Annual Report: 2021
surgicom The Ramaraju Surgical Cotton Mills Limited’s 81st Annual General Meeting (AGM) will be held on Wednesday, the 25th of August, 2021 at 9:30 A.M. via video conferencing. The ordinary business to be transacted includes adopting the company’s separate and consolidated audited financial statements for the year ended March 31st, 2021 and approving the Director’s report. A dividend of ₹0.50 per share is recommended. Shri P.R. Venketrama Raja and Shri N.K. Shrikantan Raja, are eligible to be re-appointed as Directors of the Company. Shri P.A.S. Alaghar Raja, appointed as an Additional Director on June 16th, 2021, is offering himself for appointment as a Director under the Independent Director category for a period of 5 years from the date of his appointment. Shri M. Kannan, Cost Accountant is appointed as the Cost Auditor for the financial year 2021-22 for auditing the Cost Records relating to the manufacture of textile and pharmaceutical products and his remuneration of ₹1,40,000/- will be ratified and confirmed.
The facility for remote e-voting shall remain open from 9.00 A.M on Sunday, the 22nd August, 2021 to 5.00 P.M on Tuesday, the 24th August, 2021. The cut-off date will be 19th August, 2021 for determining the eligibility to vote by remote e-Voting or in the AGM. Members who would like to express their views / ask questions during the meeting may register themselves as a speaker by sending their request at least 3 days prior to meeting mentioning your name, demat account number / folio number, email id, mobile number to the mail id: rscm@ramcotex.com. The procedure for attending meeting & e-Voting on the day of the AGM is same as the instructions mentioned above for Remote e-Voting. The Members can join the AGM in the VC mode upto 15 minutes before and after the scheduled time of the commencement of the Meeting.
Directors’ Report:
The Board of Directors presents their 81st Annual Report on the business and operations of The Ramaraju Surgical Cotton Mills Limited.
Financial Results: The separate financial results for the year ended 31st March, 2021, after considering expenses and Ramaraju Memorial Fund contributions (₹70 Lakhs), but before deducting finance cost and depreciation, resulted in EBITDA of ₹7,441.31 Lakhs against ₹5,433.82 Lakhs for the previous financial year 2019-20. After deducting ₹2,199.86 Lakhs for finance cost and ₹1,752.86 Lakhs for Depreciation, the Profit before Tax for the year is ₹3,488.59 Lakhs against profit of ₹1,002.09 Lakhs of the previous financial year 2019-20. Capital Stock and Listing on the Stock Exchange: The authorized share capital of the company is ₹500 lakhs consisting of 50,00,000 equity shares of ₹10/- each and the paid-up share capital of the company is ₹394.66 lakhs consisting of 39,46,560 equity shares of ₹10/- each. Dividend: The Directors have pleasure in recommending a dividend of ₹0.50 per share. The total dividend outgo is estimated at ₹19.73 lakhs. Taxation: An amount of ₹607.02 Lakhs for Current Tax and Deferred Tax Liability of ₹208.08 Lakhs has been provided for 2020-21. The company's MAT Credit entitlement of ₹607.02 Lakhs has been recognized in the books.
Management Discussion and Analysis, Trade Conditions: Spinning Division: An adverse impact was seen in the first two quarters of the financial year due to CoVID-19. The Spinning Division has seen some strengthening in yarn prices from early months of 2021 and is expected to continue through the third quarter of 2021-22 and possibly beyond. Cotton prices in India were lower in the first two quarters of 2020-21 due to high level of carry over stock. After relaxations announced by the Government, the manufacturing activities were resumed, and the cotton prices have increased by >30% compared to the price ruled during the initial cotton season. The prices of some imported cotton varieties especially the long staple fiber increased steeply by 40-75% within a period of 3-4 months. The company mitigated this increase by importing high-quality cotton in the first two quarters of 2020-21. From 1st February, 2021, the Government of India has withdrawn the customs duty exemption on raw cotton. Basic Custom Duty (BCD) of 5% has been imposed and a new Agriculture Infrastructure and Development Cess (AIDC) of 5% has been introduced. The total burden of customs duties on imported cotton totals to 11%. To mitigate the effect of 11% customs duty, the company planned all cotton imports through the Advance Authorization scheme. The company plans to invest in plant and equipment to improve productivity and replace machines that are having a negative impact on production at higher maintenance costs. Surgical Division: The Company was able to achieve steady sales during the Financial Year 2020-21. The impact of the pandemic CoVID-19 second wave is expected in first quarter of Financial Year 2021-22 as hospitals have focused on CoVID-19 patients and slowed their outpatient and elective procedures. Increased pricing will help in maintaining historical margins. Weaving Division: The weaving division had the highest weaving sales and contribution margins in the history of the Company. Exports: The company made export of cotton yarn and grey fabrics for ₹49.78 crores (₹68.49 crores in the previous year).
Other: During the financial year 2020-21, the company consumed power through its windmills and rooftop solar plant. The overall power cost decreased to ₹2,029.30 Lakhs from ₹2,708.04 Lakhs. The finance cost decreased to ₹2,199.86 Lakhs from ₹2,774.42 Lakhs. The company received dividend income of ₹106.15 Lakhs.
Key Financial Ratios: (for the year 2020-21):
Financial Year 2021-22 has started with positive outlook in terms of steady customer demand for our products in Spinning and Weaving divisions and second wave of pandemic seems to have lesser impact as compared to the first wave in the previous financial year 2020-21. The US Department of Agriculture has projected that India's cotton production in 2021-22 would be higher at 378 Lakhs bales. The company has firm orders through the end of the second quarter of 2021-22 with continued order enquires. The company will be investing ₹25 Crores total (Spinning ₹20 Crores; Weaving ₹1.50 Crores and Surgical ₹3.50 Crores) and ₹45.00 Crores in a modern automated line for manufacturing bedsheets.
The Company has wind mills with installed capacity of 8.30 MW for its captive power consumption. The wind farm generated 127.23 Lakhs Kwh (132.09 Lakhs Kwh of the previous year). The company has 1.20 MW of Solar Power Panels for its captive power consumption.
The Company vide Extraordinary General Meeting held on January 25th, 2021 passed ordinary resolution for acquiring the shares of Madras Chipboard Limited. In accordance with Rule 5 of Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial statements of the Company's Subsidiary is enclosed in Form AOC-1 as Annexure - I. The Consolidated Net Profit after tax amounted to ₹4,227.11 Lakhs (₹1,988.30 Lakhs of the previous year).
The Shareholders of the Company are requested to approve the appointment of Shri P.A.S. Alaghar Raja (DIN: 00487312) as an Additional Director of the Company in the category of Independent Director. The following Directors retire by rotation at the ensuing Annual General Meeting and they are eligible for reappointment, Shri P.R. Venketrama Raja, (DIN: 00331406), Shri N.K. Shrikantan Raja, (DIN: 00350693).
The objective of the Nomination and Remuneration Policy is to ensure that 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 and that the remuneration to directors, key managerial personnel and senior management shall be appropriate to the working of the Company and its goals. The web address of the Policy is at www.ramarajusurgical.com/reports/Nomination-and-Remuneration-Policy.pdf. Independent Directors have evaluated the quality, quantity and timeliness of the flow of information between the Management and the Board, Performance of the Board as a whole and its Members and other required matters.
The Board of Directors has met 5 times during the year. The Company has complied with both mandatory as well as non-mandatory Secretarial Standards. The Company has received a sum of ₹133.00 Lakhs from Directors as a loan during the financial year 2020-21, and has repaid an amount of ₹668.00 Lakhs during the year.
Your Directors inform you that the Company has no obligations pursuant to Section 135(5) of the Companies Act, 2013. However, the company has spent ₹1.74 Lakhs on CSR during the year 2020-21. At the 77th Annual General Meeting, the Statutory Auditors, Chartered Accountants (FRN: 001310S), have been appointed for a period of 5 consecutive years commencing from the financial year 2017-18 and hold office from the conclusion of the 77th Annual General Meeting till the conclusion of 82nd Annual General Meeting to be held in the year 2022. Shri M.R.L. Narasimha is the Secretarial Auditor of the Company. The Board of Directors had approved the appointment of Shri M. Kannan, Cost Accountant as the Cost Auditor of the Company to audit the Company’s Cost Records for the year 2021-22 at a remuneration of 1.40 Lakhs.
An extract of the Annual Return in Form MGT-9 for the year ended 31st March, 2021 is available in the Company's website at http://www.ramarajusurgical.com/investor.html. The Company has complied with the requirements regarding Corporate Governance. The Company has established a Vigil Mechanism and has a Whistle Blower Policy. Dividend amount of ₹41,923/- remaining unclaimed/ unpaid for a period of over 7 years was transferred to IEPF.
The Company has 1,795 employees. Prior approval/ Omnibus approval are obtained from the Audit Committee for all related party transactions and the transactions are periodically placed before the Audit Committee for its approval. The disclosures in terms of provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(1), (2) and (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, relating to remuneration are provided in Annexure - VIII.
As per Proviso to Section 178(4) of the Companies Act, 2013, the salient features of the Nomination and Remuneration Policy should be disclosed in the Board’s Report. The Company's strategic decision to focus on more value added counts using PIMA and Giza cotton has started yielding results with a good volume of yarn orders booked for Q1 and Q2 of the current year.
CRISIL Ratings has upgraded its ratings in the current year on the bank facilities of the Company as follows: Long Term Rating: CRISIL A-/ Stable (Upgraded from 'CRISIL BBB+/ Stable'), Short Term Rating: CRISIL A2+ (Upgraded from 'CRISIL A2').
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