TO THE SHAREHOLDERS
Your Directors have pleasure in presenting the Twenty Fifth Annual Report of yourCompany and the Audited Statements of Accounts for the year ended 31st March 2015.
I. FINANCIAL RESULTS:-
|DESCRIPTION ||2014-15 ||2014-15 ||2013-14 ||2013-14 |
| ||(Rs. in Lakhs) ||(Rs. in Lakhs) ||(Rs. in Lakhs) ||(Rs. in Lakhs) |
| ||(Standalone) ||(Consolidated) ||(Standalone) ||(Consolidated) |
|SALES - Domestic ||47279 ||47279 ||45028 ||45028 |
|- Exports ||14194 ||14194 ||10908 ||10908 |
|- Trading ||- ||17823 ||- ||- |
|Total ||61473 ||79296 ||55936 ||55936 |
|Operating Profit ||6116 ||7538 ||6398 ||6381 |
|Less:- Financial charges ||3979 ||4893 ||4066 ||4734 |
|Profit Before Depreciation Preliminary / FCCB & GDR Expenses W/o ||2137 ||2645 ||2332 ||1647 |
|Depreciation Preliminary / FCCB & GDR Expenses W/o ||1722 ||1722 ||2093 ||2092 |
|Net Profit Before Tax ||415 ||923 ||239 ||(445) |
|Less : Provision for Taxation ||56 ||56 ||(180) ||(180) |
|Less : Provision for Deferred Tax ||(28) ||(28) ||307 ||307 |
|Profit After Tax ||387 ||895 ||112 ||(572) |
|Add : Balance brought forward ||6004 ||5304 ||5892 ||5952 |
|Profit available for appropriation ||5680 ||5488 ||6004 ||5381 |
|Appropriation: || || || || |
|Proposed Dividend ||- ||- ||- ||- |
|Corporate Dividend Tax ||- ||- ||- ||- |
|Transfer to Reserve ||- ||- ||- ||- |
|Balance Profit carried to Balance sheet ||5680 ||5488 ||6004 ||5381 |
|Earnings per share: (Face Value Rs. 10/-) || || || || |
|Basic (Rs.) ||3.44 ||7.96 ||1.00 ||(5.08) |
|Diluted (Rs.) ||3.02 ||6.98 ||0.88 ||(4.48) |
Standalone Performance :
The Turnover during the year under review was Rs. 614.73 Crores as against Rs.559.36 Crores for the previous year a growth of 9.90% over the previous year. Increase inrevenue was due to rise in volumes and prices as well. During the year under reviewexports were higher by 30.12 % at Rs. 141.94 Crores.
Profit before tax was Rs. 4.15 Crores as against Rs. 2.39 Crores for theprevious year a increase of 73.64%
FCC Bonds which are maturing on 26th April 2016 carrying 5%YTM. The Company isconfident of generating sufficient cash flows at maturity if the bond holders opt forredemption on due date.
The Company is having 3.30 MW Windmills capacity and 10 MW Co-gen Power Plantand its generation is being utilised by the Company apart from its outside energy sales.
A more detailed discussion is provided in the Management Discussion and AnalysisReport.
Considering the significant expansion plans of your company which require substantialinvestments and the dip in Profits for the year the Board of Directors think it prudentto conserve the resources. The Directors regret their inability to recommend any dividend.
IV. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A detailed discussion on the industry structure as well as on the financial andoperational performance is contained in the Rs.Management Discussion and AnalysisReportRs. that forms an integral part of this Report (Annexure-1).
V. CORPORATE GOVERNANCE:-
Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges CorporateGovernance report together with the certificate from the companyRs.s auditors confirmingthe compliance of conditions on Corporate Governance is given in (Annexure -2)
Section 134(3) of the Companies Act 2013 requires the BoardRs.s report to includeseveral additional contents and disclosures compared to the earlier Law. Most of them haveaccordingly been made in the Corporate Governance report at the appropriate places thatforms an integral part of this report.
A Certificate from the Auditors of the Company regarding Compliance with the conditionsof Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attachedto this report.
VI. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT-9 is given in(Annexure-3).
VII. INFORMATION PURSUANT TO SECTION 134(3)(m):-
a) CONSERVATION OF ENERGY TECHONOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO RESEARCH AND DEVELOPMENT:-
Information relating to conservation of energy technology absorption and foreignexchange earnings and outgo as required under Section 134(3)(m) of the Companies Act 2013read with Rule 8 of the Companies (Accounts) Rules 2014 is given in (Annexure - 5(i)).
The Company has incurred Rs. 4.87 Lakhs (Previous Year Rs. 5.08 Lakhs) towards therecurring expenditure on Research and Development. The R & D expenditure as a % ofsales is 0.008% (Previous Year 0.009%)
VIII. PARTICULARS OF REMUNERATION PURSUANT TO SECTION 197(12):-
The information required pursuant to Section 197(12) of the Act read with Rule 5(1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexure here to as (Annexure- 4)
IX) DIRECTORSRs. RESPONSIBILITY STATEMENT PURSUANT TO SECTION 134(3)(c):-
Pursuant to Section 134(3)(c) of the Companies Act 2013 with respect to the DirectorsResponsibility Statement your Board confirms that:
a) in the preparation of the annual accounts the applicable accounting standards havebeen followed.
b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe Profit of the company for the year.
c) the Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities.
d) the Directors have prepared the annual accounts on a going concern basis.
e) the Directors have laid down internal financial controls to be followed by thecompany and that said internal financial controls are adequate and were operatingeffectively.
f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems were adequate and operating effectively.
X. PUBLIC DEPOSITS:-
The Company has not accepted any deposits from the public falling within the ambit ofSection 73 of the Companies Act 2013 and The Companies (Acceptance of Deposit) Rules2014 during the year under review. There are no outstanding deposits as on March 31 2015.
XI. LISTING WITH STOCK EXCHANGES:-
The Shares of the Company are listed with the following Stock Exchanges:
Bombay Stock Exchange Limited
Phiroze Jeejeebhoy Towers 25th Floor Dalal Street Mumbai - 400 001.
The Company has paid the annual Listing fees for the period 2015 - 2016 to Bombay StockExchange Limited
Madras Stock Exchange Limited and Cochin Stock Exchange Limited has been allowed toexit as stock exchange vide SEBIRs.s order dated 03.04.2013.
The Foreign Currency Convertible Bonds and Global Depository Receipts of the Companyare listed with Luxembourg Stock Exchange R.C.B 6222 B.P 165 L-2011 Luxembourg.
XII. WHOLLY OWNED SUBSIDIARY COMPANY :-
The Company has a Wholly Owned Subsidiary Company in the name M/s Shriudha Ventures PteLtd which has been incorporated on 9th April 2012 in Republic of Singapore for thepurpose of carrying the business of importers exporters whole salers and agents of UreaPackaging materials and other general commodities.
XIII. COMMITTEES OF THE BOARD
In compliance with the provisions of Sections 135 177 178 of the Companies Act 2013the Board constituted Corporate Social Responsibility Committee Audit CommitteeNomination and Remuneration Committee and Stakeholders Relationship Committee(Committees). The details of composition of the Committees their meeting and attendanceof the members are given in the Corporate Governance Report forming part of this annualreport.
XIV. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The brief outline of the CSR Policy of the Company and the initiatives undertaken bythe Company on CSR activities during the year are given in (Annexure-6) to this report inthe format prescribed in Companies (Corporate Social Responsibility Policy) Rules 2014.The said policy is available on the CompanyRs.s website.
XV. NOMINATION AND REMUNERATION POLICY
The Board has on the recommendation of Nomination and Remuneration Committee framed apolicy for selection and appointment of Directors Senior Management Personnel and theirremuneration. The Nomination and Remuneration Policy adopted by the Board is available onthe CompanyRs.s website www.Karurkcp.in
XVI. EVALUATION OF THE BOARD
Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the listingagreement entered into with the Stock Exchanges the Board had carried out an annualperformance evaluation of its own performance the directors individually as well ascommittees of the Board.
A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering aspects of the BoardRs.s functioning such as adequacy of thecomposition of the Board and its committees execution and performance of specific dutiesobligations and governance.
A separate exercise was carried out to evaluate the performance of Individual Directorsincluding the Chairman of the Board. The Directors performance was evaluated on parameterssuch as level of engagement and contribution in safeguarding the interest of the Companyetc. The performance of every Director was evaluated by the Nomination and RemunerationCommittee.
The Independent Directors at their separate meeting reviewed the Performance of theBoard as a whole Non independent Directors and the Chairman of the Board.
XVII. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
Pursuant to requirement of Clause 49 of the Listing Agreement Company has afamiliarization programme for the Independent Directors with regard to their role rightsresponsibilities in the Company nature of the industry in which the Company operatesbusiness model of the Company etc. The Board Members are provided with all the necessarydocuments / reports and internal policies to enable them to familiarize with theCompanyRs.s procedures and practices .
XVIII. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The Company has not given any loans guarantees or security in connection with loans ormade any investments falling within the ambit of Section 185/186 of the Companies Act2013.
XIX. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY
The Corporate Governance Report contains relevant details on the nature of RelatedParty Transactions (RPTs) and the policy formulated by the Board on Material RPTs.Particulars of contracts or arrangements with Related Parties referred in Section 188(1)of the Companies Act 2013 is furnished in accordance with Rule 8(2) of the Companies(Accounts) Rules 2014.
All related party transactions that were entered into during the financial year were onarmRs.s length basis and were in the ordinary course of business.
During the financial year 2014-15 there were no materially significant transactionswith the related parties which might be deemed to have had a potential material conflictwith the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. Prior omnibus approval of the Audit Committee is obtained for transactionwith the related parties which are routine and repetitive in nature.
The summary statement of transactions entered into with the related parties pursuant tothe omnibus approval so granted are reviewed and approved by the Audit Committee and theBoard of Directors on a quarterly basis.
The particulars of Contracts or arrangements with the related parties under section 188in Form AOC-2 is enclosed herewith (Annexure-7).
XX. INTERNAL CONTROLS
The details of internal control system and the adequacy of internal financial controlswith respect to financial statements are given in the corporate governance report whichforms part of the annual report.
The company has laid down adequate systems and well drawn procedures for ensuringinternal financial controls. It has appointed an external audit firm as internal auditorsfor periodically checking and monitoring the internal control measures.
Internal auditors are present at the Audit Committee meetings where their reports arediscussed alongside of management comments and the final observation of the internalauditor.
The Board of Directors have adopted various policies like Related Party TransactionsPolicy and Whistle Blower Policy and put in place budgetary control and monitoringmeasures for ensuring the orderly and efficient conduct of the business of the companythe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial information
XXI. RISK MANAGEMENT
During the year the risk assessment parameters were reviewed and modified. The auditcommittee reviewed the element of risks and the steps taken to mitigate the risks. Exceptfor the risk stated in para (i) (e) of the management and analysis report in the opinionof the Board there are no major elements of risk which has the potential of threateningthe existence of the Company.
XXII. WHISTLE BLOWER POLICY / VIGIL MECHANISM
The Company has established a whistle blower policy/vigil mechanism to provide anavenue to raise concerns. The mechanism provides for adequate safeguards againstvictimization of employees who avail of it and also for appointment of an Ombudsperson whowill deal with the complaints received. The policy also lays down the process to befollowed for dealing with the complaints and in exceptional cases also provides fordirect access to the Chairperson of the Audit Committee. The Whistle Blower Policyestablished by the Board is available on the CompanyRs.s website.
XXIII. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption foreign exchangeearnings and outgo as per Section 134(3)(m) of the Act read with Rule 8 of The Companies(Accounts) Rules 2014 are annexed here to as (Annexure-5 (ii)) and forms part of thisannual report.
XXIV. INDUSTRIAL RELATIONS:-
During the year under review industrial relations remained cordial and stable. Thedirectors wish to place on record their sincere appreciation for the co-operation receivedfrom employees at all levels.
XXV. SBLC FACILITY:-
Your Company has availed Stand By Letter of Credit Facility with The Karur Vysya BankLtd. for USD 28.36 million favouring Bank of India Dubai Branch on behalf of its WhollyOwned Subsidiary Company M/s. Shriudha Ventures Pte Ltd. Singapore above said facility isexempt with in the purview of Section 185 and 186 of the Companies Act 2013 read with theCompanies (Meetings of Board and its Powers) Rules 2014.
Smt. P. Annammal (DIN 00060871) retires by rotation at the ensuing Annual GeneralMeeting and in accordance with the requirements of the Act and Articles of Association ofthe Company she being eligible offer herself for reappointment is hereby reappointed asDirector of the Company.
Shri V.S. Murali Kriishanan (DIN 00527793) Non-executive - Independent Director hassubmitted his resignation on 1st August2015 and the Board has accepted his resignationwith regrets.
Shri A. Ganesh Kumar (DIN 07278155) who was appointed by the Board as an AdditionalDirector w.e.f 7th September 2015 of the Company in the casual vacancy caused by theresignation of Shri V.S. Murali Kriishnan.
All the Independent Directors have given the declaration that they met the criteria onindependence as laid down under Section 149(6) of the Companies Act 2013 and Clause 49 ofthe Listing Agreement. The performance evaluation of Independent directors has been doneby the entire Board of Directors meeting. The Board on the basis of such performanceevaluation determined to continue the term of appointment of all the independent directorswho have been appointed by the company at its Twenty Fifth Annual General Meeting for afixed tenure of Five years till Twenty Nineth Annual General Meeting.
i) Statutory Auditor
M/s. MSS SRIRAM & Co. Chartered Accountants Karur (FRN:007909S) has beenappointed as Statutory Auditors of the Company till the conclusion of Twenty SeventhAnnual General Meeting respectively subject to ratification by members at every AnnualGeneral Meeting. Accordingly requisite resolution for ratifying their appointment isproposed in the manner stated in the Notice for the Twenty Fifth Annual General Meeting.
ii) Cost Auditor
Shri B. Venkateswar Cost Accountant (Registration No.M-27622) has been appointed bythe Board of Directors on recommendation of Audit Committee in terms of Section 148 andother applicable provisions of the Companies Act 2013 read with Companies ( Cost recordsand Audit) Rules 2014 to conduct the Cost Audit in respect of Paper and Paper Productsfor the financial year 2014-15 whose appointment has been approved by the CentralGovernment. The Cost Audit Report for the financial year ended 31st March 2014 had beene-filed with the Ministry of Corporate Affairs New Delhi vide SRN S38045092 dated01-06-2015. The remuneration of the Cost Auditor is subject to ratification by the memberat the ensuing Annual General Meeting.
iii) Secretarial Auditor
Shri V.Suresh Practicing Company Secretary (Registration Number :2969) pursuant tothe provisions of Section 204 of the Companies Act 2013 and The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed him asSecretarial Auditor to undertake the Secretarial Audit of the Company.
The Report of the Secretarial Audit in Form MR3 for the financial year ended March 312015 is annexed as (Annexure - 8) to the Report.
The following qualifications were observed by the Secretarial Auditor in his Report towhich the Board has shared the following explanations:
The Company has appointed a CFO (Chief Financial Officer) before 31st March 2015 butthe ROC compliances are made belatedly.
The Company has subsequently filed necessary forms with the Registrar of CompaniesPondicherry in respect of said appointment.
The Company has not regularized an Independent DirectorRs.s appointment as requiredunder Section 149 of the Act. Response 2:
The Company shall regularize the appointment of Independent Director in the upcomingAnnual General Meeting. Qualification 3:
The following Policies are framed by the Company but not placed before the AuditCommittee/Nomination and Remuneration Committee/Board of Directors:
- Nomination and Remuneration Policy under Section 178 of the Act.
- Whistle Blower Policy under Section 177 of the Act.
- CSR Policy under Section 135 of the Act.
- Familiarization Programme for Independent Directors under Clause 49 of the ListingAgreement
- Risk Management Policy under Section 134(3)(n) of the Act.
- Related Party Transaction Policy as required under Clause 49 of the ListingAgreement.
The Company has since placed all the said policies before Audit Committee/Nominationand Remuneration Committee/Board of Directors as required.
The Company has not constituted a CSR Committee as required under Section 135 of theAct 2013.
CSR activities already commenced formally as in the past. The Company has constitutedthe CSR Committee during this Financial year 2014-2015 and regularised subsequently asper Section 135 of the Act 2013.
The Company has not filed Form 5 INV and Form 1 INV as required under Section 124 ofthe Companies Act 2013. Response 5:
The Company is taking steps to file the said form 5 INV and 1 INV.
The Company has to upload the Letter of Appointment for Independent Directors and theabove mentioned Policies stated in Point No.3 in its website.
The Directors are taking steps to upload the letter of appointment of IndependentDirector and other documents as mentioned in point no.3 in the CompanyRs.s website.
The Company has not filed the Form MGT-15 after the Annual General Meeting held on29.09.2014 as required under Section 121 of the Companies Act 2013.
The company has since filed the Form MGT 15 with the Registrar of CompaniesPondicherry.
Proper Compliances of The Securities and Exchange Board of India (SubstantialAcquisition of Shares and Takeovers) Regulations 2011 are not made with specificreference to Regulation 30 of the stated Regulations;
Directors are taking steps to ensure proper compliance of the same in the current year.
Proper compliances of The Securities and Exchange Board of India (Prohibition ofInsider Trading) Regulations 1992 are not made;
Directors are taking steps to ensure proper compliance of the same in the current year.
iv) Internal Auditor
Shri E. Muthuraman Chartered Accountant (Membership Number:207028) had been appointedby the Company as an Internal Auditor to conduct the Internal Audit.
The Board of Directors thank the Consortium of Bankers consisting of State Bank ofIndia (Lead Bank) Union Bank of India The Karur Vysya Bank Limited IDBI Bank Limitedand Canara Bank who have supported the Company for the credit requirements.
The Board of Directors takes this opportunity to place on record their appreciation forthe co-operation commitment and dedication of all the employees of the Company and thesupport extended by the customers vendors business associates banks governmentauthorities and all concerned without which it would not have been possible to achieveall round growth of the Company.
The Directors are thankful to the shareholders for their continued patronage.
| ||On Behalf of the Board |
|Place : Karur ||K. C. PALLANI SHAMY |
|Date : 7th September 2015 ||Chairman |
Annexure : 5
FORM - A
I DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
|DESCRIPTION ||Current year 31st March 2015 ||Previous Year 31st March 2014 |
|A. Power and Fuel Consumption || || |
|a) Electricity || || |
|Purchased (Units) ||2115266 ||1453073 |
|Total Amount (Rs.) ||15367595 ||10125946 |
|Rate / Unit (Rs.) ||7.27 ||6.97 |
|b) Own generation (Generator) || || |
|Captive Consumption (Units) ||323537 ||450327 |
|Total Amount (Rs.) ||5404053 ||7543982 |
|Rate / Unit (Rs.) ||16.70 ||16.75 |
|Diesel Consumed (Litres) ||99027 ||137406 |
|c) Own generation (Co Gen) || || |
|Captive Consumption (Units) ||48571224 ||52202821 |
|Total Amount (Rs.) ||316882952 ||330762826 |
|Rate / Unit (Rs.) ||6.52 ||6.34 |
|d) Wind Mills Generation || || |
|Captive Consumption (Units) ||6430660 ||7705867 |
|Total Amount (Rs.) ||37525710 ||44647604 |
|Rate / Unit (Rs.) ||5.84 ||5.79 |
|B. Consumption per M.T. of Production || || |
|Electricity - Units ||Units/M.T. ||Units / M.T. |
|- Paper & Paper bags ||1161.82 ||1186.62 |
|- PP & FIBC bags ||1256.42 ||1211.03 |
II. Technology Absorption Adaptation and Innovation
Research and Development activities are carried out on an ongoing basis for improvingthe efficiency and also for improving quality of products.
III. Foreign Exchange Earnings & Outgo
| ||2014 - 15 ||2013 - 14 |
| ||(Rs. In Lakhs) ||(Rs. In Lakhs) |
|a) Earnings ||14194 ||10908 |
|b) Outgo ||11576 ||10082 |
| ||On behalf of the Board |
|Place : Karur ||K. C. PALLANI SHAMY |
|Date : 7th September 2015 ||Chairman |