Lakshmi Mills Co.

Ltd

Key Points from Director’s report

 The Spindles capacity remained at the same level of 1.33 lakh spindles throughout the year
2018-19. Overall utilization remained around 95% - same as that of 2017-18.
 The revenue segments of the Company have been reclassified as (a) Textile Business and (b)
Rental Services. The income generated from rental services during the year was ` 273.60
Lakhs.
 Export of yarn and fabric accounted for ` 3731 Lakhs as against ` 3529 Lakhs in the previous
year, an increase of around 5.72% over the previous year's performance.
 The Directors have recommended a dividend of `5/- per Equity Share of ` 100/- each, at 5%
for the financial year 2018-2019 (Previous Year - 9%).

Key Points from MANAGEMENT DISCUSSION AND ANALYSIS REPORT

 Textile sector is the largest manufacturing sector in India and is in two segments - the
organized sector and the decentralized sector. Majority of the manufacturing activities like
knitting, weaving, processing, garmenting etc., are in the decentralized sector providing large
scale employment - several fold more than workers employed in the organized sector.
 The decentralized sector - the back bone of the Indian Textile Industry is yet to get itself
adjusted to tax compliance environment and is struggling to attain the growth as was before
GST implementation.
 Small manufacturing enterprises which are responsible for 80% of the production across the
value chain excepting spinning sector. Though the Spinning sector had been able to adjust to
the post GST environment, yet the Powerloom, Knitting and Garment sectors are still
grappling with numerous problems in their operations. The main problem faced by Garment
Industry is the blockage in GST refunds, slow disbursement of State levies and the sharp
decline in ROSL rates – resulting in Working Capital drying up. (Annual report 2018)
 Though the organized sector had adjusted itself to the new tax compliance environment
quickly, yet it is facing acute shortage of skilled labour. Shortage of skilled personnel not only
affects production activities but also affects quality aspect.
 Because of external factors the industry is struggling to progress. One of them being new
entrants like Vietnam, Cambodia and Bangladesh, who have free access to U.S and European
Markets, resulting in a fall in our country's share in cotton yarn trade.
 Global textile markets are swiftly moving from exports of cotton yarn to man-made fibre.
The Indian per capita consumption of man-made fibre is 3 kg while the average per capita
 consumption in the World is 12 kg. It looks that Indian Textile industry needs to pay
attention for the growth of man-made fibre sector - which it has not been tapping.
 Cotton prices continue to be volatile. While the international cotton prices came down by
more than 25%, Indian cotton prices came down only by 8%, mainly on account higher
support prices fixed by the government.
 Garment imports from Bangladesh increased almost 82% in 2018 - 19. Imported garments
were 12% to 15% cheaper to the Indian goods. Continuing unrestrained imports from
Bangladesh will seriously damage the textile value chain.
 By and large, Indian Textiles and clothing exports in 2018 remained sluggish.

 The last three successive quarters had shown signs of slowing down in Indian economy. This
trend needs to be reversed.
 The industry needs to modernize in a big way at an affordable cost - both to improve quality
as well as to reduce the cost of production. Automation seems to be the need of the hour, if
the industry has to survive
 The nature and magnitude of risks associated with the company are reviewed and placed
before the Board periodically. Measures have been introduced to automate some of the
processes and thereby to some extent reduce the dependency on labour, which also ensures
optimum capacity utilisation and quality outputs.
 Today our textile trade is very much affected by various trade barriers.

Principal Business Activities of the Company

Textile Business

 Preparation and spinning of cotton of total turnover fibre including blended cotton – 32.50%

 Preparation and spinning of man-made fibre including blended man-made fibre – 61.20%

Rental Services - 6.30%

Share Capital

The paid up Equity Share Capital as on March 31, 2019 was ` 6,95,55,000/- comprising 6,95,550
shares of ` 100/ - each. During the year under review, the company has not made any fresh issue of
shares.

Shareholding Pattern

Promoters – 60.81%

Institutions – 6.19%
Non-Institutions – 33.00%

PLANT LOCATIONS

The Company has 2 Plants situated at the following locations:

Unit I: Lakshmipuram P.O., Kovilpatti.

Unit II: Kuppuswamy Naidupuram, Palladam.