AMBIKA COTTON MILLS LIMITED
ANNUAL REPORT 2011-2012
Your directors have great pleasure in submitting the Twenty Fourth Annual
Report together with the audited accounts for the year ended 31st March
The Financial results for the year ended 31st March 2012 are furnished
CURRENT YEAR PREVIOUS YEAR
Sales and other Income 3,90,12,85,314 3,27,24,15,467
Gross Profit for the year 58,95,32,150 84,03,37,383
Less: Depreciation 26,80,13,695 24,21,96,256
Profit before tax 32,15,18,455 59,81,41,127
Less: Tax Expenses
Current Tax (MAT) 6,43,35,758 11,92,02,034
Less: MAT Credit 0 -9,80,22,617
Net Current Tax 6,43,35,758 2,11,79,417
Less: Deferred Tax 10,64,134 14,56,18,277
Less: MAT Credit Reversed 89,53,158 43,06,197
Less: Prior Period Income Tax 83,44,059 25,90,481
Profit after Tax 23,88,21,346 42,44,46,755
Add: Balance in Profit
& Loss Account 53,02,25,734 23,91,15,361
Add: Depreciation Withdrawn 0 9,17,440
Interim Dividend 1,17,50,000 1,17,50,000
Dividend Tax on Interim Dividend 19,06,144 19,51,530
Transferred to General Reserve 10,00,00,000 10,00,00,000
Proposed Dividend on Equity
Shares 1,76,25,000 1,76,25,000
Dividend Tax 28,59,216 29,27,292
Balance Carried Over in
Profit & Loss Account 63,49,06,720 53,02,25,734
The company has paid an Interim dividend of 20% (Rs.2/- per share) during
the year. The directors are pleased to recommend a Final dividend of 30%
(Rs.3/- per share) for the year ended 31st March 2012 for your approval.
The outflow on account of Equity Dividend would be including interim
dividend for the year works out to 50% (Rs.5/- per share) and the total
payout will be Rs.293.75 Lakh (Previous year Rs. 293.75 Lakh) and dividend
tax Rs.47.65 Lakh (Previous year Rs. 48.79 Lakh).
The Company`s Total Income and Gross profit amounted to Rs.39013 Lakh
(Previous year Rs.32724 Lakh) and Rs.5895 Lakh (Previous year Rs. 8403
Lakh). This represents growth in total income of 19.22% and decline in
Gross Profit of 29.85% as compared to the previous year.
For the year Company`s Direct Export Turnover amounted to Rs.22916 Lakh as
compared to Rs. 17816 Lakh in the previous year representing a growth of
28.63%. In terms of percentage the export turnover constituted 60.97% of
the net sales as against 55.94% in the previous year.
The company continued its fine performance for the current year on the
strength of its operational matrix, but was impacted on account of
volatility in foreign currency, hike in interest cost,`instability in
cotton prices and uninterrupted availability of power. Despite, the above
constraints having a bearing on the overall performance, the company
exhibited its strength as it can be seen from the financial results. As of
now the company is focusing on debt reduction. The substantial investments
made by the company over the years in spinning segment and wind energy
would contribute sustainable revenue ensuring continued better performance
of the company.
MANAGEMENT`S DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report covering matters listed in
Clause 49 of the Listing Agreement for the year under review is given as a
separate statement in the Annual Report.
The Company has not accepted any deposits from the public.
Sri. K.N.Sreedharan Director retires by rotation and being eligible offers
himself for reappointment.
Dr. K.Venkatachalam Director retires by rotation and being eligible offers
himself for reappointment.
Mrs. Vidya Jyothish was co-opted as an additional director of the company
by the Board of Directors of the company at the meeting held on 14.02.2012.
Sri P.V. Chandran, Chairman and Managing Director is re-appointed for a
period of 5 years to hold the office with effect from 01.04.2012 to
M/s. L.Venkatasubbu & Co., Chartered Accountants, Auditors of the Company
are to retire at the ensuing Annual General Meeting and being eligible
offer themselves for re-appointment. They have furnished the necessary
certificate in terms of Section 224 of the Companies Act, 1956.
The companys cost records are audited by Mr. G. Sivagurunathan, Cost
Accountant, Coimbatore for the financial year ended 31.03.2011 and in
respect of the same has submitted his report to the Central Government on
30.09.2011. He was re-appointed to conduct cost audit of cost records of
the company for the financial year 2011-12 and 2012-13 upon his furnishing
a certificate to the effect that he is independent, free from any
disqualification and his appointment if appointed, will be within the
limits as specified under the Companies Act, 1956.
DIRECTORS RESPONSIBILITY STATEMENT
In terms of Section 217 (2AA) of the Companies Act 1956, your directors
state that: -
1. In the preparation of the Annual Accounts, the applicable accounting
standards have been followed.
2. The Company has selected such accounting policies, applied them
consistently, 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 financial year and of the profit of the company for that
3. The Directors have taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act 1956, for safe guarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
4. The Company has prepared the attached annual statement of accounts for
the year ended 31st March 2012, on a going concern basis.
PARTICULARS OF EMPLOYEES:
The statement relating to the employees who have drawn remuneration of the
category specified in Section 217(2A) of the Companies Act, 1956 is
DISCLOSURES OF PARTICULARS:
Particulars relating to conservation of energy. Technology absorption,
Foreign Exchange Earning and outgo pursuant to the Companies (Disclosure of
particulars in the Report of Board of Directors) Rules 1988 are set out
separately and form part of this report.
By order of the Board
Chairman and Managing Director
DATE : 29.05.2012
ANNEXURE TO DIRECTORS` REPORT ANNEXURE I
Particulars pursuant to the Companies (Disclosure of particulars in the
Report of Board of Directors) Rule 1988.
A. CONSERVATION OF ENERGY
a) Energy Conservation measures taken:
Usage of Energy is constantly monitored and the need to conserve the same
b) Additional Investments and proposals being Implemented for reduction of
consumption of Energy: The Company has installed 25.9 MW of wind energy
capacity for captive consumption. This would meet 100% power requirement of
the spinning segment.
c) Impact of measures (a) & (b) above for reduction of Energy Consumption
and consequent impact on cost of production.
i) Substantial savings in energy cost.
ii) The consumption of energy has been closely monitored and as a result
wastage is avoided.
iii) Efficiency of the Internal Generation of Electricity is maintained.
d) Total energy consumption and energy consumption per unit of production
as prescribed in Form A:
YEAR ENDED YEAR ENDED
Units (in Lakhs) 89.35 195.06
Total Amount (Rs. in Lakhs) 841.50 1150.92
Rate per Unit (inclusive of
demand charges per unit
Rs. 3.07 (previous year Rs. 1.40) 9.42 5.90
b. Own Generation:
1. Through Diesel Generator:
Units (in Lakhs) 49.00 90.16
Units per litre of Diesel Oil 3.66 3.66
Rate per Unit 9.35 8.72
2. Wind Energy 468.71 362.08
3. Coal Nil Nil
4. Furnace Oil Nil Nil
5. Others/Internal Generation Nil Nil
c. Consumption per unit of
Production Electricity Units per Kg. 4.96 5.18
d. Technology Absorption: Indigenous Technology alone is used.
e. Foreign Exchange Earnings
(Rs. in lakhs) 22916 17816
Foreign Exchange Outgo
(Rs. in lakhs) 8774 5707
MANAGEMENT`S DISCUSSION AND ANALYSIS
1. Overall Review
The Financial Year 2011-12 globally witnessed economic uncertainty and had
severely impacted the demand environment in respect of all products and
services. The economic scenario was further affected, domestically, by way
of substantial rupee depreciation against USD, impacting the financial
performance of those Companies who are having a wider exposure to imports
2. Industry Outlook
The long term trend of the cotton textile industry is better placed as the
demand for cotton yarn is set to grow considerably as more and more users
opt to wear cotton based clothing vis-a-vis other clothing styles on
account of its Comfortability in wearing. But the industry, on the other
hand, is exposed to volatility in cotton prices the main input in
manufacturing cotton yarn.
The Cotton yarn manufacturing industry is broadly categorized into viz: (i)
Normal yarn (ii) Speciality yarn. The demand for speciality yarn would grow
on account of comfort of cotton wear, wherein specialty yarn is the major
input and as such the speciality products would have a continuous demand.
The Company is operating only in speciality cotton yarn segment and would
be in a position to make use of continuous demand for such yarn.
(i) Volatility in cotton prices
(ii) Government regulatory issues
(iii) Rupee depreciation against USD
(iv) High cost of interest for domestic borrowing
(v) Consistent and adequate supply of quality power without any
(vi) Transfer of power generated by windmills to grid by TNEB without
interruption and its allowability for due set-off for captive consumption.
5. Company Outlook
The company has consistently good demand for its speciality yarn products.
Even while, adverse environment prevailed on several fronts, it is able to
perform substantially better as compared to the peers. 100% Captive power
wind capacity would further support the operations of the company.
6. Risks and Concerns
Government policy of controlling free exports, sudden rupee depreciation
against USD, sustaining the high bank interest, volatility in cotton
prices, wind grid connectivity and due set-off, uninterrupted power would
have a bearing on the overall performance of the company.
7. Discussion on Financial Performance with Respect to Overall Performance
The key financial data are furnished below for the current year as compared
to the previous year
Year 2012 Year 2011
1. Increase in Net Sales
(Rs. in Lakhs) 5736 11045
2. Increase in Net Sales (%) 18.01 53.08
3. Increase in Exports
(in Rs.Lakhs) 5100 5675
4. Increase in Exports (%) 28.63 55.93
5. Operating Profit Margin
before Tax (%) 20.93 31.17
6. Operating Profit Margin
after Tax (%) 18.73 25.72
7. Cash Profit Margin before
Tax (%) 15.68 26.38
8. Cash Profit Margin after
Tax (%) 13.48 20.93
9. Net Profit Margin before
Tax (%) 8.55 18.78
10. Net Profit Margin
after Tax (%) 6.35 13.33
* Profit Margin calculations are on the basis of Net Sales.
8. Internal control, systems and adequacy.
The Company has put in place effective control systems in respect of all
its operations and such systems are continuously reviewed and upgraded.
9. Human Resources Development
The Company places its utmost value on the human resource and contribution
from the employees is always fine-tuned towards to achieve the overall
organisation performance by constant education, training and various
incentive schemes, which are in vogue.
10. Safety and Environment
The Company ensures high safety and environmental standards in all its
operations at all the units. Safety needs are continuously monitored and
preventive actions are initiated thorough departmental safety committees
consisting of plant staff and workmen.
11. Cautionary Statement
Certain Statements in this report on Management`s Discussion may be forward
looking statements and which have been issued as required by applicable
Securities Laws and Regulations. There are several factors which would be
beyond the control of Management and as such, may affect the actual results
which could be different from that envisaged.