DIRECTORS' REPORT TO THE MEMBERS: Your Directors have pleasure in presenting the 24th Annual Report together with the audited accounts of the Company for the year ended March 31, 2015. OVERALL PERFORMANCE AND STATE OF COMPANY'S AFFAIRS The financial year ended March 31, 2015 was a milestone year for the company as total income crossed Rs. 400 crores. The year witnessed the election of a new government with an agenda to revive economic growth. Key steps have been taken towards boosting infrastructure and augmenting government finances with coal block auction and spectrum auction. Lower crude oil prices have helped in overcoming some of the current account deficit issues faced in the past along with softening of inflationary trends. The year has also seen the revival of global interest from strategic and financial investors into India. This has led to a positive mindset and expectations of recovery in the investment and capital cycle. While the trend of lowering of interest rates has commenced, high NPAs continue to weigh on the financial sector leading to a lower trickle down effect. Your Directors are pleased to inform you that during the financial year ended March 31,2015, your company's sales and operating income were Rs. 408.32 crores representing a growth of 11.39%. The cash flow continues to be robust and the company has invested in mutual funds with longer duration that are now classified as non-current investments resulting in deferment of other income. Inspite of this deferment the net profit after tax stood at Rs. 66.25 crores, similar to the level in the previous year. There are no material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report. There is no change in the nature of business of the company. There were no companies, which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year. DIVIDEND The total dividend for the year ended March 31, 2015 (including interim and final dividends) stood at Rs. 25 per share as compared to Rs. 21 per share in the previous year. The Board of Directors had in their meeting held on September 10, 2014 declared the first interim dividend of Rs. 8/- per equity shares absorbing a sum o f Rs. 11,53,57,416/- including dividend distribution tax. The record date for the purpose of payment of interim dividend was September 27, 2014 and the said interim dividend was paid in October 2014. The Board of Directors had in their meeting held on October 17, 2014 declared the second interim dividend of Rs. 7.5/- per equity shares absorbing a sum o f Rs. 11,09,19,972/- including dividend distribution tax. The record date for the purpose of payment of interim dividend was October 31, 2014 and the said interim dividend was paid in November 2014. The Board of Directors had in their meeting held on January 31, 2015 declared the third interim dividend of Rs. 5/- per equity shares absorbing a sum of Rs. 7,39,46,648/- including dividend distribution tax. The record date for the purpose of payment of interim dividend was February 11, 2015 and the said interim dividend was paid in February 2015. The Board of Directors had in their meeting held on May 14, 2015 declared the fourth interim dividend of Rs. 3/- per equity shares absorbing a sum of Rs. 4,43,67,989/- including dividend distribution tax. The record date for the purpose of payment of interim dividend was May 26, 2015 and the said interim dividend was paid in May 2015. Your directors are pleased to recommend a final dividend of Rs. 1.5/- per equity share of Rs. 10/- each for the year ended March 31, 2015. The dividend once approved by the members in the ensuing Annual General Meeting will be paid out of the profits of your company for the year and will sum up to a total of Rs. 2,22,51,178/- including dividend distribution tax. An amount of Rs. 6,62,44,954/- would be transferred to the reserves. OUTLOOK The branded fashion apparel industry in India presents an attractive opportunity due to various factors including a young demographic profile, high fashion consciousness and increasing demand for quality, branded products. The presence and entry of foreign brands provides consumers with a benchmark for quality products at various price points. The rapid growth of e-commerce with high spends on promoting fashion apparel is an added driver for higher consumption. The retail market in India is expected to grow from USD 0.5 trillion in 2013 to USD 1.3 trillion in 2020. Apparel is the largest contributor in the non-food category and the share of organized retail in apparel is likely to increase from 18% to 30-35%. While short term factors like monsoons and global economic developments will weigh on the sentiment, disposable income, which had been under pressure due to high inflation, high interest rates and low economic growth, is likely to rise as macro environment improve and turn favorable. The company has strong brands and distributes its products through various channels including multi brand outlets, exclusive brand outlets, large format department stores and e-commerce platforms giving it a pan India presence and multiple touch points with the consumer. Hence the company is well positioned to capture growth as the economy revives and gains momentum. INVESTMENT IN WHITE KNITWEAR PRIVATE LIMITED The company had invested in aggregate Rs. 34,550,000 (P.Y. Rs. 34,550,000) in Joint Venture "White Knitwear Private Limited" (WKPL). WKPL had acquired land in Surat Special Economic Zone (SEZ) and constructed factory building for setting up of manufacturing unit for production of knitwear apparels for exports. However due to slowdown in International market, SEZ could not take off and most of the members of SEZ shelved their projects and approached to Gujarat Industrial Development Corporation (GIDC) and state and central government for denotification of SEZ. Gujarat Industrial Development Corporation vide its circular No. GIDC/CIR/Distribution/ Policy /13/05 dated 14.03.2015 has de-notified the SEZ and conceded the members to convert and use the erstwhile land in SEZ as Domestic Tariff Area (DTA) subject to fulfillment of conditions stated therein. WKPL vide its letter dated 04.04.13 has consented for de-notification of its plot of Land and undertaken to complete the formal procedure for the same. Post de-notification joint venture partners shall dispose of the Company/land and building and realize the proceeds to return it to joint venture partners. No provision for diminution in the value of investment is considered necessary for the year ended March 31, 2015 in view of the value of underlying assets base of joint venture. However, the company had made a provision for its share of loss in joint venture of Rs. 4,900,000 (P.Y. Rs. 4,900,000) and provision is grouped under 'Other long term provisions'. CASH FLOW STATEMENT In conformity with the provisions of Clause 32 of the Listing Agreement with Stock Exchanges, the Cash Flow Statement for the year ended March 31, 2015 is annexed hereto. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013 with respect to Director's Responsibility Statement, it is hereby confirmed that: (a) in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give 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) the directors had taken proper and sufficient care 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; (d) the directors had prepared the accounts for the financial year ended March 31, 2015 on a 'going concern' basis; (e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. NOMINATION AND REMUNERATION POLICY AND BOARD EVALUATION POLICY The Board had approved the Nomination and Remuneration Policy, as recommended by Nomination and Remuneration Committee, in the Board Meeting held on October 17, 2014. The policy lays down framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. It also envisages the criteria for selection and appointment of Board Members like determining qualification, positive attributes and independence of director, etc. The details of the remuneration policy of the company is given in the corporate governance report, which forms part of this Annual Report. FORMAL ANNUAL EVALUATION During the year, the Board adopted a formal mechanism for evaluating its performance and as well as that of its Committees and Individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of Individual Directors including the Board Chairman who was evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgment, safeguarding of minority shareholders interest, etc. The evaluation of the Independent Directors was carried out by the entire Board and that of the Chairman and the Non-Independent Directors were carried out by the Independent Directors. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company. The company has formulated familiarization programme for the Independent Director. The web-link for the said programme is http://kewalkiran.com/PDFV Familiarisation_programme.pdf DISCLOSURES Audit Committee In accordance with Section 177 of the Companies Act, 2013 and rules made there under and Clause 49 of the Listing Agreement as on March 31, 2015 the Audit Committee consisted of three non-executive independent directors of the company viz. Mr. Yogesh A. Thar (Chairman of Audit Committee), Mr. Nimish G. Pandya and Ms. Drushti R. Desai as members. Whistle Blower/ Vigil Mechanism Policy Fraud free and corruption free work culture has been core of your company. In view of the potential risk of fraud and corruption due to rapid growth and geographic spread of operation, the company has put an even greater emphasis to address this risk. To meet this objective a comprehensive whistleblower policy has been adopted by your company. The details of the said policy are given in the Corporate Governance Report, which forms part of this Annual Report. The Policy on whistle blower/ vigil mechanism may be accessed on the Company website at http://kewalkiran.com/PDF's/ Whistelblower_Policy.pdf Extracts of Annual Report The details forming part of the extract of the annual return is enclosed in AnnexureI. Number of Board Meetings held During the year under review 5 (five) meetings of the Board of Directors were held. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report, which forms part of this Annual Report. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT 2013 Your Company has not given any loans or guarantee. The acquisition of securities of any other body corporate are within the limit specified under section 186 of the Companies Act, 2013. The details of the same are given in the notes to financial statements. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO - Annexure II. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1), 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as Annexure III. RELATED PARTY TRANSACTIONS Suitable disclosure as required by the accounting standard (AS18) has been made in the notes to the financial statement. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUBSECTION (1) OF SECTION 188 OF THE COMPANIES ACT 2013 The Particulars of contracts or arrangements with related parties referred to in Section 188 (1) of Companies Act, 2013 is given as Annexure-IV. There are no material related party transactions during the year under review with Promoters, Directors or Key Managerial Personnel. The Company has developed a Related Party Transactions framework through standard operating procedures for the purpose of identification and monitoring of such transactions. All related party transactions are placed before the Audit Committee as also to the Board for approval. The policy on Related Party transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web-link to the Related Party Transaction Policy is http://kewalkiran.com/PDFV Related_party_policy.pdf DIRECTOR'S a. Cessation Mr. Popatlal F. Sundesha (DIN 00030409) had tendered his resignation from the position of Non-Executive Independent Director w.e.f April 1, 2014. b. Appointment Ms. Drushti Desai (DIN 00294249) was appointed as the Additional Director of your company in the Board Meeting held on July 23, 2014 and her appointment was regularized in the last Annual General Meeting held on August 28, 2014. c. Re-appointment In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of your company, Mr. Hemant P. Jain (DIN 00029822), Director of your Company would retire by rotation at the ensuing Annual General Meeting and being eligible have offered himself for re-appointment. During the year under review, the members approved the tenure of appointment of Mr. Kewalchand P. Jain as the Chairman and Managing Director for a period of 5(five) years w.e.f April 1, 2015 to March 31, 2020. The members also approved the tenure of appointment of Mr. Hemant P. Jain, Mr. Dinesh P. Jain and Mr. Vikas P. Jain as Wholetime Directors of your company liable to retire by rotation for a period of 5(five) years w.e.f September 1, 2014 to August 31, 2019. During the year under review, the members approved the tenure of appointment of Mr. Yogesh Thar, Mr. Nimish Pandya and Dr. Prakash Mody as Independent Directors of the Company who are not liable to retire by rotation for a period of 5 (five) consecutive years w.e.f April 1, 2014 to March 31, 2019. The members also approved the tenure of appointment of Ms. Drushti Desai as Independent Director of the Company who is not liable to retire by rotation for a period of 5 (five) consecutive years w.e.f August 28, 2014 to August 27, 2019. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under Section 149 (6) of the Companies Act 2013 and under Clause 49 of the Listing Agreement with the Stock Exchange. KEY MANAGERIAL PERSONNEL During the year under review, the Company has recognized the following persons as Key Managerial Personnel: 1. Mr. Kewalchand P. Jain - Chairman and Managing Director Mr. Hemant P. Jain Director Whole-time Mr. Dinesh P. Jain - Director Whole-time Mr. Vikas P. Jain - Director Whole-time Mr. Abhijit Warange - Vice President - Legal and Company Secretary Mr. Shantilal Kothari - Financial Officer Chief AUDITORS AND AUDIT REPORT Your company's auditors M/s. Jain & Trivedi, Chartered Accountants and the joint auditors M/s. N.A. Shah Associates, Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting of the company and being eligible offer themselves for re-appointment. The Companies has received letters from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. The Auditors Report on financial statements forming part of this Annual Report is self explanatory and do not call for any further comments. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed Mr. Ummedmal P. Jain, proprietor of M/s U. P. Jain & Co (C.P. No. 2235) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as Annexure - V and forms an integral part of this report. There was no qualification in the secretarial audit report which required any explanation from the Board of Directors. INTERNAL CONTROLS AND ITS ADEQUACY Your Company has an Internal Control system, commensurate with the size, scale and complexity of its operations. The Internal Audit team monitors and evaluates the efficacy and adequacy of the internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all the Company locations. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control system and suggests improvements to strengthen the same. The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board of Directors. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board of Directors. RISK MANAGEMENT During the year, your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company's enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. A Risk Management Policy was reviewed and approved by the Committee. The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company's management systems, organisational structures, processes, standards, code of conduct and behavior together governs how the Group conducts the business of the Company and manages associated risks. CORPORATE SOCIAL RESPONSIBILITY (CSR) REPORT The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility policy indicating the activities to be undertaken by the company, which has been approved by the Board. The CSR Policy may be accessed on the Company's website at http:// kewalkiran.com/PDF's/CSR%20policy. The report on Corporate Social Responsibility activities as required under Companies (Corporate Social Responsibility Policy) Rule, 2014 is given as Annexure-VI. ENVIRONMENT AND SAFETY The Company is conscious of the importance of environmentally clean and safe operations. The Company's policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances environmental regulations and preservation of natural resources. The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year under review, there were no complaints reported to the Board. CORPORATE GOVERNANCE The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms a part of the this Report. The requisite certificate from the Auditors, M/s. N.A. Shah Associates, Chartered Accountants and M/s. Jain and Trivedi, Chartered Accountants confirming the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the stock exchanges form a part of this report. MANAGEMENT DISCUSSION AND ANALYSIS A detailed review of operations, performance and future outlook of the company is given separately under the head Management Discussion and Analysis and forms a part of this report. COMPLIANCE WITH THE CODE OF CONDUCT Your company has put in place a Code of Conduct effective January 14, 2006, for its Board members and Senior Management Personnel. Declaration of compliance with the code of conduct has been received from all the Board Members and Senior Management Personnel. A certificate to this effect from Mr. Kewalchand P. Jain, Chairman & Managing Director forms a part of this Report. COMPLIANCE WITH THE CODE OF INDEPENDENT DIRECTORS Your company has put in place a Code of Independent Director approved in the Board Meeting held on May 10, 2014, for its Independent Directors. Declaration of compliance with the code has been received from all the Independent Directors of your Company. A certificate to this effect from Mr. Kewalchand P. Jain, Chairman and Managing Director forms a part of this Report. 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: 1. Details relating to deposits covered under Chapter V of the Companies Act, 2013. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme and ESOS. 4. 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. PENDING SHARES UPLOAD The company has opened a demat suspense account with the Edelweiss Securities Limited and credited all the shares issued pursuant to the Initial Public Offer(IPO), which remain unclaimed despite the best efforts of the Company and Registrar to Issue. i) Number of Shareholders outstanding at the beginning of the year: 7 Outstanding shares in the demat suspense account at the beginning of the year: 190 ii) Number of shareholders who approached the company for transfer of shares from suspense account during the year: Nil iii) Number of shareholders to whom shares were transferred from suspense account during the year : Nil iv) Aggregate number of shareholders outstanding at the end of the year: 7 Outstanding shares in the suspense account lying at the end of the year: 190 v) The voting rights on these shares are frozen till the rightful owner of such shares claims the shares. The Company had declared Final Dividend for the financial year ended 2006-07 in the annual general meeting held on August 7, 2007. The unencashed dividend amount lying unclaimed to the credit of the said Final Dividend Account 2006- 07 became due for transfer to the Investor Education and Protection Fund on September 12, 2014. The company has accordingly transferred an amount of Rs.19,658/- (Rupees Nineteen Thousand Six Hundred and Fifty Eight only) being the unencashed dividend amount remaining unclaimed and due for transfer to the Investor Education and Protection Fund. The Company had declared Interim Dividend for the financial year ended 2007-08 in the board meeting held on October 20, 2007. The unencashed dividend amount lying unclaimed to the credit of the said Interim Dividend Account 2007-08 became due for transfer to the Investor Education and Protection Fund on November 25, 2014. The company has accordingly transferred an amount o f Rs. 66,138/- (Rupees Sixty Six Thousand One Hundred and Thirty Eight only) being the unencashed dividend amount remaining unclaimed and due for transfer to the Investor Education and Protection Fund. HUMAN RESOURCES AND INDUSTRIAL RELATIONS Employee relations continued to be cordial during the year ended March 31, 2015. Your company had 1974 employees as on March 31, 2015. Your Company continued its thrust on Human Resource Development. Your company has initiated various customized training programs viz. personality development, development of inter personal skills communication skills, public speaking etc. for its employees that enhance both personal as well career growth of the employees. These programs are conducted round the year by professional trainers as well as by the human resource department of the company. Your company has also encouraged its employees to attend seminars and discussions conducted by professional institutions and trade bodies. The Board wishes to place on record its appreciation to all the employees in the company for their sustained efforts and immense contribution to the high level of performance and growth of the business during the year. ACKNOWLEDGEMENTS Your Board of Directors would like to place on record its sincere appreciation for the wholehearted support and contribution made by its customers, its shareholders and all its employees across the country, as well as the various Government Departments, Banks, Distributors, Suppliers and other business associates towards the conduct of efficient and effective operations of your company. For and on behalf of the Board Kewalchand P. Jain Chairman & Managing Director DIN :- 00029730 Dated: July 23, 2015 Place: Mumbai |