report together with audited accounts of the Company for the year ended 31st March, 2021.

FINANCIAL RESULTS: (Rs. in Lakhs)
2020-21 2019-20
Profit before Depreciation 1563.77 2854.65
Less : Depreciation 2809.11 2831.16
Less : Taxes (190.29) (3.59)
Add/(Less) : Other Comprehensive Income 46.10 57.30
Profit after Tax (1008.95) 77.20
Surplus brought forward from last year 4870.76 5108.02
Amount available for appropriation 3861.81 5185.22

DIVIDEND

Your Directors have not recommended any dividend for the year 2020-21.

REVIEW OF OPERATIONS

The performance of the Company was significantly affected in the first half of the financial year 2020-21 on account of lock down measures imposed by the Governments to control the impact of COVID-19. This resulted in complete closure of factories for about 45 days, fall in prices of finished goods due to reduced demand during the pandemic period, disrupted logistics, cancelled or suspended orders all of which contributed to the decline in performance. Even after the lock down was lifted, there were restrictions in labour employment leading to reduced capacity utilization which further impacted the operations.

However sentiments picked up in the second half of the year both in domestic and international markets which enabled the Company to reduce the losses for the full year.

IMPACTOF COVID-19

The impact of COVID 19 has been severe for the entire Global economy and textile industry is no exception to this. Complete shut down of manufacturing units in the initial stages of COVID 19 pandemic, sub optimal capacity utilization for 2 to 3 months after relaxation was permitted, cancellation of orders by domestic and international buyers due to uncertainty across the markets, slump in physical Retail sales of apparel items were factors affecting the industry adversely.

The Company has considered the possible effects that may result from the pandemic relating to COVID-19 on the carrying amounts of Property, plant and equipment, Intangibles, Inventories, Receivables and Other assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company, as at the date of approval of these financial results has used internal and external sources on the expected future performance of the Company. The Company has evaluated its liquidity position, recoverability and based on current estimates expects the carrying amount of these assets will be recovered.

The unit wise performance of the company is furnished below:

Spinning Units

During the year under review, the Spinning mills produced 26273 tonnes (30714.94 tonnes) inclusive of purchased quantity Nil tonnes (77.11 tonnes) of Yarn and sold 21853.38 tonnes (25779.09 tonnes) of Yarn.

The sales include 3859.87 tonnes (3322.73 tonnes) by way of export. The total yarn sales of this division amounted to Rs. 46580.55 Lakhs (Rs.54017.30 Lakhs) of which export sales amounted to Rs.7777.97 Lakhs (Rs. 6701.80 Lakhs) constituting 16.70% (12.41%) of the total yarn sales.

The Spinning division produced 8048.59 tonnes (8809.02 tonnes) of saleable waste cotton and sold 7930.21 tonnes (8438.23 tonnes) and the total waste cotton sales of this division amounted to Rs.4564.97 Lakhs (Rs. 5466.79 Lakhs).

Weaving Unit

The Weaving division specializes in manufacturing wider-width cotton grey woven fabric. During the year under review, 118.21 Lakh metres (159.20 Lakh metres) of fabric were produced and 113.02 Lakh metres (123.22 Lakh metres) of fabric were sold.

The sales include 38.12 tonnes (33.09 tonnes) by way of export. The total fabric sales of this division amounted to Rs.10965.78 Lakhs (Rs. 10324.09 Lakhs) of which export sales amounted to Rs. 3116.54 Lakhs (Rs. 2807.32 Lakhs).

Home Textile Unit

During the year under review, the Home Textile division produced 9.59 Lakh pieces (14.66 Lakh Pieces) of made ups and sold 6.05 Lakh pieces (14.56 Lakh pieces).

The total sales of this division amounted to Rs.3106.41 Lakhs (Rs.3187.10 Lakhs) which includes fabric sales 12.77 Lakh metres (19.72 Lakh metres) and the sales amounted to Rs.1315.82 Lakhs (Rs.1590.60 Lakhs).

Knitting Unit

During the year under review, 5865.56 tonnes (5209.68 tonnes) of Knitted fabric were produced and 5500.41 tonnes (4777.35 tonnes) were sold. The total sales of this division amounted to Rs.12284.58 Lakhs (Rs.10826.52 Lakhs) of which export sales amounted to Rs.4881.66 Lakhs (Rs.1627.60 lakhs).

Processing Unit

During the year under review, 2069.83 tonnes (2206.45 tonnes) of fabric were processed on job work basis and 1098.59 tonnes (1001.12 tonnes) of fabric were produced and 1011.76 tonnes (954.81 tonnes) of fabric were sold. The total fabric sales of this division amounted to Rs. 4316.55 Lakhs (Rs. 3933.93 lakhs).

Apparel Unit

During the year under review, 28.73 Lakhs (10.62 lakhs) pieces of Garments were produced on job work basis and nil lakhs (7.41 lakhs) pieces of Garments on own production. The total income of this division amounted to Rs.873.72 lakhs (Rs. 963.29 Lakhs).

Wind Mills

The company has 4 windmills of 1250 KW each totaling 5 MW in Radhapuram Taluk, Tirunelveli District, Tamilnadu, 23 Nos windmills, each of 800 KW capacity totaling 18.4 MW capacity in Dharapuram Taluk, Tirupur District and Palani Taluk, Dindigul District, Tamilnadu. The total installed capacity of Windmills is 23.40 MW and the whole of the wind power generated is captively consumed by the Spinning Units and Weaving Unit.

The windmills produced 407.67 Lakh units of power as against 469.52 Lakh units produced in the last year.

PROSPECTS FOR THE FINANCIAL YEAR 2021-22

The second wave of Covid -19 pandemic reached its peak in April and May of the current financial year.

The lock down measures imposed by the government to control the second wave has affected the operations and consequently the performance of the company has been impacted to an extent. The Central Government has warned of possible third wave also which may affect the fortunes of the industry.

Hence the prospects for the current year can not be reasonably estimated at this point of time but the Company is confident of overcoming the adverse impact of the pandemic on the operations of the Company.

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS

In terms of the resolution framework for COVID-19 related stress prescribed by Reserve Bank of India, vide Circular No. RBI/2020-21/16 DOR.No.BP.BC/3/21.04.048/2020-21 dt. August 6, 2020 ("August 6 Framework"), the company has restructured its existing credit facilities by extension of the tenure of Term loans from Banks and offer of additional/modification of the securities offered to them.

There are no material changes and commitments affecting the Financial position of the Company, subsequent to the end of the Financial Year.

There are no proceedings pending under the Insolvency and Bankruptcy Code, 2016. There was no instance of one-time settlement with any Bank or Financial Institution.

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.

CAPITAL STRUCTURE

i. Sub-division of face value of equity shares

The Company has completed the sub-division of 1 (one) Equity Share of face value of Rs.10/- (ten) each fully paid up into Equity Shares of Rs.5/- (five) each fully paid up, resulting in issuance of 2 (two) Equity Shares of Rs.5/- (five) each fully paidup, thereby keeping the paid-up capital intact under Section 61(1)(d) of the Companies Act, 2013 with necessary approval of Regulators wherever applicable.

Accordingly, the face value of the equity shares of the Company changed from Rs.10/- to Rs.5/- with effect from 12.2.2021.

FURTHER ISSUE OF SHARES ON RIGHTS BASIS

The Company has initiated the procedural formalities for obtaining in-principle approval from Stock Exchanges and have filed the Draft Letter of Offer with the Securities and Exchange Board of India, in order to issue of equity shares to the shareholders of the Company on Rights basis amounting to Rs.100 Crore, in accordance with applicable laws, including Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, during the year.

Accordingly, National Stock Exchange of India Limited and BSE Limited have issued the in-principle approval for Listing of shares on 4.5.2021 and on 18.6.2021 respectively and SEBI has issued its observation letter on 25.6.2021.

COMPANY BECOMES SUBSIDIARY

The company has become subsidiary of Murugan Enterprise Private Limited, one of the promoter company consequent to the acquisition of 7,79,500 equity shares of Rs.10/- each constituting 4.95% from Sakthi Murugan Transports Private Limited, another promoter company, with effect from 19.10.2020.

CORPORATE GOVERNANCE

In line with requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 your Company is committed to the principles of good Corporate Governance and continues to adhere good corporate governance practices consistently.

A separate section is given on Corporate Governance, Management Discussion and Analysis alongwith a certificate from a Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.

ANNUAL RETURN

Pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013, Annual Return for Financial Year ended on 31st March, 2021, is posted on the website of the Company viz., www.bannarimills.com

DIRECTORS

Sri S V Arumugam, (DIN 00002458) will retire by rotation at the ensuing Annual General Meeting, he is eligible for re-appointment and seeks re-appointment.

In terms of Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Special Resolution for continuation of present term of Directorship of Sri K Sadhasivam (DIN 00610037), non-executive Independent Director is proposed who is attaining the age of 75 years. 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 Regulation 25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The company has obtained a Certificate from Sri R Dhanasekaran, Company Secretary in Practice certifying that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by the Board/Ministry of Corporate Affairs or any such statutory authority.

KEY MANAGERIAL PERSONNEL

The Company has appointed the following persons as Key Managerial Personnel

Name of the persons Designation
Sri S V Arumugam Managing Director
Sri S Seshadri Chief Financial Officer
Sri N Krishnaraj Company Secretary

AUDIT COMMITTEE

The Audit Committee comprises of:

1. Sri K N V Ramani Chairman (Non-Executive Independent Director)
2. Sri S Palaniswami Member (Non-Executive Independent Director) and
3. Sri K Sadhasivam 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 Regulation 17 (10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 performance of Board and of individual Directors as well as the Committees of Directors. The evaluation has been conducted internally in the manner prescribed by Nomination and Remuneration Committee.

BOARD MEETINGS

During the year under review, Seven Board Meetings were conducted. The details of the same have been given in the Corporate Governance Report under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forming part of this Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has furnished/extended Corporate Guarantee to an amount of Rs.149.90 Crores for the credit facilities both term loan and working capital facilities, given by Punjab National Bank (Erstwhile Oriental Bank of Commerce) to Young Brand Apparel Private Limited, a Subsidiary Company.

Investments of the Company in the shares of other companies is provided under notes to Balance Sheet appearing in this Annual Report.

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 (1) of the Companies Act, 2013 are not attracted. Further no materially significant related party transactions were entered 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.Approval of Audit Committee was obtained for transactions of repetitive nature on annual basis. All related party transactions are placed before the Audit Committee for approval and Board of Directors for their review.

The policy on Related Party Transactions is available in the website www.bannarimills.com

Disclosure of these Transactions in form AOC-2 pursuant to Section 134 (3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 as set out below:

Form AOC - 2

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso thereto

1. Details of contracts or arrangements or transactions not at arm's length basis: Nil

2. Details of material contracts or arrangement or transactions at arm's length basis: Nil

There were no transactions made with any person or entity belonging to promoter/promoter group which holds 10% or more shareholding in the Company.

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

f) 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 Deloitte Haskins & Sells LLP, Chartered Accountants, Bangalore (Firm Registration No: 117366W/W-100018), were appointed for a term of 5 years, pursuant to the resolution passed by the members at the Annual General Meeting held on 25th September, 2017.

Pursuant to Section 40 of the Companies (Amendment) Act, 2017, the proviso to Section 139 (1) relating to ratification of appointment of Auditors every year has been omitted. Accordingly, the term of office of present Auditors continues without requirement of ratification at the Annual General Meeting.

There is no audit qualification for the year under review.

DETAILS OF FRAUDS REPORTED BY AUDITORS

There were no frauds reported by the Statutory Auditors under provisions of Section 143 (12) of the Companies Act, 2013 and rules made thereunder.

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 - I.

COMPLIANCE OF SECRETARIAL STANDARDS

The Company has complied with all applicable Secretarial Standards issued by the Institute of Company Secretaries of India from time to time.

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 2021 - 2022. The Company has maintained such accounts and cost records as required under Section 148 (1) of the Companies Act, 2013.

JOINT VENTURE, ASSOCIATE AND SUBSIDIARIES

The Company has following five subsidiaries as on 31.3.2021:

i. Abirami Amman Designs Private Limited

ii. Accel Apparels Private Limited

iii. Young Brand Apparel Private Limited (also Joint Venture Company)

iv. Bannari Amman Retails Private Limited and

v. Bannari Amman Trendz Private Limited.

In accordance with the Section 129 (3) of the Companies Act, 2013, the consolidated Financial Statements of the Company has been prepared which forms part of the Annual Report. A separate statement containing the salient features of the Financial Statements of Subsidiaries in Form AOC-1 (Part A) is furnished:

Form AOC-1

Statement pursuant to Section 129 (3) of the Companies Act, 2013, related to Subsidiary Companies Part A Subsidiaries

(Amount in Rs.)
Name of thesubsidiary Abirami Amman Designs Private Limi ted* Accel Apparels Private Limited* Young Brand Apprel Private Limited Bannari Amman Retails Private Limi ted* Bannari Amman Trendz Private Limi ted*
1 The date since when subsidiary wasacquired 23.6.2016 23.6.2016 7.7.2017 14.12.2018 21.2.2019
2 Share capital 10,00,000 1,00,000 65,16,06,060 1,00,000 1,00,000
3 Reserves and surplus (73,071) (2,72,339) 8,01,98,591 (46,62,820) (83,36,547)
4 Total assets 9,54,611 74,239 2,10,71,31,956 1,08,18,836 15,47,67,852
5 Total Liabilities 27,682 2,46,578 1,37,53,26,639 1,53,80,958 16,30,04,558
6 Investments - - - - -
7 Turnover - - 1,69,57,24,050 79,13,505 1,16,17,797
8 Profit before taxation (17,266) (52,000) 1,74,85,499 12,27,679 (47,57,388)
9 Provision for taxation - - 47,74,717 6,23,925 (28,32,720)
10 Profit after taxation (17,266) (52,000) 1,27,10,782 6,03,754 (19,24,668)
11 Proposed Dividend - - - - -
12 Extent of shareholding (in percentage) 100% 100% 51.33% 100% 100%

* Unaudited Notes:

1. Names of subsidiaries which are yet to commence operations-Abirami Amman Designs Private Limited and Accel Apparels Private Limited.

2. Names of subsidiaries which have been liquidated or sold during the year - Nil

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 and to the Chairman and Managing Director of the Company.

The Company has Independent Internal Auditor and 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, the Committee has developed a Risk Management Policy and implemented the same. At present the Company has not identified any element of risk which may be of threat to the existence of the Company.

CORPORATE SOCIAL RESPONSIBILITY

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 fully spent the amount stipulated under the requirements of the Act. The Company has constituted Corporate Social Responsibility Committee consisting of the following Directors:

1. Sri S V Arumugam Managing Director
2. Sri S Palaniswami Independent Director
3. Sri K Sadhasivam Independent Director

The Annual Report on CSR activities and its related particulars is enclosed as Annexure II

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, 2021, relating to Conservation of Energy, etc., is enclosed as Annexure III.

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, 2021 is provided in Annexure IV.

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 an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 and an Internal Complaints Committee (ICC) has constituted to redress complaints of sexual harassment as provided therein. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

a. No.of complaints filed during the financial year 2020-21 Nil
b. No.of complaints disposed off during the financial year 2020-21 Nil
c. No.of complaints pending as on end of financial year 2020-21 Nil

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.

Coimbatore By Order of the Board
23rd July, 2021 S V ARUMUGAM
Chairman & Managing Director
DIN 00002458