K G Denim Ltd
Directors Reports
MANAGEMENT DISCUSSION AND ANALYSIS
Dear Shareholders,
We have pleasure in presenting the Twenty-Sixth Annual Report of the Company together
with the Audited Statement of Accounts for the year ended 31st March 2018.
FINANCIAL RESULTS
|
Standalone |
Consolidated |
| PARTICULARS |
For the year ended 31st March 2018 |
For the year ended 31st March 2017 |
For the year ended 31st March 2018 |
For the year ended 31st March 2017 |
| Gross Profit |
4702 |
7901 |
4201 |
8068 |
| Less : Finance Cost |
2435 |
2603 |
2582 |
2751 |
| Profit prior to Depreciation and write off |
2267 |
5298 |
1619 |
5317 |
| Less : Depreciation |
1391 |
1378 |
1445 |
1452 |
| Profit before Tax |
876 |
3920 |
174 |
3865 |
| Current, Deferred & earlier year tax |
293 |
1462 |
83 |
1529 |
| Add : Other Comprehensive Income |
48 |
(39) |
32 |
(62) |
| Net Profit for the year |
631 |
2419 |
123 |
2274 |
| Balance Brought forward |
5832 |
3667 |
4873 |
3188 |
| Ind AS adjustments for Depreciation/ Receivables |
- |
(22) |
- |
(357) |
| Equity Dividend & Tax thereon |
232 |
232 |
232 |
232 |
| Balance Carried Forward |
6231 |
5832 |
4765 |
4873 |
The Company has adopted Ind AS from 01.04.2017 for the first time.
STATE OF THE COMPANY'S AFFAIRS
During the period under review, the Company has earned revenue of Rs.63867 lakh and Net
Profit of Rs.631 lakh on standalone basis and Rs.71985 lakh and Rs.123 lakh respectively
on consolidated basis.
PERFORMANCE OF THE COMPANY
The Company has two main product segments viz., Fabric (Denim / Apparel) and Home
Textiles.
During the year ended 31.03.2018 total Fabric production was 371 lakh meters as against
359 lakh meters in 2016-17.
Sale of Fabric was 355 lakh meters in 2017-18 as against 346 lakh meters in 2016-17.
The Net Profit had decreased due to increase in raw material cost and cost of fuel with
no corresponding increase in sale price. DIVIDEND
The Board of Directors recommends a dividend of 7.50 % (i.e. Rs.0.75) per equity share
of the Company for the year 2017-18. The Dividend tax payable amounts to Rs.39 lakh.
INDUSTRY STRUCTURE AND DEVELOPMENT
Textile Industry in India had witnessed downword trend both in the domestic as well as
export markets. Certain Government policies like Demonitisation, Implementation of GST had
resulted in reduced off take in the domestic markets. Competition from neighboring
countries, reduction of export incentives and strengthening Indian Rupee had adverse
impact on export realisation.
Inspite of the above, company has been able to marginally improve the turnover mainly
by export sales of denim fabric and home textiles.
Company is making efforts to focus on new markets, new segments and other countries in
the Far East and Middle East. OPPORTUNITIES AND THREATS
With the stabilisation, after the initial glitches, in the implementation of GST,
improvements are seen in the demand.
Good monsoon forecast in the current year augurs well for the overall improvement in
the economy.
Necessary forward covers are also made to insulate against foreign currency
fluctuations.
LISTING OF EQUITY SHARES
The Company's Equity shares are listed at the following Stock Exchange:
BSE Limited, Phiroze JeeJeebhoy Towers, Dalal Street, Mumbai-400 001.
The Company has paid the Annual Listing Fees to the said Stock Exchange for the
Financial Year 2018-19.
PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES
The Company has two wholly owned subsidiaries Trigger Apparels Limited and KG Denim
(USA) Inc.
The Company's wholly owned subsidiary Trigger Apparels Limited is engaged in the
manufacture and marketing of readymade garments.
During the year, the gross turnover in Trigger Apparels Limited was Rs.11500 lakh
against Rs. 11164 lakh during the previous year. The Subsidiary Company has registered a
loss of Rs.504 lakh as against a loss of Rs.144 lakh in the previous year. The increase in
losses is due to liquidation of old stocks. The subsidiary is reorganising its products
and marketing channels.
KG Denim (USA) Inc. had achieved a turnover of Rs.29 lakh and registered a loss of Rs.5
lakh during the year.
As per the provisions of Section 129 of the Companies Act, 2013 read with Companies
(Accounts) Rules, 2014, a separate statement containing the salient features of the
financial statements of the Subsidiary companies is prepared in Form AOC-1 and same is
enclosed to this report as Annexure-1.
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements have been prepared by the Company's Management in
accordance with the requirements of Accounting Standards 21 issued by The Institute of
Chartered Accountants of India (ICAI) and as per the provisions of Companies Act, 2013.
As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed
separate audited accounts of its subsidiaries on its website www.kgdenim.com and copy of
separate audited financial statements of its subsidiaries will be provided to the
shareholders at their request.
CEO/CFO CERTIFICATION
The Managing Director and Chief Financial Officer of the Company have submitted a
Certificate to the Board as required under Clause 49 of the Listing Agreement for the year
ended 31st March, 2018.
MEETINGS OF THE BOARD OF DIRECTORS
During the year ended 31st March, 2018, six Board Meetings were held.
The dates on which the Board meetings were held are 23rd May 2017, 28th
July 2017, 02nd September 2017, 17th November, 2017, 14th February
2018 and 24th March 2018.
A meeting of the Independent Directors of the Board was held on 14th
February, 2018.
Details of meetings of the Board and its Committees are disclosed in the report on
Corporate Governance.
DIRECTORS' RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT,
2013
Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect
to the Directors' Responsibility Statement the Board of Directors of the Company hereby
confirms:
i) that in the preparation of the Annual Accounts, the applicable accounting standards
have been followed;
ii) that 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 a true and fair view of the state of affairs of the Company as at 31st
March 2018 and Statement of Profit and Loss Account of the Company for that period;
iii) that the Directors have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this Act for safeguarding
the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) that the Directors have prepared the Annual Accounts for the Financial Year ended
31st March, 2018 on a going concern basis;
v) that the Directors have laid down internal financial controls to be followed by the
Company and that such internal financial controls are adequate and were operating
effectively; and
vi) that the Directors have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate and operating
effectively.
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB-SECTION (7) OF
SECTION 149 OF THE COMPANIES ACT, 2013
The Independent Directors have submitted the declarations of independence, as required
pursuant to Section 149(7) of the Companies Act, 2013 stating that they meet the criteria
of independence as provided in sub-section(6).
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee consisted of Shri K N V Ramani, Chairman with
Shri G V S Desikan and Shri V Jagadisan as members.
Consequent upon the demise of Shri V Jagadisan in March 2018 his vacancy was filled up
by appointing Shri G P Muniappan as member in March 2018.
The Board of Directors appointed Shri G P Muniappan as member of the said Committee on
24.03.2018, who fulfills the criteria specified under Section 178(1).
Brief description of terms of reference:
1. identifying persons who are qualified to become directors and who may be appointed
in senior management in accordance with the criteria laid down and recommend to the Board
for their appointment and removal;
2. carry on the evaluation of every director's performance;
3. formulation of the criteria for determining qualifications, positive attributes and
independence of a director;
4. recommend to the Board a policy relating to the remuneration of the directors, key
managerial personnel and other employees;
5. formulation of criteria for evaluation of Independent Directors and the Board;
6. devising a policy on Board diversity; and
7. any other matter as the Board may decide from time to time.
NOMINATION AND REMUNERATION POLICY THE OBJECTIVES OF THE POLICY
1. To lay down criteria and terms and conditions with regard to identifying persons who
are qualified to become Directors (Executive and Non-Executive) and persons who may be
appointed in Senior Management and Key Managerial positions and to determine their
remuneration.
2. To determine remuneration based on the Company's size and financial position and
trends and practices on remuneration prevailing in peer companies.
3. To carry out evaluation of the performance of Directors.
4. To provide them reward linked directly to their effort, performance, dedication and
achievement relating to the Company's operations.
5. To retain, motivate and promote talent and to ensure long term sustainability of
talented managerial persons and create competitive advantage.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT,
2013
The details of Loans, Guarantees given and Investments made during the Financial Year
ended on 31st March, 2018 are given in the notes to Financial Statements in
compliance with the provisions of Section 186 of the Companies Act, 2013 read with
Companies (Meetings of Board and its Powers) Rules, 2014.
PARTICULARS OF CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN
SUB-SECTION (1) OF SECTION 188 OF COMPANIES ACT, 2013
The Company adopted a Related Party Transaction Policy in terms of SEBI regulations for
compliance with Corporate Governance and Clause 49 of the Listing Agreement. The policy
has also been hosted on the Company's website. All transactions entered into with Related
Parties for the year 2017-18 were on Arm's length basis.
There were no material related party transactions in terms of the Related Party
Transaction Policy adopted.
Thus disclosures in Form AOC-2 as per Companies Act, 2013 and Rule 8 of Companies
(Account) Rules, 2014 are not required. Further, there were no material related party
transaction with the Promoters, Directors or Key Managerial Personnel during the year.
All related party transactions are placed before the Audit Committee as also to the
Board for approval on a quarterly basis. Omnibus approval was obtained for transaction of
repetitive nature.
TRANSFER OF AMOUNT TO RESERVES
The Company does not propose to transfer any amount to the general reserve for the
Financial Year ended 31st March, 2018. EXTRACT OF ANNUAL RETURN
The extract of Annual Return is prepared in Form MGT-9 as per the provisions of the
Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014
and the same is enclosed as Annexure - 2 to this Report.
THE CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
PURSUANT TO PROVISIONS OF SECTION 134(3)(m) OF THE COMPANIES ACT, 2013 READ WITH THE
COMPANIES (ACCOUNTS) RULES, 2014
Information with respect to conservation of energy, technology absorption, foreign
exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies
(Accounts) Rules, 2014 is prepared and the same is enclosed as Annexure - 3 to this
Report.
RISK MANAGEMENT COMMITTEE
Risk Management Committee consists of Shri B Sriramulu as Chairman with Shri S
Muthuswamy and Shri M Balaji as members.
The Committee had formulated a Risk Management Policy for dealing with different kinds
of risks which it faces in day to day operations of the Company. Risk Management Policy of
the Company outlines different kinds of risks and risk mitigating measures to be adopted
by the Board. The Company has adequate internal control systems and procedures to combat
the risk. The Risk management procedure is reviewed by the Audit Committee and Board of
Directors on a Quarterly basis at the time of review of Quarterly Financial Results of the
Company.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Corporate Social Responsibility is commitment of the Company to improve the quality of
life of the workforce and their families and also the community and society at large. The
Company believes in undertaking business in such a way that it leads to overall
development of all stakeholders and Society.
The Board of Directors of the Company has constituted Corporate Social Responsibility
Committee consisting of Shri KG Baalakrishnan as Chairman with Shri G V S Desikan and Shri
A Velusamy as Members and adopted policy for Corporate Social Responsibility.
Corporate Social Responsibility policy was adopted by the Board of Directors on the
recommendation of Corporate Social Responsibility Committee.
The Report on CSR activities, as required under the Companies (Corporate Social
Responsibility Policy) Rules, 2014, is annexed as Annexure - 4.
EVALUATION OF BOARD
Evaluation of all Board members is done on an annual basis. The evaluation is done by
the Board, Nomination and Remuneration Committee and Independent Directors with specific
focus on the performance and effective functioning of the Board and Individual Directors.
The manner in which the evaluation has been done is explained in the report on
Corporate Governance.
DIRECTORS
Shri V Jagadisan, Independent Director of the Company, had expired on 16.03.2018. The
Board placed on record the invaluable contributions of Shri V Jagadisan towards the
progress of the Company.
In accordance with the provisions of Section 152 of the Companies Act, 2013 and the
Company's Articles of Association No.34, Shri A Velusamy retires by rotation at the
forthcoming Annual General Meeting and being eligible offers himself for re-appointment.
Due to amendments in SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2018 Messrs K N V Ramani, Shri G V S Desikan and Shri G P Muniappan, who are Non-Executive
Directors and have attained 75 years of age are proposed to be appointed as Directors for
3 years from 01.04.2019 at the forthcoming Annual General Meeting.
Shri KG Baalakrishnan, Executive Chairman, Shri B Sriramulu, Managing Director and Shri
B Srihari, Managing Director are being reappointed from 03.11.2018 for a period of 5
years.
The Board proposes to appoint Shri M B N Rao, an acclaimed Banking Professional, as an
Independent Director at the forthcoming Annual General Meeting of the Company to fill in
the vacancy caused due to the demise of Shri V Jagadisan.
KEY MANAGERIAL PERSONNEL
The following are the Key Managerial Personnel of the Company :
| 1. Shri B Sriramulu - |
Managing Director |
| 2. Shri B Srihari - |
Managing Director |
| 3. Shri S Muthuswamy - |
Chief Financial Officer |
| 4. Shri M Balaji - |
Company Secretary |
DEPOSITS
The Company has not accepted any deposits from the public in terms of Section 73 of the
Companies Act, 2013.
STATUTORY AUDITORS
M/s. Mohan & Venkataraman were appointed as Auditors of the Company at the AGM held
on 16.09.2017, to hold office as Auditors for a term of five Financial Years commencing
from 2017-18 to 2021-22 till conclusion of AGM to be held for financial year 2021-22.
AUDITORS REPORT
M/s. Mohan & Venkataraman, Chartered Accountants (ICAI Regn. No.007321S) have
issued Auditors Report for the Financial Year ended 31st March, 2018.
There are no qualifications in Auditors' Report.
INTERNAL AUDITORS
The Board of Directors of the Company had appointed Mr K Panneerselvam, Chartered
Accountant (Membership No.220574) to conduct Internal Audit of the Company.
COST AUDITORS
As per the requirement of Central Government and pursuant to Section 148 of the
Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as
amended from time to time, your Company has been carrying out audit of cost records
relating to Textile Division every year.
The Board of Directors, on the recommendation of Audit Committee, has appointed Messrs
M Nagarajan, Cost Accountants, (Firm Registration Number 6384) as Cost Auditor to audit
the cost accounts of the Company for the Financial Year 2018-19. As required under the
Companies Act, 2013, a resolution seeking member's approval for the remuneration payable
to the Cost Auditor forms part of the Notice convening the Annual General Meeting for
their ratification.
AUDIT COMMITTEE
Audit Committee consisted of Shri V Jagadisan as Chairman with Shri K N V Ramani and
Shri G V S Desikan as members.
All the members of the Audit Committee are Independent Directors.
Consequent upon the demise of Shri V Jagadisan, Chairman of Audit Committee, vacancy
had arisen in the Company's Audit Committee.
The Board of Directors appointed Shri G P Muniappan as member of the said Committee on
24.03.2018, who fulfills the criteria specified under Section 177(2).
There is no such incidence where Board has not accepted the recommendation of the Audit
Committee during the year under review.
CORPORATE GOVERNANCE
A separate section on Corporate Governance and a Certificate from the Auditors of the
Company regarding compliance of conditions of Corporate Governance as stipulated under
Clause 49 of the Listing Agreement with the Stock Exchange, forms part of the Annual
Report - Annexure - 5.
VIGIL MECHANISM
The Board of Directors have adopted a Whistle Blower Policy which is hosted on the
Company's website. The Whistle Blower Policy aims for conducting the affairs in a fair and
transparent manner by adopting highest standards of professionalism, honesty, integrity
and ethical behaviour. All permanent employees of the Company are covered under the
Whistle Blower Policy.
A mechanism has been established for employees to report concerns about unethical
behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. It also
provides for adequate safeguards against the victimization of employees who avail of the
mechanism and allows direct access to the Chairperson of the Audit Committee in
exceptional cases.
SECRETARIAL AUDITORS REPORT
As per the provisions of Section 204 of the Companies Act, 2013, the Board of Directors
have appointed Shri M.R.L.Narasimha, Practising Company Secretary (C.P.No:799) as
Secretarial Auditor to conduct Secretarial audit of the Company for the Financial Year
ended on 31st March, 2018.
Secretarial Audit Report issued by Shri M.R.L.Narasimha, Practising Company Secretary
in form MR-3 is enclosed as Annexure - 6 to this Annual Report.
There are no qualifications in Secretarial Audit Report.
STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
The Statement of particulars of Appointment and Remuneration of Managerial personnel as
per Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
is enclosed as Annexure - 7 to this Annual Report.
ENVIRONMENT
The Company holds due certification under ISO 14001 : 2004 which is primarily focused
on environmental management system. It ensures that the manufacturing of products is
carried on without affecting the environment in the working area and surroundings.
The Company is a member of Sustainable Apparel Coalition (SAC). SAC provides credible,
practical and industry wide guidelines and provides tools to define, measure and evaluate
industry's product environmental and social performance support.
The Company has achieved one of the best scores in the apparel industry as verified by
a leading brand assessor.
During the current year, the Company has implemented various environmental measures and
reduction program like Green House Gas inventory measurement, replacement of freon gas air
conditioners, increasing the area of plantation etc.
The Company has improved effluent water treatment system conforming to the Pollution
Control Board parameters. A new plant has been added which has increased the Biological
treatment capacity by 60%. An advanced technology of Biological Diffuser Aeration system
has been introduced which has resulted in reduction in chemicals usage. Consequently,
reduction in sludge, improvement in outlet water quality and consistence and improvement
in RO recovery were achieved. The highlights of our sustainability effort can be seen in
the link https://youtu.be/uZGhiwq6XSM
HEALTH AND SAFETY
The Company has obtained certification under OHSAS 18001 : 2007 (Occupational Health
and Safety Management Assessment Standard) which is an Integrated Management System
focusing on an organization's occupational health and safety management system. This
standard guides us to identify and control the conditions and factors that affect the
well-being of employees, contractors, visitors and any other person in the work place.
The Company is implementing various health and safety practices in continuous manner as
per OHSAS-18001 standards and legal requirements.
POLICY ON SEXUAL HARASSMENT
The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace
in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013. During the Financial Year ended 31st March, 2018, the
Company has not received any complaints pertaining to sexual harassment.
LEGAL REQUIREMENTS
The Company is conscious of improving the occupational and personal health of its
employees. In addition to free medical camps, the Company also organizes employees' health
check up in outside hospitals on annual basis.
The Company provides a safer work environment for its employees. Basic equipments are
provided to ensure safety from fire. Awareness classes are being conducted periodically
with the help of external agencies about the basic safety, fire fighting, mock drills,
mass evacuation, first aid etc.,
SOCIAL RESPONSIBILITIES
The Company is maintaining a hospital for serving the community including supply of
medicines at subsidised costs. As a part of social environmental protection, agro forestry
has been developed with a demo plant with the technical support of Forest College,
Coimbatore.
INSURANCE
All properties and insurable interests of the Company including building, plant and
machinery and stocks have been fully insured. FINANCE
Your Directors acknowledge with gratitude, the valuable assistance and support extended
by our Bankers for Term Loans and Working Capital ie., Indian Bank, Andhra Bank, State
Bank of India, The South Indian Bank Limited and Allahabad Bank.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE
FINANCIAL STATEMENTS
1. The Company maintains all its records in ERP System and the work flow and approvals
are routed through ERP System;
2. The Company has appointed Internal Auditors to observe the Internal Controls,
whether the work flow of organization is being done through the approved policies of the
Company. In every Quarter during the approval of Financial Statements, Internal Auditors
will present the Internal Audit Report and Management Comments on the Internal Audit
observations; and
3. The Board of Directors of the Company have adopted various policies like Related
Party Transactions Policy, Whistle Blower Policy, Policy to determine Material
Subsidiaries and such other procedures for ensuring the orderly and efficient conduct of
its business for safeguarding of its assets, the prevention and detection of frauds and
errors, the accuracy and completeness of the accounting records and the timely preparation
of reliable financial information.
CHANGE IN THE NATURE OF BUSINESS
There is no change in the nature of business of the Company.
THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE.
No Significant and material orders passed by the regulators or courts or tribunals
impacting the going concern status and company's operations in future.
Details of pending legal cases are furnished in Note No.41 to the accounts.
MATERIAL CHANGES AND COMMITMENTS
There are no Material changes and commitments in the business operations of the Company
from the Financial Year ended 31st March, 2018 to the date of signing of the
Director's Report.
ACKNOWLEDGMENT
The Directors take this opportunity to place on record their sincere thanks to the
Banks and Financial Institutions, Insurance Companies, Central and State Government
Departments and the shareholders for their support and co-operation extended to the
Company from time to time.
PERSONNEL
The Directors wish to place on record their appreciation for the co-operation extended
by all sections of the employees. CAUTIONARY STATEMENT
The statement in this Directors' Report & Management Discussion and Analysis
contain forward looking statements regarding Company's projections & expectations and
the actual results could differ materially from those expressed on account of various
factors like raw material prices, change in demand, government regulation etc., and the
readers are cautioned against placing undue reliance on the same.
PARTICULARS OF EMPLOYEES
Information 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 is
given in Annexure - 7 to this report.
The particulars in respect of employees in receipt of remuneration exceeding Rs.60
lakhs per annum as per Section 197(12) read with Rule 5(2) of The Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure-8.
The Company has presented in this Report, the consolidated financial statements of the
holding company and all its subsidiaries, duly audited by the Statutory Auditors. The
Company will make available the audited annual accounts and related information of its
subsidiaries, upon request by any of its shareholders. The annual accounts of the
subsidiary companies will also be kept for inspection by any member at the Registered
Office of the Company and its subsidiary companies.
Our humble prayers to Sri Venkateswaraswamy Vari of Then Thirumalai for the continued
prosperity of the Company.
|
On behalf of the Board |
|
KG Baalakrishnan |
| Coimbatore |
Executive Chairman |
| 01.08.2018 |
DIN: 00002174 |
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