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Indo Count Industries Ltd.

BSE: 521016 Sector: Industrials
NSE: ICIL ISIN Code: INE483B01026
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OPEN 117.00
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VOLUME 122679
52-Week high 209.90
52-Week low 107.35
P/E 11.32
Mkt Cap.(Rs cr) 2,262
Buy Price 0.00
Buy Qty 0.00
Sell Price 114.45
Sell Qty 200.00
OPEN 117.00
CLOSE 115.80
VOLUME 122679
52-Week high 209.90
52-Week low 107.35
P/E 11.32
Mkt Cap.(Rs cr) 2,262
Buy Price 0.00
Buy Qty 0.00
Sell Price 114.45
Sell Qty 200.00

Indo Count Industries Ltd. (ICIL) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 27th Annual Report on thebusiness and operations of your Company together with the audited financial statements andthe Auditors’ Report for the financial year ended 31st March 2016.

(' in Crores except EPS)

Particulars

Standalone

Consolidated

2015-16 2014-15 2015-16 2014-15
Total Revenue 2070.78 1679.95 2212.80 1781.80
EBIDTA 452.92 301.27 473.55 313.66
Less: Finance Cost 51.58 62.53 54.91 65.02
Less: Depreciation 18.19 15.40 18.85 15.97
Less: Exceptional Items - 25.74 - 25.74
Profit before Tax 383.15 197.60 399.79 206.93
Tax Expenses 132.44 58.56 135.05 61.04
Minority Interest 0.02 0.21
Net Profit 250.71 139.04 264.72 145.66
Basic & Diluted EPS (in ') 63.49 37.18 67.04 38.95
Cash Profit 316.43 170.83 330.11 178.53
Net Profit 250.71 139.04 264.72 145.66
Add: Balance in Profit and Loss Account 244.73 106.70 249.18 108.77
Less: Appropriations
Adjustment on account of depreciation - 0.89 - 0.91
Transferred to Capital Redemption Reserve 2.50 - 2.50 -
Transferred to Transitional Reserve - - 10.92 4.22
Dividend on preference shares including Dividend Distribution Tax 0.06 0.12 0.06 0.12
Interim Dividend on Equity Shares including Dividend Distribution Tax 4.75 - 4.75 -
Proposed Final Dividend on Equity Shares including Dividend Distribution Tax 4.75 - 4.75 -
Balance carried to Profit and Loss Account 483.38 244.73 490.92 249.18

Operational and Financial Performance Overview

During the financial year under review on a standalone basis the Company achievedrevenue of ' 2070.78 Crores as against ' 1679.95 Crores in the previous year therebyregistering a growth of 23.3%. EBIDTA for the year under review was ' 452.92 Croresrepresenting a growth of 50.3%. The net profit for the year ended 31st March2016 increased from ' 139.04 Crores to ' 250.71 Crores showing a remarkable growth of80.3%.

On a consolidated basis the Company achieved revenue of ' 2212.80 Crores as against '1781.80 Crores in the previous year thereby registering a growth of 24.19%. EBIDTAduring the year has shown a growth of 50.97%. The net profit during year under reviewincreased from ' 145.66 Crores to ' 264.72 Crores registering a significant growth of81.48%.

The increased bottom line translated into improved earnings per share from ' 38.95 in2014-15 to ' 67.04 in 201516 on a consolidated basis. The debt equity ratio has reducefrom 0.21 to 0.10.

The Company could achieve such a remarkable growth and performance due to tighteroperating controls prudent raw material sourcing new customer addition increasedcapacity utilisation followed by expansion in bed-linen capacity positioning in themid-to-high end segment make-to order approach superior product mix and controlledoverheads.

In March 2016 the Company launched three new lifestyle brands - Boutique LivingRevival and The Pure Collection in the US market which will be launched next year inother markets.

The business operations overview and outlook is dealt in detail in the ManagementDiscussion 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 Baggersduring 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 forthe 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 "ExportExcellence Award in the Top Exporter - Non MSME -Trading House Category".

The Company and Indo Count Foundation have received Momentos for its importantcontribution towards CSR from Education Department Zilla Parishad Kolhapur and fromKagal Nagar Parishad Kolhapur. Government of Maharashtra Directorate of PrimaryEducation has also recognized Indo Count Foundation for the Social work in primaryeducation.

Our Company has been ranked amongst India’s top 500 companies during 2015-16 byDun & 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 theconstituents 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 paidinterim dividend @10% (' 1/- per equity share of ' 10/- each). Further your Directors arepleased to recommend final dividend @10% (' 1/- per equity share of ' 10/- each) for theapproval of shareholders at the ensuing Annual General Meeting. If approved the totaldividend payout for the year under review will be 20% amounting to ' 7.90 Crores.

Share Capital

During the year under review the Company redeemed 2500000 4% Non-ConvertibleCumulative Redeemable Preference Shares of ' 10/- each aggregating to ' 2.50 Crores.Consequently the issued subscribed and paid up share capital of the Company is reducedfrom ' 41.98 Crores to ' 39.48 Crores. There was no change in equity share capital of theCompany during the year 2015-16.

Credit Rating

CARE and ICRA have assigned credit rating of "A" for Company’s Long TermBank Facilities indicating adequate degree of safety regarding timely servicing offinancial obligations. For Company’s short term bank facilities CARE and ICRA havepronounced rating of "A1" which is the highest rating indicating very strongdegree of safety regarding timely payment of financial obligations.

Debentures

During the year under review the Company redeemed 300 Non-Convertible RedeemableDebentures of face value of ' 1000000/- each aggregating to ' 30 Crores. The saiddebentures 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 ofDirectors 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 5years 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 theCompany at the ensuing Annual General Meeting. Further Mr. Anil Kumar Jain Chairman andManaging Director continues to be an Executive Chairman of the Company w.e.f. 9thMay 2016.

Mr. R. N. Gupta Joint Managing Director was associated with the Company from the year1996 and has played a vital role in the growth of the Company. However owing to hisadvanced age he expressed to the Board that he shall not be in a position to devote hisfull time to manage the affairs of the Company and hence resigned from the position ofDirector designated as "Joint Managing Director" of the Company w.e.f. 9thMay 2016. The Board placed its appreciation for valuable contributions made by him duringhis long association as a Board Member with the Company.

Pursuant to the provisions of Section 152 of Companies Act 2013 Mr. Kamal MitraDirector (Works) of the Company retires by rotation at the ensuing Annual General Meetingand being eligible has offered himself for the re-appointment. The Board recommends hisre-appointment.

Pursuant to the recommendation of Nomination and Remuneration Committee the Board ofDirectors at its meeting held on 8th June 2016 approved the re-appointment ofMr. Anil Kumar Jain as a Whole-Time Director designated as "Executive Chairman"Mr. Kailash R. Lalpuria as a Whole-Time Director designated as "ExecutiveDirector" 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 theapproval of members of the Company. The resolutions for their respective re-appointmentare also placed for approval of members of the Company at the ensuing Annual GeneralMeeting.

The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under Section 149 (6) of theCompanies 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 CompaniesAct 2013 brief profile and other details of Directors being appointed /re-appointed areprovided in the Notice of Annual General Meeting.

During the year under review Mr. R. Sundaram holding dual positions of ChiefFinancial Officer and Company Secretary of the Company decided to concentrate on the roleof Chief Financial Officer and relinquished the position of the Company Secretary andCompliance Officer of the Company with effect from 9th February 2016. Mr. R.Sundaram continues to remain Chief Financial Officer of the Company. Mrs. Amruta Avasarewas appointed as Company Secretary and Compliance Officer of the Company w.e.f. 9thFebruary 2016.

Directors’ Responsibility Statement

In terms of Section 134(3)(c) of the Companies Act 2013 your Directors to the bestof their knowledge and belief and according to the information and explanations obtainedby them state that:

1. in the preparation of the annual financial statements for the year ended 31stMarch 2016 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;

2. such accounting policies as mentioned in the notes to the Financial Statements forthe year ended 31st March 2016 have been selected and applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March2016 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 accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

4. the annual financial statements for the year ended 31st March 2016 havebeen prepared on a going concern basis;

5. internal financial controls to be followed by the Company have been laid down andthat the said financial controls were adequate and were operating effectively;

6. proper systems to ensure compliance with the provisions of all applicable laws havebeen 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 May2015 30th June 2015 3rd August 2015 24th October2015 and 8th February 2016 the details of which are given in the CorporateGovernance 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 May2016 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 bythe 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 theCompany for a period of 3 years to hold office from the conclusion of the 25thAnnual General Meeting till the conclusion of the 28th Annual General Meetingof 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 themembers 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 theconclusion of the ensuing Annual General Meeting till the conclusion of the 28thAnnual 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 formspart of the Annual Report. The Auditors’ Report does not contain any qualificationsreservations adverse remarks disclaimer or emphasis of matter. Notes to the FinancialStatements are self-explanatory and do not call for any further comments.

The Statutory Auditors of the Company have not reported any fraud as specified underthe second proviso of Section 143(12) of the Companies Act 2013 (including any statutorymodification(s) or re-enactment for the time being in force).

Internal Audit

M/s. Suresh Kumar Mittal & Co. Chartered Accountants are Internal Auditors of theCompany 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 FinancialStatements 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 relateddocuments of the subsidiaries are not attached in this Annual Report. A copy of AuditedFinancial Statements of the Subsidiaries shall be made available for inspection at theRegistered Office of the Company during business hours. Any shareholder interested inobtaining a copy of separate Financial Statements of the subsidiaries shall make specificrequest in writing to the Company Secretary. The Audited Financial Statements of thesubsidiaries 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 nothave 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 and8(1) of the Companies (Accounts) Rules 2014 the salient features of financial positionof each subsidiary is given in Form AOC-1 annexed as "Annexure 1" to thisReport.

The Company has framed a policy for determining material subsidiaries which can beaccessed 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 SmileCounts ...". Pursuant to the provisions of Section 135 of the Companies Act 2013the Company has constituted a CSR Committee. Dr. (Mrs.) Vaijayanti Pandit is theChairperson of the Committee Mr. Anil Kumar Jain and Mr. Kailash R. Lalpuria are othermembers of the Committee.

The adopted CSR Policy outlines various areas like education healthcare water andsanitation environment and women empowerment for undertaking CSR activities. The Companyimplements the CSR initiatives through ‘Indo Count Foundation’. and has alsotied up with other trusts for implementing CSR Activities. During the year under reviewCompany / Indo Count Foundation has contributed to Prime Minister Relief Fund and carriedout 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 accessedat 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 ofthe 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 hadappointed S. Anantha Rama Subramanian Proprietor of S. Anantha & Co. PractisingCompany Secretaries to conduct Secretarial Audit for the financial year 2015-16. TheSecretarial Audit Report issued by him is annexed as "Annexure 4" to thisReport. The Secretarial Audit Report does not contain any qualification reservationdisclaimer or adverse remark.

Management Discussion and Analysis Report

Management Discussion and Analysis Report for the financial year under review asstipulated under Regulation 34 of SEBI (LODR) Regulations 2015 is presented in a separatesection forming part of the Annual Report.

Corporate Governance

In terms of Regulation 34 of SEBI (LODR) Regulations 2015 a report on CorporateGovernance along with Statutory Auditors’ Certificate confirming its compliance isprovided separately and forms integral part of this Report.

Related Party Transactions

All related party transactions entered during the financial year under review were onan arm’s length basis and in the ordinary course of business. Note No. 32 to theFinancial Statements contains details of Related Party Transactions. No related partytransaction was in conflict with the interest of the Company. As prescribed by Section134(3)(h) of the Companies Act 2013 and Rule 8(2) of the Companies (Accounts) Rules2014 particulars of contracts/arrangements with Related Parties are given in Form AOC-2annexed as "Annexure 5" to this Report. The policy on Related Party Transactionshas 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 Earningsand Outgo required under Section 134(3) (m) of the Companies Act 2013 read with Rule 8 ofthe Companies (Accounts) Rules 2014 is given in "Annexure 6" forming part ofthis 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 andRemuneration of Managerial Personnel) Rules 2014 for the year ended 31stMarch 2016 none of the employees of the Company except Mr. Anil Kumar Jain Chairman andManaging 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) ofthe Companies Act 2013 read with Rule 5 (1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given in "Annexure 7" tothis 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 October2015 approved capex of ' 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 ' 110 Crores. The balancecapitalization for enhancing its Processing capacity from 68mn meters to 90mn meters isprogressing as per schedule and to be completed by Q3FY17.

At the Board meeting held on 7th May 2016 the Board approved the capitalexpenditure plan under Phase 2 for approximately ' 300 Crores. This capital outlay will befunded by internal accruals and debt. The Capital expenditure will be for upgrading theexisting Spinning Facilities Investments in additional Weaving (with specialized looms)and value added equipments for delivery of fashion and utility bedding. This expansionwill be completed by March 2018.

Vigil Mechanism / Whistle Blower Policy

Pursuant to the provisions of Section 177 (10) of the Companies Act 2013 andRegulation 22 of SEBI (LODR) Regulations 2015 the Company has established a vigilmechanism. 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 websiteat 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 ofDirectors Key Managerial Personnel (KMP) and Senior Management Personnel.

The appointment of Directors is made by the Board pursuant to the recommendation ofNomination and Remuneration Committee (NRC).

The remuneration of Executive Directors comprises of Basic Salary Perquisites &Allowances Commission. The remuneration is within the limits prescribed under theCompanies Act 2013 and is recommended by NRC. Approval of Board Shareholders and theCentral Government if required for payment of remuneration to Executive Directors issought from time to time.

The remuneration of Non-Executive Directors comprises of sitting fees and commission inaccordance with the provisions of Companies Act 2013.

A brief extract of the Remuneration Policy on appointment and remuneration ofDirectors 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 IndependentDirectors are laid down by Nomination and Remuneration Committee of the Company. Pursuantto the provisions of the Companies Act 2013 and Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout the annual performance evaluation of the entire Board Committees and all theDirectors based on the parameters specified in the Corporate Governance Report. Theparameters of performance evaluation were circulated to the Directors in the form ofquestionnaire.

Business Responsibility Report

Pursuant to the Regulation 34 of SEBI (LODR) Regulations 2015 Business ResponsibilityReport is mandatory to be published for top 500 companies based on market capitalisationas on 31st March 2016. Accordingly Business Responsibility Report for theyear ended 31st March 2016 is provided in ‘Annexure 8’ to thisReport.

Obligation of Company under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013

In order to prevent sexual harassment of women at workplace the Company has adopted apolicy for prevention of Sexual Harassment of Women at workplace and has set up anInternal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 to look into complaints relating tosexual harassment at workplace of any woman employee. During the year under review theCompany has not received any complaint under the said policy.

Particulars of Loans given Investments made Guarantees given and Securities providedunder Section 186 of the Companies Act 2013

The Company has not granted any loan during the year under review. The details ofinvestment made are provided in Note No. 14 to the Standalone Financial Statements. TheCompany has given Corporate Guarantee to the extent of US $ 9.5 million for securingfinancial assistance to Indo Count Global Inc. USA wholly owned subsidiary of theCompany.

Internal Financial Controls with respect to the Financial Statements

The Company maintains adequate internal control system and procedures commensurate withits size and nature of operations. The internal control systems are designed to provide areasonable assurance over reliability in financial reporting ensure appropriateauthorisation 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 acomprehensive Management Information System coupled with quarterly reviews of operationaland financial performance a well structured budgeting process with regular monitoring ofexpenses and Internal audit.

The Internal Audit reports are periodically reviewed by the management and the AuditCommittee and necessary improvements are undertaken if required.

Risk Management

The Company has in place Risk Management System which takes care of riskidentification assessment and mitigation. There are no risks which in the opinion of theBoard threaten the existence of the Company. Risk factors and its mitigation are coveredextensively in the Management Discussion and Analysis Report forming part of thisDirectors’ Report.

Deposits

During the year under review no deposits were accepted by the Company under Chapter Vof 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 theRegulators or Courts or Tribunals which impact the going concern status and Company’soperations in future.

General

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under reviewor said items are not applicable to the Company:

1. Cost Audit

2. Issue of equity shares with differential rights as to dividend voting or otherwiseor issue of sweat equity share.

3. Mr. Anil Kumar Jain & Mr. Kamal Mitra who are NonExecutive Directors on theBoard of Pranavaditya Spinning Mills Ltd. subsidiary of the Company receive sitting feesfor attending Board / Committee Meeting. Apart from the sitting fees as aforesaid noneof the Whole-Time Directors of the Company receive any remuneration or commission from anysubsidiaries of the Company.

There are no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year 2015-16 and the date ofthis report.

Acknowledgements

Our consistent growth has been made possible due to our culture of professionalismintegrity and continuous evolvement.

Your Directors take this opportunity to thank our customers suppliers investorsbankers the Central and State Governments for their consistent support and co-operationto the Company. We place on record our appreciation of the contribution made by employeesat all levels without whose whole-hearted efforts the overall performance would not havebeen possible.

Your Directors look forward to the long term future with confidence.

On behalf of the Board of Directors

ANIL KUMAR JAIN

Date: 8th June 2016

Executive Chairman

Place: Mumbai

DIN: 00086106