DIRECTORS’ REPORT Dear Shareholders, We take pleasure in presenting the Report on our Business and Operations for the year ended 31st March 2015. REVIEW OF OPERATIONS Indian Textile Industry, one of the key drivers of Indian Economy, is passing through a positive phase. Our expanded Garment capacity has joined the mainstream. During the year, production levels at all segments of textiles have gone up. However, the steep decline in Cotton prices has impacted the yarn realisation by around 10% over previous year. The up-trend in demand at the Garment Segment entailed the Company to achieve the reported Turnover, despite the challenges faced by the Spinning Segment. Evacuation issue at Power front in the State still continues. Cost of Power and Labour has gone up due to increase in Power charges & Minimum Wages by the Government. Comfortable cash flow enabled the Company to lower working capital loan and Finance cost. The Company earned a Cash Profit of Rs. 272 Crores and Cash EPS of Rs. 72 as against Rs. 260 Crores and Rs. 69 in the previous year. The favourable market trend and the enhanced Garment capacity would strengthen the prospects of the Company. Competing countries' higher cost of production would further widen India's stake at International Market. DIVIDEND In its Meeting held on 5th February 2015, Your Board of Directors had declared an interim dividend of 40% on the Equity Shares of the Company. The Board has recommended a final dividend of 50% on Equity Shares, subject to the approval of the Members at the ensuing 12th Annual General Meeting. Your Directors have recommended the payment of Dividend of 7% on Redeemable Cumulative Non-Convertible Preference Shares of Rs. 100 each. GARMENTS EXPANSION Driven by consistent demand, the Global Textile & Apparel Trade is growing rapidly. The core competency enabled Indian Textile Industry to emerge as the World's second largest Textile Exporter. The uptrend is expected to remain for a long term. The Garment capacity expansion mooted during last year has been successfully completed as detailed below. BROWN FIELD The Brown field Garment expansion at our Arasur Garment Facility upgrading its capacity by 10 million pieces per annum was completed as scheduled and its Production had commenced from 24th June 2014 onwards. GREEN FIELD We are pleased to announce that the Green field Garment expansion at Thekkalur has also been successfully completed as contemplated. It has commenced commercial production from March 2015 onwards. These enhanced our overall Garment Production capacity from 37 Million Pieces to 59 Million Pieces per annum. The increased capacity is fully backed up by firm orders. The Financial Year 2015-16 shall witness its full-fledged operations. FURTHER EXPANSION To convert its potential into reality, K.P.R. is planning to add a further large Green field manufacturing facility of 36 Million garments per annum at an estimated cost of Rs. 175 Crores. With this, the total garment capacity will become 95 Million garments per annum, one of the largest in the Country. The project is expected to complete during this financial year. Considering the impelling orders from the existing Buyers and the encouraging response from U.S. market, the Board has considered and accorded its approval to the proposal. SUBSIDIARY COMPANIES The Company has the following four Wholly Owned Subsidiary Companies and the Statements pursuant to Section 129 (3) of the Companies Act, 2013 (Hereinafter referred to as the 'Act') in 'Form AOC- 1' containing the details of Subsidiaries forms part of this Annual Report. However as required by the 'Act', we give below a brief report on their performance. Quantum KNITS PVT. LIMITED During the year the Company made a Turnover of Rs. 209.26 Crores and a Net Profit of Rs. 13.37 Crores. K.P.R SUGAR MILL LIMITED Due to the delay in fixation of cane price by the Government for the Sugar Season 2014-15, the Production had commenced during the month of December 2014 only. Produced 8.83 Crore units of power, out of which 6.13 Crore units sold and 2.70 Crore units captively consumed. 92,285 metric tonnes sugar was produced. JAHNVI MOTOR PRIVATE LIMITED During the year the Company sold 265 cars clocking a revenue of Rs. 113.21 Crores. Considering the enlarged demand for 'Audi' vehicles, the Company has extended its network at Madurai in Tamil Nadu. It continues to maintain the 'No.1' position under category 'B' Dealers. New Models were introduced and market response was good. GALAXY KNITS LIMITED The Company has not yet commenced its operation. FIXED DEPOSITS The Company has not accepted any fixed deposits from public during the year under review. FINANCE Your Company has been regular in meeting its obligation towards payment of Principal & Interest. Comfortable cash scenario enabled lesser Working Capital Loan vis-a-vis Finance Cost. DIRECTORS In pursuance of Section 149 and other applicable provisions of the Act & Clause 49 of the Listing Agreement, Independent Directors were appointed for a Term at the last Annual General Meeting. Pursuant to the provisions of the Act and Listing Agreement Dr. S. Ranganayaki, M.B.B.S., has been co-opted as a Woman Independent Director at the Meeting of the Board of Directors of the Company held on 12.03.2015, subject to her appointment at the Annual General Meeting. To regularise her appointment at the ensuing Annual General Meeting suitable Resolution has been included in the Notice of the said meeting. Familiarisation Program on the Company and its operations was conducted for the Independent Directors. Requisite declaration from the Independent Directors of the Company under Section 149 (7) of the Act confirming that they meet with the criteria of their Independence laid down in Section 149 (6) have been obtained. Consequent on the cessation of right to appoint a Director in our Board, as per the Agreement, the Private Equity Investors had withdrawn their Nominee Director Sri. Shujaat Khan from our Board with effect from 30.12.2014. The Board wishes to place on record its appreciation for the valuable services rendered by him during the tenure of his Directorship. Sri. C.R. Anandakrishnan, Director retire by rotation at the ensuing Annual General Meeting and is eligible for reappointment. The details of the aforesaid Directors, required to be disclosed under clause 49 of the Listing Agreement, form part of the Notice of the ensuing Annual General Meeting. Your Directors recommend their appointment. All the Directors of the Company have confirmed that they are not disqualified from being appointed as Directors in terms of Section 164 (2) of the Act. KEY MANAGERIAL PERSONNEL AND MANAGERIAL REMUNERATION CRITERIA In pursuance of the Act, Key Managerial Personnel (KMP) for the Company were appointed. None of the Managing Directors or Whole Time directors receive any remuneration or commission from the Subsidiary Companies and the remuneration paid to them is within the purview of the provisions of Section 197 of the Act. The Company pays remuneration by way of salary, perquisites, commission (variable component) to its Chairman, Managing Directors and fixed monthly remuneration to its Executive Director and Whole Time Director in line with the approvals accorded by the General Meetings in pursuance of the recommendation of the Nomination and Remuneration Committee as per the guiding principles laid down in the Nomination and Remuneration Policy. The information as required by Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended. ANNUAL PERFORMANCE EVALUATION In line with the criteria evolved by the Nomination and Remuneration Committee, the performance of all Directors, Committees, Chairman etc., have been evaluated pursuant to the provisions of the Act and the Listing Agreement. COMMITTEES As required by the provisions of the Companies Act and Listing Agreement, the Company has already formed the following Committees, the details of which are disclosed in the Report on Corporate Governance forming part of this Report. I. Audit Committee II. Stake Holders Relationship Committee III. Nomination and Remuneration Committee IV. Corporate Social Responsibility (CSR) Committee POLICIES In pursuance of the Companies Act, 2013 and the Listing Agreement, the following policies have been framed and disclosed on the Company's website 'www.kprmilllimited.com' I. Nomination & Remuneration Policy II. Related Party Transaction Policy III. CSR Policy IV. Whistle Blower Policy consisting of Vigil Mechanism V. Policy on Determining Material Subsidiaries VI. Code for Fair Disclosure RISK MANAGEMENT Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49 of the Listing Agreement, the Company has framed a Risk Management Policy. In the opinion of the Board there appears to be no element of risk which may threaten the existence of the Company. VIGIL MECHANISM & WHISTLE BLOWER POLICY The Company has an established Vigil Mechanism for Directors / Employees to report concerns about unethical behaviors, actual or suspected fraud, or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of Directors / Employees who avail of the mechanism. The Company affirms that no personnel have been denied access to the audit committee. The Company has formulated a Policy of Vigil Mechanism and has established a mechanism that any personnel may raise Reportable Matters. All suspected violations and Reportable Matters are reported to the Chairman of the Audit Committee at e-mail id 'whistleblower@kprmill.com'. The key directions / actions will be informed to the Chairman / Managing Director of the Company. The Whistle Blower Policy has been framed and displayed in the Company's Website. CSR EXPENDITURE During the year, in pursuance of the recommendations of the CSR committee, the Company has contributed Rs. 2.32 Crores being 2% of the average net profit of the Company towards implementing the CSR activities. Annual Report on CSR, as required by the Act is appended. BOARD MEETINGS The Board of Directors met Six times during the financial year on 19.04.2014, 22.05.2014, 04.08.2014, 06.11.2014, 05.02.2015 and 12.03.2015. The Composition of Board, procedure, dates and other details are included in the Corporate Governance Report that forms part of this Report. CONSOLIDATED FINANCIAL STATEMENTS Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to the provisions of the 'Act' and the Listing Agreement entered into with the Stock Exchanges. They are prepared in accordance with the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in this regard. The Consolidated Financials also marked a significant increase in its Revenue as well as Profitability. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The Company has duly complied with the provisions of Section 186 of the Act and as required therein the details of the Borrowals, Security, Investment etc., are annexed by way of notes to accounts. RELATED PARTY TRANSACTIONS All Related Party Transactions that were entered into during the financial year were only between Holding Company and Wholly owned Subsidiary Companies in the ordinary course of business, whose accounts are consolidated with Holding Company and placed before the shareholders at the General Meeting for approval. Accordingly, pursuant to Section 134 (3) (h) read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 and clause 49 of the Listing Agreement there are no transactions to be reported under Section 188 (1) of the Companies Act, 2013. However, the Transactions as required under Accounting Standards AS-18 are reported in Note 31 of the Notes to Accounts of the Consolidated Financial Statements as well as Standalone Financial Statements of your Company. The Company's Policy on dealing with related party transactions is available on the Company's website. EMPLOYEE WELFARE Strong and dedicated work force is one of our Key Strengths. The Company continues to extend exemplary facilities to the Employees. Their sustained involvement enabled higher productivity and efficiency with low attrition rate. Their consistent record making ability in Government examinations evidences the high standard of unique educational facilities extended by the Company to the Employees. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the Company Secretary in advance. PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 provides for protection against sexual harassment of women at workplace and for the prevention and redressal of complaints of sexual harassment and also for the matters incidental thereto. The Company has accordingly adopted the policy against Sexual Harassment of Women at Workplace, for the purpose of preventing, prohibiting and redressing sexual harassment of female employees at all the workplace within the Company which are based on fundamental principles of justice and fair play. Further, Anti Sexual Harassment Committee has been constituted at each unit which shall be responsible for redressal of complaints related to sexual harassment. The details of all such Complaints and its proper redressal through prompt corrective steps are informed to the Top Management so as to ensure that suitable processes and mechanisms are put in place to ensure that issues of sexual harassment, if any, are effectively addressed. During the year, no complaints of sexual harassment were received by the Company from any of its Units. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act read with the Companies (Accounts) Rules, 2014 are provided in the Annexure to the Report. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to the requirement under section 134(5) of the Companies Act, 2013, the Board of Directors of the Company hereby state and confirm that; I. In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures. II. The Directors have selected accounting policies and applied them consistently and 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 the financial year and of the profit of the Company for the year under review. III. The Directors have taken proper and sufficient care for the maintenance of adequate record 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. IV. The Directors have arranged preparation of the accounts for the financial year ended 31.03.2015 on a going concern basis. V. 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. VI. 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. CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT Corporate Governance Report and Management Discussion and Analysis Statement are attached to this Report. Certificate from the Statutory Auditors of the Company confirming the compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is also attached to this report. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The details of internal financial control and their adequacy are included in the Report of Management Discussion & Analysis, which forms part of this report. RATIO OF REMUNERATION TO EACH DIRECTOR Details / Disclosures of Ratio of Remuneration of Director to the median employee's remuneration as required by the Act and Companies Rules are appended. SIGNIFICANT & MATERIAL ORDER PASSED BY THE REGULATORS No significant and material order was passed by any Regulators that have any impact on the going concern status and the operations of the Company. DETAILS REGARDING ISSUE OF SHARES During the year under review the Company has not issued any shares. AUDITORS M/s. Deloitte Haskins & Sells, Chartered Accountants, Coimbatore, (ICAI No: 008072S) the Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for Re-appointment. AUDITORS REPORT The Auditor's Report to the Shareholders does not contain any qualification. COST AUDIT In pursuance of Companies (Cost Records and Audit) Rules, 2014, the Company has appointed a Cost Auditor for the Company to audit the cost records for the Financial Year 2015-16. SECRETARIAL AUDIT REPORT As required by the Act a Secretarial Audit Report issued by a Company Secretary in practice is annexed. EXTRACT OF ANNUAL RETURN Pursuant to section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 forms part of this Report. ACKNOWLEDGEMENT Your Directors acknowledge with gratitude and express their appreciation for the assistances and co-operation received from the Bankers, Government Authorities, Customers, Vendors, Private Equity Investors and Members during the year under review. Your Directors also wish to thank the employees at all levels for their co-operation and dedication. By order of the Board of Directors Coimbatore K.P. Ramasamy Chairman DATE : 05.05.2015 |