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K P R Mill Ltd.

BSE: 532889 Sector: Industrials
NSE: KPRMILL ISIN Code: INE930H01023
BSE LIVE 14:37 | 23 Nov 706.50 -0.65
(-0.09%)
OPEN

713.65

HIGH

726.70

LOW

704.00

NSE 14:27 | 23 Nov 707.75 -0.90
(-0.13%)
OPEN

708.65

HIGH

724.00

LOW

702.30

OPEN 713.65
PREVIOUS CLOSE 707.15
VOLUME 587
52-Week high 882.00
52-Week low 535.00
P/E 21.79
Mkt Cap.(Rs cr) 5,221
Buy Price 705.50
Buy Qty 10.00
Sell Price 710.35
Sell Qty 2.00
OPEN 713.65
CLOSE 707.15
VOLUME 587
52-Week high 882.00
52-Week low 535.00
P/E 21.79
Mkt Cap.(Rs cr) 5,221
Buy Price 705.50
Buy Qty 10.00
Sell Price 710.35
Sell Qty 2.00

K P R Mill Ltd. (KPRMILL) - Director Report

Company director report

Dear Members

The Board of Directors' take pleasure in presenting the report on the operations andbusiness of the Company along with Audited Financial Statements for the Financial Yearended 31st March 201Z

FINANCIAL RESULTS

(Rs. in Lakhs)

PARTICULARS

STANDALONE

CONSOLIDATED

Sales and Other Income 2016-17 2015-16 2016-17 2015-16
Domestic Sales 152162 137522 169259 160329
Export Sales 64200 54397 101395 90654
Other Income 8264 7629 13755 11458
224626 199548 284409 262441
Profit before Interest & Depreciation 47277 39022 59074 49346
Less: Interest 4503 4442 6445 5763
Depreciation 11743 12384 14939 15205
Profit Before Tax
Less: Taxation 31031 22196 37690 28378
Provision for Current Tax 7668 6574 9119 8390
Tax relating to earlier years (166) 145 (159) 165
MAT Credit Entitlement 1420 1119
7502 6719 7540 7436
Deferred Tax expense / (Credit) (313) (137) 1468 (129)
Profit After Tax 23842 15614 28682 21071
Other Comprehensive Income (Net of tax) 15 23 15 5
Total Comprehensive Income 23857 15637 28697 21076

REVIEW OF OPERATIONS

It has been a significant and eventful year for KPR. The expansion programs ascontemplated have been successfully completed. Its strategic direction towards valueaddition has started yielding results. The revenue recorded a growth of 13% over previousyear and PAT by 52%. The cotton price continues to be stable. The wind energy (Greenpower) supported the operations considerably. Power availability in the State has beencomfortable. Due to hike in Minimum Wages by the Government the labour cost has gone up.The well acclaimed labour practices enabled smooth flow of labour to the expandedcapacities. Our consistent improvement in profitability has been due to several factorssuch as strategic plans reduced cost increased production capacity etc. Despite theslowdown due to demonetization drive we have not seen any major impact on our business.

FUTURE OUTLOOK

Rapid urbanization growing population rising per-capita income enlarging middleclass & young population exposed to changing tastes and fashion have led to hugeopportunities for the textiles sector in the domestic market. Growing encouragement todownstream sectors of the Textile Industry from the Government and the efforts forexpediting Free Trade Agreement's to improve the competitiveness on the global frontwould improve the export earnings of the Industry significantly. K.P.R which is wellequipped with strong factors of production financial and operational performance is anadvantageous position to reap the benefits of bright outlook for the Sector as a whole.

SUB -DIVISION OF EQUITY SHARE (SPLIT OF SHARE)

During November 2016 after obtaining the consent of the Members of the Company byPostal Ballot and complying with the applicable provisions of the Act & Regulationsthe Equity Share of the Company of the Face Value of Rs. 10/- each has been split into twoshares of Face Value of Rs. 5/- each. The new subdivided shares have been credited to theconcerned shareholders' Demat accounts. The new ISIN of the Company at Depositories isINE930H01023.

BUYBACK

The Board of Directors of the Company announced a Buyback of 1470000 fully paid-upequity shares (1.95% of the pre Buyback equity share capital) of the face value of Rs. 5/-each from all the existing shareholders on a proportionate basis through the "TenderRoute" process at a price of Rs. 660 per Equity Share payable in cash. The totalconsideration amounted to Rs. 97.02 Crores representing 9.95% ofthe aggregate of thepaid-up equity share capital and free reserves as per the audited accounts ofthe Companyfor the year ended March 31 2016. After complying with the applicable laws the Companybought back 1470000 Equity Shares. The funds in respect of accepted Equity Shares havebeen paid out. Buyback was completed on February 13 2017. The Promoters who haveparticipated in the Buyback offer re-organised their stake to the permitted levelssubsequently as per their undertaking to SEBI. The present Paid up Capital Post Buyback isRs. 36.95 Crores.

DIVIDEND

The Board in its meeting held on 03.05.2017 has recommended a Dividend of 15% on EquityShares of Rs. 5/- each ( Rs. 0.75) subject to the approval of the Members at theFourteenth Annual General Meeting.

RESERVES

During the year under review the Company has transferred Rs. 73 Lakhs to the CapitalRedemption Reserve towards Buyback of Equity Shares and Rs. 2386 Lakhs to the GeneralReserve.

FINANCE

Our prompt repayments of loan and interest continued. The funds are effectively managedto reduce the cost of interest. During the year we have availed additional term loans tofund the expansion Projects. The comfortable cash position is expected to continue withthe prospective outlook.

EXPANSION

The Financial Year 2016-17 has been a record year for KPR in augmenting its capacitiesin the value added segment. A brief about the expansion plans completed during the year isfurnished below:

I. GARMENT

KPR commissioned its large Green field Garment manufacturing facility with a capacityto produce 36 million Garments per annum under one roof. Now with a total capacity of 95Million Garments we are one of the largest Garment Manufacturers in India. New Clients andnew Markets are added. Order book positions response from existing and prospectiveclients are promising.

II. DOUBUNG OF PROCESSING CAPACITY

We have also commenced operations in the 'State of the Alt' Processing Unit II. Theadvanced technology of cold processing adopted therein reduces the water consumption by30% and eliminates the usage of salt completely. This eco - friendly facility willeconomise the cost of production and enhance the Fabric quality with excellent colouruniformity. This new unit will further add value to the Garment Division.

III. NEW SOPHISTICATED PRINTING DIVISION

KPR established a new Printing Division with the Sophisticated Technology PrintingMachines imported from Austria. This advanced technology empowers us to print sharpdesigns with high level of accuracy. Entire range of fabrics such as light & heavy aswell as delicate & sensitive fabrics can be printed in the same machine without anyfriction. Its ability to print voluminous fabrics with high resolution is a salientfeature. The sharpness & accuracy in printing the design and colour are itssignificant strengths. This new division shall cater to the Premium Brands' high-endgarment requirements carrying higher revenue and margin.

SUBSIDIARY COMPANIES

In respect of statements pursuant to Section 129(3) of the Companies Act 2013(Hereinafter referred to as the 'Act') in 'Form AOC - 1' containing the details ofSubsidiaries forms part of this Annual Report. However as required by the 'Act' we givebelow a brief report on their performance.

I. QUANTUM KNITS PVT. UMITED

The garment business has been consolidated for effective management.

I.K.P.R. SUGAR MILL LIMITED

The continuous drought conditions at Karnataka impacted the production and supply ofsugarcane. The sugarcane crushing commenced in December 2016 during the year couldproduce 32995 metric tons of sugar. Out of 423 Lakh units of power generated 294 Lakhunits were sold and 129 Lakh units captively consumed. However sugar prices continues tobe stable.

I. (AHNV) MOTOR PRIVATE UMITED

In Financial Year 2016-17 the Company sold 192 cars and with improved service incomemarked total revenue of Rs. 115.07 Crores. The National Demonetization drive during theyear has impacted the sale of automobiles for the industry as a whole considerably.However the Automobile Industiy is optimistic of its growth during the current year.

IV. GALAXY KNITS UMITED

The Company has not yet commenced its operation.

FIXED DEPOSITS

The Company has not accepted any fixed deposits from public during the year underreview.

DIRECTORS

The Company has adequate Independent Directors in compliance with the Act and ListingRegulations. Familiarization Program on the Company and its operation was conducted forthe Independent Directors. Requisite declaration from the Independent Directors of theCompany under Section 149 (7) of the Act confirming that they meet with the criteria oftheir Independence laid in Section 149 (6) have been obtained.

Sri.C.R. Anandakrishnan Director retires by rotation at the ensuing Annual GeneralMeeting and is eligible for reappointment.

The details of the aforesaid Director required to be disclosed under Regulation 36(3)of the Listing Regulation form part of the Notice of the ensuing Annual General Meeting.Your Directors recommend his re- appointment. All the Directors of the Company haveconfirmed that they are not disqualified from being appointed as Directors in terms ofSection 164 (2) of the Act.

KEY MANAGERIAL PERSONNEL AND MANAGERIAL REMUNERATION CRITERIA

In pursuance of the Act the Company has Key Managerial Personnel. None of the ManagingDirectors or Whole Time Directors receive any remuneration or commission from theSubsidiary Companies and the remuneration paid to them is within the purview of theprovisions of Section 197 of the Act. The Company pays remuneration by way of salaryperquisites etc. to its Chairman Managing Directors and fixed monthly remuneration toits Executive Directors and Whole Time Director in line with the approvals accorded by theGeneral Meetings in pursuance of the recommendation of the Nomination and RemunerationCommittee as per the guiding principles laid down in the Nomination and RemunerationPolicy. The information as required by Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is appended.

ANNUAL PERFORMANCE EVALUATION

In line with the criteria evolved by the Nomination and Remuneration Committee theperformance of all Directors Committees Chairman etc. have been evaluated pursuant tothe provisions of the Act and the Listing Regulations.

COMMITTEES

As required by the provisions of the Act and Listing Regulation the Company hasalready formed the following Committees the details of which are disclosed in the Reporton 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 Act and the Listing Regulation the following policies have beenframed and disclosed on the Company's website 'www.kprmilllimited.com'.

I. Nomination & Remuneration Policy

II. Related PartyTransaction Policy

Ill CSR Policy

IV. Whistle Blower Policy consisting of Vigil Mechanism

V. Policy on Determining Material Subsidiaries

VI. Code for Fair Disclosure

VII. Risk Management Policy

VIII. Dividend Distribution Policy

RISK MANAGEMENT

Pursuant to section 134 (3) (n) of the Companies Act 2013 & Regulation 17(9) ofthe Listing Regulation the Company has framed a Risk Management Policy. In the opinion ofthe Board there appears to be no element of risk which may threaten the existence oftheCompany.

VIGIL MECHANISM & WHISTLE BLOWER POLICY

The Company has an established Vigil Mechanism for Directors / Employees to reportconcerns about unethical behaviors actual or suspected fraud or violation of the code ofconduct or ethics policy it also provides for adequate safeguards against victimizationof Directors / Employees who avail of the mechanism. The Company affirms that no personnelhave been denied access to the audit committee. The Company has formulated a Policy ofVigil Mechanism and has established a mechanism that any personnel may raise ReportableMatters. All suspected violations and Reportable Matters can be reported to the Chairmanof the Audit Committee at e-mail id 'whistleblower@kprmill.com'. The key directions /actions can be informed to the Chairman / Managing Director of the Company. The WhistleBlower Policy has been framed and displayed in the Company's Website.

CSR EXPENDITURE

During the year in pursuance ofthe recommendations ofthe CSR committee the Companyhas contributed Rs. 392.24 Lakhs being 2% ofthe average three years net profitofthe Company towards implementing the CSR activities. Annual Report on CSR as requiredby the Act is appended.

BOARD MEETINGS

The Board of Directors met Six times during the financial year on 28.04.201625.07.201605.10.201624.10.20160712.2016 and 25.01.2017. The Composition of Boardprocedure dates and other details are included in the Corporate Governance Reportthatforms part of this Report.

CONSOUDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated Financial Statementspursuant to the provisions of the 'Act' and the Listing Regulations entered into with theStock Exchanges. They are prepared in accordance with the Ind-AS prescribed by theInstitute of Chartered Accountants of India in this regard. The Consolidated Financialsalso 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 ofthe Act and asrequired therein the details of the Borrowals Security Investment etc. are annexed byway of notes to accounts.

RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered into during the financial year wereonly between Holding Company and Wholly owned Subsidiary Companies in the ordinary courseof business whose accounts are consolidated with Holding Company and placed before theshareholders 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 Regulation 23 oftheListing Regulations there are no transactions to be reported under Section 188 (1) oftheAct.

However the Transactions as required under "Ind-AS" are reported in theNotes to Accounts of the Consolidated Financial Statements as well as Standalone FinancialStatements of your Company. The Company's Policy on dealing with related partytransactions is available on the Company's website.

EMPLOYEE WELFARE

Labour welfare activities in an industrialized society have far reaching impact notonly on the work force but also on the facets of human resources building a humanesociety. The underlying principle in our welfare practices is to empower the workers withhuman value addition and make the workers contribute voluntarily their loyal services ingenuine spirit of co-operation to

promote economic development by increasing production and productivity. The trendsetter facilities are provided to supplement the earning of the workers by services suchas comfortable & safe accommodation hygienic food & working conditions medicalassistance education library sports extra-curricular activities recreation etc.Higher education facilities provided at KPR is one of the best matching the high standardsof an Academic Institution. The Employees are also keen in effective utilization of theeducation and skill development facilities. During the Academic year 2016 also supportedby the best quality education extended by the Company several employees excelled in theGovernment conducted Examinations securing higher ranks. During the year also we haveenrolled around 2000 employees under the Central Government skill development initiatives.

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 Employeesof the Company will be provided upon request. In terms of Section 136 of the Act thereports and accounts are being sent to the members and others entitled thereto excludingthe information on employees' particulars which is available for inspection by the membersat the Registered Office of the Company during business hours on working days of theCompany up to the date of ensuing Annual General Meeting. If any member is interested ininspecting 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) Act2013 provides for protection against sexual harassment of women at workplace and for theprevention and redressal of complaints of sexual harassment and also for the mattersincidental thereto. The Company has accordingly adopted the policy against SexualHarassment of Women at Workplace for the purpose of preventing prohibiting andredressing sexual harassment of female employees at all the workplace within the Companywhich are based on fundamental principles of justice and fair play.

Further Anti Sexual Harassment Committee has been constituted at each unit which shallbe responsible for redressal of complaints related to sexual harassment. The details ofall such Complaints and its proper redressal through prompt corrective steps are informedto the Top Management so as to ensure that suitable processes and mechanisms are put inplace 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 anyof its Units.

ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to energy conservation technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act read with theCompanies (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 Boardof Directors of the Company hereby state and confirm that;

I. In the preparation of the Annual Accounts the applicable Ind- AS have been followedalong with proper explanation relating to material departures.

II. The Directors have selected accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for the year under review.

III. The Directors have taken proper and sufficient care for the maintenance ofadequate records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

IV. The Directors have arranged preparation of the accounts for the financial yearended 31.03.2017 on a going concern basis.

V. The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

VI. The Directors had devised proper systems to ensure compliance with the provisionsof 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 areattached to this Report. Certificate from the Statutory Auditors of the Company confirmingthe compliance with the conditions of Corporate Governance as stipulated under Schedule Vof the Listing Regulation is also attached to this Report.

BUSINESS RESPONSIBILITY REPORT

In pursuance of Regulation 34(2)(f) of the SEBI (LODR) Regulations 2015 the BusinessResponsibility Report containing the initiatives taken by the company from environmentalsocial and governance perspective forms part of this Report.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The details of internal financial control and their adequacyare included in the Report of Management Discussion & Analysis which forms partofthis Report.

RATIO OF REMUNERATION TO EACH DIRECTOR

Details / Disclosures of Ratio of Remuneration of Director to the median employee'sremuneration 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 onthe 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. However the Companyhas subdivided its Share and resorted to Buyback.

AUDITORS

M/s. Deloitte Haskins & Sells Chartered Accountants Coimbatore (ICAI No:008072S) the Statutory Auditors of the Company retire at the ensuing Annual GeneralMeeting upon completion of their term as per the Act.

As suggested by the Audit Committee the Board recommends the appointment of BSR &Co. LLP Chartered Accountants (Firm Registration Number: 101248W/W-100022) Chennai asStatutory Auditors of the company.

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 hasappointed a Cost Auditor for the Company to audit the cost records for the Financial Year2017-18.

SECRETARIAL AUDIT REPORT

As required by the Act a Secretarial Audit Report issued by a Company Secretary inpractice is annexed.

EXTRACT OF ANNUAL RETURN

Pursuant to section 92(3) of the Act and Rule 12(1) of the Companies (Management andAdministration) Rules 2014 an extract of annual return in MGT 9 forms part ofthisReport.

ACKNOWLEDGEMENT

Your Directors acknowledge with gratitude and express their appreciation for theassistances and co-operation received from the Bankers Government Authorities CustomersVendors and Members during the year under review. Your Directors also wish to thank theemployees at all levels for their co-operation and dedication.

By order of the Board of Directors
Coimbatore K.P. Ramasamy
03.05.2017 Chairman