DIRECTORS' REPORT Dear Members, Your Directors have pleasure in presenting the 27th Annual Report on the business and operations of your Company together with the audited financial statements and the Auditors' Report for the financial year ended 31st March, 2016. Operational and Financial Performance Overview During the financial year under review, on a standalone basis, the Company achieved revenue of Rs. 2,070.78 Crores as against Rs. 1,679.95 Crores in the previous year, thereby registering a growth of 23.3%. EBIDTA for the year under review was Rs. 452.92 Crores, representing a growth of 50.3%. The net profit for the year ended 31st March, 2016 increased from Rs. 139.04 Crores to Rs. 250.71 Crores, showing a remarkable growth of 80.3%. On a consolidated basis, the Company achieved revenue of Rs. 2,212.80 Crores as against Rs. 1,781.80 Crores in the previous year, thereby registering a growth of 24.19%. EBIDTA during the year has shown a growth of 50.97%. The net profit during year under review increased from Rs. 145.66 Crores to Rs. 264.72 Crores, registering a significant growth of 81.48%. The increased bottom line translated into improved earnings per share from Rs. 38.95 in 2014-15 to Rs. 67.04 in 201516 on a consolidated basis. The debt equity ratio has reduce from 0.21 to 0.10. The Company could achieve such a remarkable growth and performance due to tighter operating controls, prudent raw material sourcing, new customer addition, increased capacity utilisation followed by expansion in bed-linen capacity, positioning in the mid-to-high end segment, make-to order approach, superior product mix and controlled overheads. In March 2016, the Company launched three new lifestyle brands - Boutique Living, Revival and The Pure Collection in the US market, which will be launched next year in other markets. The business operations, overview and outlook is dealt in detail in the Management Discussion and Analysis Report forming part of this Directors' Report. Awards/Recognitions Your Company is: 1. 2nd largest manufacturer/exporter of Bed Linen from India; 2. amongst top 3 Bed sheets exporter to USA; 3. 11th largest supplier of Home Textiles to USA. Our Company with 40% CAGR is ranked 4th amongst list of top 20 Multi Baggers during the last 10 years. (Source: Business Line issue dated 11.1.2016). During the year under review, the Company has received Silver Trophy from TEXPROCIL for the 2nd highest exports of made ups in "Bed Linen/Bedsheets/Quilts" under the Category - III for the year 2014-15. FIEO, Western Region has conferred on the Company, the Prestigious "Export Excellence Award in the Top Exporter - Non MSME -Trading House Category". The Company and Indo Count Foundation have received Momentos for its important contribution towards CSR from Education Department, Zilla Parishad, Kolhapur and from Kagal Nagar Parishad, Kolhapur. Government of Maharashtra, Directorate of Primary Education has also recognized Indo Count Foundation for the Social work in primary education. Our Company has been ranked amongst India's top 500 companies during 2015-16 by Dun & Bradstreet. The ranking has improved from 386 to 353 on the basis of revenue. MSCI (NYSE) has recognized and included shares of the company as one of the constituents of MSCI (NYSE) for the MSCI India Domestic Small Cap fund. Dividend During the year 2015-2016, the Board of Directors of the Company declared and paid interim dividend (2)10% 1/- per equity share of Rs. 10/- each). Further, your Directors are pleased to recommend final dividend (210% 1/- per equity share of Rs. 10/- each) for the approval of shareholders at the ensuing Annual General Meeting. If approved, the total dividend payout for the year under review will be 20% amounting to Rs. 7.90 Crores. Share Capital During the year under review, the Company redeemed 25,00,000, 4% Non-Convertible Cumulative Redeemable Preference Shares of Rs. 10/- each aggregating to Rs. 2.50 Crores. Consequently, the issued, subscribed and paid up share capital of the Company is reduced from Rs. 41.98 Crores to Rs. 39.48 Crores. There was no change in equity share capital of the Company during the year 2015-16. Credit Rating CARE and ICRA have assigned credit rating of "A" for Company's Long Term Bank Facilities indicating adequate degree of safety regarding timely servicing of financial obligations. For Company's short term bank facilities, CARE and ICRA have pronounced rating of "A1" which is the highest rating indicating very strong degree of safety regarding timely payment of financial obligations. Debentures During the year under review, the Company redeemed 300 Non-Convertible Redeemable Debentures of face value of Rs. 10,00,000/- each aggregating to Rs. 30 Crores. The said debentures were allotted on private placement basis in the year 2007. Directors and Key Managerial Personnel Pursuant to the recommendation of Nomination and Remuneration Committee, the Board of Directors of the Company approved the appointment of Mr. Mohit Anilkumar Jain (DIN: 01473966) as an Additional Director and Managing Director of the Company for a period of 5 years with effect from 9th May, 2016, as part of a long term succession plan. The resolution for his appointment is also being placed for approval of members of the Company at the ensuing Annual General Meeting. Further, Mr. Anil Kumar Jain, Chairman and Managing Director, continues to be an Executive Chairman of the Company w.e.f. 9th May, 2016. Mr. R. N. Gupta, Joint Managing Director was associated with the Company from the year 1996 and has played a vital role in the growth of the Company. However, owing to his advanced age, he expressed to the Board that he shall not be in a position to devote his full time to manage the affairs of the Company and hence resigned from the position of Director designated as "Joint Managing Director" of the Company w.e.f. 9th May, 2016. The Board placed its appreciation for valuable contributions made by him during his long association as a Board Member with the Company. Pursuant to the provisions of Section 152 of Companies Act 2013, Mr. Kamal Mitra, Director (Works) of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for the re-appointment. The Board recommends his re-appointment. Pursuant to the recommendation of Nomination and Remuneration Committee, the Board of Directors at its meeting held on 8th June, 2016 approved the re-appointment of Mr. Anil Kumar Jain as a Whole-Time Director designated as "Executive Chairman", Mr. Kailash R. Lalpuria as a Whole-Time Director designated as "Executive Director" and Mr. Kamal Mitra as a Whole-Time Director designated as "Director (Works)" for a period of 3 years w.e.f. 1st October, 2016 subject to the approval of members of the Company. The resolutions for their respective re-appointment are also placed for approval of members of the Company at the ensuing Annual General Meeting. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149 (6) of the Companies Act, 2013 and Regulation 16 (1) (b) of Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015.('SEBI (LODR) Regulations, 2015'). As required under the provisions of SEBI (LODR) Regulations, 2015 and the Companies Act, 2013, brief profile and other details of Directors being appointed /re-appointed are provided in the Notice of Annual General Meeting. During the year under review, Mr. R. Sundaram, holding dual positions of Chief Financial Officer and Company Secretary of the Company decided to concentrate on the role of Chief Financial Officer and relinquished the position of the Company Secretary and Compliance Officer of the Company with effect from 9th February, 2016. Mr. R. Sundaram, continues to remain Chief Financial Officer of the Company. Mrs. Amruta Avasare was appointed as Company Secretary and Compliance Officer of the Company w.e.f. 9th February, 2016. Directors' Responsibility Statement In terms of Section 134(3)(c) of the Companies Act, 2013, your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, state that: 1. in the preparation of the annual financial statements for the year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; 2. such accounting policies as mentioned in the notes to the Financial Statements for the year ended 31st March, 2016 have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for the year ended on that date; 3. proper and sufficient care has been taken 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 annual financial statements for the year ended 31st March, 2016 have been prepared on a going concern basis; 5. internal financial controls to be followed by the Company have been laid down and that the said financial controls were adequate and were operating effectively; 6. proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems were adequate and operating effectively. Number of Board Meetings During the year under review, 5 Board Meetings were held viz on 9th May, 2015, 30th June, 2015, 3rd August, 2015, 24th October, 2015 and 8th February, 2016, the details of which are given in the Corporate Governance Report. Audit Committee As on 31st March, 2016, the Audit Committee comprises of Mr. P. N. Shah (Chairman), Mr. R. Anand, Mr. Prem Malik and Mr. R. N. Gupta. W.e.f. 9th May, 2016, the Committee has been re-constituted and comprises of Mr. P. N. Shah (Chairman), Mr. R. Anand, Mr. Prem Malik and Mr. Kailash R. Lalpuria. All the recommendations made by the Audit Committee were accepted by the Board. Statutory Auditors At the Annual General Meeting of the Company held on 23rd August, 2014, M/s. B K Shroff & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company for a period of 3 years to hold office from the conclusion of the 25th Annual General Meeting till the conclusion of the 28th Annual General Meeting of the Company, subject to ratification by the members at each Annual General Meeting. The Audit Committee and the Board of Directors of the Company have recommended to the members of the Company, ratification of appointment of M/s. B K Shroff & Co., Chartered Accountants, as Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting till the conclusion of the 28th Annual General Meeting of the Company. The Company has received a letter from B. K. Shroff & Co. confirming that they are eligible for ratification of their appointment. Auditors' Report The Auditors' Report on standalone and consolidated financial statements forms part of the Annual Report. The Auditors' Report does not contain any qualifications, reservations, adverse remarks, disclaimer or emphasis of matter. Notes to the Financial Statements are self-explanatory and do not call for any further comments. The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Companies Act, 2013 (including any statutory modification(s) or re-enactment for the time being in force). Internal Audit M/s. Suresh Kumar Mittal & Co., Chartered Accountants are Internal Auditors of the Company and their report is reviewed by the Audit Committee from time to time. Consolidated Financial Statements & Subsidiaries In accordance with the provisions of Companies Act, 2013 ("the Act"), SEBI (LODR) Regulations, 2015 and Accounting Standard (AS) - 21 on Consolidated Financial Statements, the audited consolidated financial statements form part of the Annual Report. In view of this, the Balance Sheet, Statement of Profit and Loss and other related documents of the subsidiaries are not attached in this Annual Report. A copy of Audited Financial Statements of the Subsidiaries shall be made available for inspection at the Registered Office of the Company during business hours. Any shareholder interested in obtaining a copy of separate Financial Statements of the subsidiaries shall make specific request in writing to the Company Secretary. The Audited Financial Statements of the subsidiaries are also available on the website of the Company www.indocount.com . As on 31st March, 2016, the Company has 4 subsidiaries. The Company does not have any Associate Company pursuant to the provisions of the Companies Act, 2013. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 and Rules 5 and 8(1) of the Companies (Accounts) Rules, 2014, the salient features of financial position of each subsidiary is given in Form AOC-1 annexed as "Annexure 1" to this Report. The Company has framed a policy for determining material subsidiaries, which can be accessed at <http://www.indocount>. com/images/investor/ICIL- Policy-on-Material-Subsidiaries.pdf. Corporate Social Responsibility (CSR) The key philosophy of all our CSR initiatives is guided by our belief "Every Smile Counts Pursuant to the provisions of Section 135 of the Companies Act, 2013, the Company has constituted a CSR Committee. Dr. (Mrs.) Vajayanti Pandit is the Chairperson of the Committee, Mr. Anil Kumar Jain and Mr. Kailash R. Lalpuria are other members of the Committee. The adopted CSR Policy outlines various areas like education, healthcare, water and sanitation, environment and women empowerment for undertaking CSR activities. The Company implements the CSR initiatives through 'Indo Count Foundation'. and has also tied up with other trusts for implementing CSR Activities. During the year under review, Company / Indo Count Foundation has contributed to Prime Minister Relief Fund and carried out CSR activities in the areas of Education and Healthcare. A CSR Policy of the Company is uploaded on website of the Company and can be accessed at <http://www.indocount.com/> images/investor/ICIL-CSR-Policy.pdf. The Report on CSR activities is provided in "Annexure 2" to this Report. Extract of Annual Return Pursuant to Section 92 (3) of the Companies Act, 2013, extract of the Annual Return of the Company in Form MGT-9 is annexed as "Annexure 3" to this Report. Secretarial Audit Report Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed S. Anantha Rama Subramanian, Proprietor of S. Anantha & Co., Practising Company Secretaries to conduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report issued by him is annexed as "Annexure 4" to this Report. The Secretarial Audit Report does not contain any qualification, reservation, disclaimer or adverse remark. Management Discussion and Analysis Report Management Discussion and Analysis Report for the financial year under review, as stipulated under Regulation 34 of SEBI (LODR) Regulations, 2015 is presented in a separate section forming part of the Annual Report. Corporate Governance In terms of Regulation 34 of SEBI (LODR) Regulations, 2015, a report on Corporate Governance along with Statutory Auditors' Certificate confirming its compliance is provided separately and forms integral part of this Report. Related Party Transactions All related party transactions entered during the financial year under review were on an arm's length basis and in the ordinary course of business. Note No. 32 to the Financial Statements contains details of Related Party Transactions. No related party transaction was in conflict with the interest of the Company. As prescribed by Section 134(3)(h) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014, particulars of contracts/arrangements with Related Parties are given in Form AOC-2, annexed as "Annexure 5" to this Report. The policy on Related Party Transactions has been uploaded on the Company's website and can be accessed at <http://www.indocount.com/> images/investor/ICIL-Policy-on-Related-Party-Transactions.pdf Conservation of Energy, Technology Absorption & Foreign Exchange Earning & Outgo Information on Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in "Annexure 6" forming part of this Report. Particulars of Employees and related disclosures Pursuant to the provisions of Section 197 (12) of the Companies Act, 2013 ("Act") read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, for the year ended 31st March, 2016, none of the employees of the Company except Mr. Anil Kumar Jain, Chairman and Managing Director draws remuneration in excess of the limits set out in the said rules. The details required as per said rules and the Disclosure pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in "Annexure 7" to this Report Particulars of Employees and related disclosures Pursuant to the provisions of Section 197 (12) of the Companies Act, 2013 ("Act") read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, for the year ended 31st March, 2016, none of the employees of the Company except Mr. Anil Kumar Jain, Chairman and Managing Director draws remuneration in excess of the limits set out in the said rules. The details required as per said rules and the Disclosure pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in "Annexure 7" to this Report Segment The Company operates only in one segment i.e Textile Segment. Capacity Expansion The Board of Directors of the Company at its meeting held on 24th October, 2015 approved capex of Rs. 175 Crores for Phase I towards: i) Increasing processing capacity from current 68 million meters to 90 million meters ii) Setting up a water effluent treatment / RO plant iii) Automation of cut and sew and warehousing As on 31st March 2016, amount capitalized was Rs. 110 Crores. The balance capitalization for enhancing its Processing capacity from 68mn meters to 90mn meters is progressing as per schedule and to be completed by Q3FY17. At the Board meeting held on 7th May, 2016, the Board approved the capital expenditure plan under Phase 2 for approximately Rs. 300 Crores. This capital outlay will be funded by internal accruals and debt. The Capital expenditure will be for upgrading the existing Spinning Facilities, Investments in additional Weaving (with specialized looms) and value added equipments for delivery of fashion and utility bedding. This expansion will be completed by March, 2018. Vigil Mechanism / Whistle Blower Policy Pursuant to the provisions of Section 177 (10) of the Companies Act, 2013 and Regulation 22 of SEBI (LODR) Regulations, 2015, the Company has established a vigil mechanism. The details of Vigil Mechanism are provided in the Corporate Governance Report. The Vigil Mechanism / Whistle Blower Policy may be accessed on the Company’s website at www.indocount.com . Company's Policy on Appointment and Remuneration of Directors The Company has been following well laid down policy on appointment and remuneration of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel. The appointment of Directors is made by the Board pursuant to the recommendation of Nomination and Remuneration Committee (NRC). The remuneration of Executive Directors comprises of Basic Salary, Perquisites & Allowances, Commission. The remuneration is within the limits prescribed under the Companies Act, 2013 and is recommended by NRC. Approval of Board, Shareholders and the Central Government, if required, for payment of remuneration to Executive Directors is sought, from time to time. The remuneration of Non-Executive Directors comprises of sitting fees and commission in accordance with the provisions of Companies Act, 2013. A brief extract of the Remuneration Policy on appointment and remuneration of Directors, KMP and Senior Management is provided in the Corporate Governance Report. Performance Evaluation of Directors Criteria of performance evaluation of the Board of Directors including Independent Directors are laid down by Nomination and Remuneration Committee of the Company. Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of the entire Board, Committees and all the Directors based on the parameters specified in the Corporate Governance Report. The parameters of performance evaluation were circulated to the Directors in the form of questionnaire. Business Responsibility Report Pursuant to the Regulation 34 of SEBI (LODR) Regulations, 2015, Business Responsibility Report is mandatory to be published for top 500 companies based on market capitalisation as on 31st March, 2016. Accordingly, Business Responsibility Report for the year ended 31st March 2016 is provided in 'Annexure 8' to this Report. Obligation of Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 In order to prevent sexual harassment of women at workplace, the Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up an Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013to look into complaints relating to sexual harassment at workplace of any woman employee. During the year under review, the Company has not received any complaint under the said policy. Particulars of Loans given, Investments made, Guarantees given and Securities provided under Section 186 of the Companies Act, 2013 The Company has not granted any loan during the year under review. The details of investment made are provided in Note No. 14 to the Standalone Financial Statements. The Company has given Corporate Guarantee to the extent of US $ 9.5 million for securing financial assistance to Indo Count Global Inc. USA , wholly owned subsidiary of the Company. Internal Financial Controls with respect to the Financial Statements The Company maintains adequate internal control system and procedures commensurate with its size and nature of operations. The internal control systems are designed to provide a reasonable assurance over reliability in financial reporting, ensure appropriate authorisation of transactions, safeguarding the assets of the Company and prevent misuse/ losses and legal compliances. The internal control system includes a well defined delegation of authority and a comprehensive Management Information System coupled with quarterly reviews of operational and financial performance, a well structured budgeting process with regular monitoring of expenses and Internal audit. The Internal Audit reports are periodically reviewed by the management and the Audit Committee and necessary improvements are undertaken, if required. Risk Management The Company has in place Risk Management System which takes care of risk identification, assessment and mitigation. There are no risks which in the opinion of the Board threaten the existence of the Company. Risk factors and its mitigation are covered extensively in the Management Discussion and Analysis Report forming part of this Directors' Report. Deposits During the year under review, no deposits were accepted by the Company under Chapter V of the Companies Act, 2013. Significant or Material orders passed by the Regulators/Courts During the year under review, no significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. General Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review or said items are not applicable to the Company: 1. Cost Audit 2. Issue of equity shares with differential rights as to dividend, voting or otherwise or issue of sweat equity share. 3. Mr. Anil Kumar Jain & Mr. Kamal Mitra who are Non-Executive Directors on the Board of Pranavaditya Spinning Mills Ltd., subsidiary of the Company, receive sitting fees for attending Board / Committee Meeting. Apart from the sitting fees, as aforesaid, none of the Whole-Time Directors of the Company receive any remuneration or commission from any subsidiaries of the Company. There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year 2015-16 and the date of this report. Our consistent growth has been made possible due to our culture of professionalism, integrity and continuous evolvement. Your Directors take this opportunity to thank our customers, suppliers, investors, bankers, the Central and State Governments, for their consistent support and co-operation to the Company. We place on record our appreciation of the contribution made by employees at all levels, without whose whole-hearted efforts, the overall performance would not have been possible. Your Directors look forward to the long term future with confidence. On behalf of the Board of Directors ANIL KUMAR JAIN Executive Chairman DIN: 00086106 Place: Mumbai Date: 8th June, 2016 |