TO THE MEMBERS OF NAGA LIMITED

Your Directors take pleasure in presenting the Twenty Fifth Annual Report together with the audited financial statements for the year ended March 31, 2016.

FINANCIAL RESULTS

The audited financial results of your Company for the year under review along with the figures for the previous year are as follows:

(Rupees in Lacs)

DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 0.20 per equity share of Rs. 10/-  each, for the year ended 31st March, 2016. The interim dividend of Rs. 0.60 per equity share was paid in March 2016.

The Final Dividend, subject to approval of members, will be paid within statutory period, to the members whose names appear in the Register of Members, as per book closure. The total dividend for the financial year, including proposed Final Dividend, amounts to Rs.0.80 per equity share (8% on paid-up equity share capital) (Previous year Rs. 0.80 per equity share) and the same will absorb Rs.113.98 Lacs (Previous year Rs.113.98 Lacs).

Pursuant to the provisions of Section 205C of the Companies Act, 1956 and Section 124(5) of the Companies Act, 2013, dividend which remains unpaid or unclaimed for a period of seven years from the date of its transfer to unpaid dividend account is required to be transferred by the Company to Investor Education and Protection  Fund (IEPF), established by the Central Government under the provisions of Section 125 of the Companies Act, 2013. The details of any unpaid dividend amounts as per Section 125(2) of the Companies Act, 2013 have to be identified and uploaded on the website of the Company. Accordingly, unclaimed dividends up to the financial year 2007-08 have been transferred to IEPF by the Company.

COMPANY PERFORMANCE

Your company's turnover & other income during the year under review is Rs. 43565.46 Lacs as against Rs. 46,575.43 Lacs for the corresponding previous year. There has been decrease of Rs.3009.97 Lacs which works out to an decrease of 6.46 %  when compared to the previous year.

Your Directors are to report that your Company has earned a net profit  after tax of Rs. 511.59 Lacs, as against a sum of Rs. 762.23 Lacs during the previous year due to higher depreciation and amortisation and higher other expenses.

Despite the unfavorable economic conditions and the continuous weak global scenario, your company has achieved the present turnover and has increased the retail  reach of the products to the consumer. Having our presence in the essential commodities industry, your company will perform well in the forthcoming years with sustained increase in retail  market share and with more emphasis on the quality products from Naga family.

FOOD AND RETAIL

There is decrease in production volume by 3.68% during the year compared to last year. Food and Retail Division has shown an decrease of about 3.31% in the sale volume during the year under report as compared to the previous year.

DETERGENTS

Detergents Division of Naga is the third largest manufacturer and supplier for M/s Hindustan Unilever Limited.  We have restored production to the last year’s figures and even surpassed it by a little margin.

MINERALS

Minerals Division has shown an decrease in production volume of about 8.20% during the year under report  as compared to the previous year. The sales volume has shown a decrease of about 10.65% for the year under report as compared to the previous year.

WIND & SOLAR POWER

The Energy Division of your company now has total  11 windmills with an installed capacity of

9025 KW apart from having 600 KW of Solar Power.   The generation during the year under report was 96 Lacs units as compared to 111 Lac units during the previous year.

TRANSFER TO RESERVE

Your Board propose to transfer  Rs.21 Lacs to the General Reserve. An amount of Rs229.18 Lacs is proposed to be retained in the General Reserve Account.

MANAGEMENT  DISCUSSION & ANALYSIS

As required by Regulation 34(2) of the Securities and Exchange of India (LODR) Regulations. 2015 has been attached to this report in “Annexure A”.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

a) Retirement by Rotation

In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Sri. Sounder Kannan, Whole-Time Director, retires by rotation and being eligible,  offered himself for reappointment at the ensuing Annual General Meeting.

b) Board independence

Our definition  of 'Independence' of Directors is derived from  Regulation  16(1) of the  SEBI (LODR) Regulations,  2015 with  Stock Exchanges and Section 149(6) of the  Companies Act, 2013. Based on the declaration submitted by Independent Directors and on evaluation of the relationships disclosed, the following  Non-Executive Directors are Independent in terms of Regulation 25(3) of the SEBI (LODR)  Regulations, 2015 and Section 149(6) of the Companies Act, 2013 :-

a) Sri. L.A.Irudayaraj

b) Dr. K. Venkatachalam c) Sri. S. Ramesh

The terms and conditions of appointment  of the  Independent Directors are placed on the website of the company www.nagamills.com.

c) Directors'  training, Familiarization & Evaluation and Nomination  and Remuneration  Policy

The Directors are regularly informed  during meetings of the Board and Committees of the activities  of the Company, its operations and issues facing  our industries. Considering the long association of the Directors with the Company and their seniority and expertise in their respective areas of specialization and knowledge of our industries, their  training  and familiarization were not  considered necessary and accordingly no such programmes were conducted.

Pursuant to the provisions of the Companies, Act, 2013 and Regulations  17 & 19 read with part D of Schedule II to  SEBI  LODR,  the Board has carried out an evaluation of the Directors as well as the evaluation of the Board and Committees. A structured questionnaire was prepared after  taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture,  execution and performance of specific duties, obligations and governance.

Your Board has adopted a Nomination and Remuneration Policy as required by Section 178 of the Companies Act, 2013. The policy provides for the appointment and removal of Directors, Key Managerial Personnel and Senior Management employees and their  remuneration.  The terms of reference of the Nomination and Remuneration Committee are given in the Report on Corporate Governance.

d) Resignation and Appointment of C.F.O.

i)  Mr.  R.Anand, CFO, has  resigned from  the  Company effective  December 31, 2015. Your Directors place on record their appreciation of the valuable services rendered by the aforesaid CFO during his tenure as CFO of the Company. Mr. T.Nagarajan, F.C.A., ACMA & A.C.S. was appointed as Chief Financial Officer (C.F.O) of the Company with effect  from 01.06.2016 at the Board Meeting held on 19.05.2016.

e) Key Managerial Personnel

As required  under Section 203 of  the  Companies Act,  2013, the  Company has noted  that Mr.  K.S.Kamalakannan, Chairman and Managing Director,  Mrs. Mageswari Kannan, Joint Managing Director,  Mr.  Sounder Kannan, Whole-Time Director,  Mr.  R.Anand, Chief Financial Officer  upto  31st December,  2015 and V.  Marikannan, Company Secretary   are  the  Key Managerial Personnel of the Company.

CASH FLOW AND CONSOLIDATED FINANCIAL STATEMENTS

As required by Regulation 34(2) of the SEBI (LODR),  Regulations, 2015, a Cash Flow Statement is appended. Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Section 129(3) of the Companies Act, 2013 and SEBI Listing Regulations and prepared in  accordance with  the  Accounting Standards prescribed  by  the  Institute   of  Chartered Accountants of India, in this regard.

BOARD MEETINGS

Eight meetings of the Board of Directors were held during the year. Dates of the meetings are given in the Report of Corporate Governance.

AUDIT COMMITTEE

Details pertaining to composition of the Audit Committee are included in the Report on Corporate Governance.

SUBSIDIARIES, ASSOCIATE COMPANIES AND JOINT VENTURES

As on March 31, 2016, your Company has One Associate Company,  viz. Annai Power Private Limited.  There has not been any material change in the nature of the business of the associate. As required under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and the Companies Act, 2013, the Consolidated Financial Statements  of  your  Company and its  associate are  provided  in  this  Annual Report.  The Consolidated Financial Statements have been prepare in accordance with Accounting Standards AS 21, AS 23 and AS 27 issued by the Institute  of Chartered Accountants of India and shown the financial resources, assets, liabilities, income, profits and other details of your Company and its share in Associate Company as a single entity. 

The performance and financial  position of associate Company included in the Consolidated Financial Statement is provided in accordance with the provisions of Section 129, read with Rule 5 of the Companies (Accounts) Rules, 2014 as a separate statement annexed to end of the Consolidated Financial Statements containing the salient features of the financial statements of Company’s subsidiaries / joint  ventures or associate companies in Form AOC-1.

Pursuant to Rule 8 (5) (iv) of the Companies (Accounts) Rules, 2014, the names of the companies which have become or ceased to be the subsidiaries, joint  ventures or associate companies during the year are provided in end of the Consolidated Financial Statements.

PUBLIC DEPOSITS

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 for the year ended March 31, 2016.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

RISK MANAGEMENT  POLICY

Your Company has adop ted  the  following  measures concerning the  development  and implementation of a Risk Management Policy after identifying  the following elements of risks which in the opinion of the Board may threaten the very existence of the Company itself.

a) To ensure that  all  the  current  and future  material  risk exposures of  the  company are identified, assessed, quantified,  appropriately mitigated, minimized and managed i.e to ensure adequate systems for risk management.

b) To establish a framework  for  the company's risk management process and to ensure its implementation.

c) To enable compliance with appropriate regulations, wherever applicable, through the adoption of best practices.

d) To assure business growth with financial stability.

The details  of  risk identified and mitigation  plan are provided  as a part  of  Management Discussion and Analysis Report attached as “Annexure A” to this report.

CORPORATE GOVERNANCE

As required by Schedule V(C) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed report on Corporate Governance is given as a part of the Annual Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Auditors' Certificate  of the compliance with Corporate Governance requirements by the Company is attached to the Report on Corporate Governance.

GENERAL SHAREHOLDER INFORMATION

General Shareholder Information is given in Item No. 10 of the Report on Corporate Governance forming part of the Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information  and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a. in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b. 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 March 31, 2016 and of the profit  of the Company for the year ended on that date; 

c. the proper and sufficient  care has been taken for the maintenance of adequate accounting records in accordance with  the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal  financial controls were in place and that the financial controls were adequate and were operating effectively.

f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

AUDITORS

a) Statutory  Auditors

Yours Company's Auditors, M/s. D.Sampathkumar & Co., Chartered Accountants, Chennai Firm Registration No. 003556S who retire  at the ensuing Annual General Meeting of the Company are eligible for reappointment.  They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for reappointment  as Auditors of the Company. As required under Regulation  33(1)(d)   of the SEBI(LODR) Regulations,  2016, the auditors have also confirmed  that  they hold a valid certificate issued by the Peer Review Board of the Institute  of Chartered Accountants of India.

The Auditors Report to the Shareholders on the Standalone Financials for the year ended March 31, 2016 does not contained any qualification, observation or adverse comment.

The Auditors Report to the Shareholders on the Consolidated Financials for the year endedMarch 31, 2016 does not contained any qualification, observation or adverse comment.

b) Secretarial  Audit

Pursuant to  the  provisions of Section 204 of the  Companies Act,  2013 and The Companies (Appointment  and Remuneration  of  Managerial Personnel)  Rules,  2014, the  Company has appointed M/s. G.S.R. & Co.,  Practising Company Secretaries, Chennai, FCS No. 5691 & C.P. No. 4966 to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report for FY 2015-2016 is annexed herewith  as “Annexure B ”. The report  does not contain any qualification, reservation or adverse remark.

c) Cost Auditor

Pursuant to the provisions of Section 148(3) of the Act the Board of Directors had appointed Dr.  I. Ashok, Cost Accountant,  Thirumangalam,   having Registration  No. M/11929 as Cost Auditor of the Company, for conducting the audit of cost records of Minerals Division for the financial year ended March 31, 2016. The audit is in progress and report will be filed with the Ministry of Corporate affairs with in the prescribed period.

HUMAN  RESOURCES AND INDUSTRIAL RELATIONS

Your Company takes pride  in  the  commitment,  competence and dedication  shown by its employees in all areas of business.

Your Company has a structured induction process at all locations and management development programs to upgrade skills of managers. Objective  appraisal systems based on Key Results Areas (KRAs) are in place for senior management staff.

Your Company is committed to nurturing,  enhancing and retaining top talent through superior Learning & Organizational Development. This is a part  of Corporate HR function  and is a critical  pillar to support the organization's growth and its sustainability in the long run.

During the year under review, the total number of permanent employees on the rolls of Company is 542.

EXTRACT OF ANNUAL RETURN

The extracts of Annual Return in Form MGT-9 as on March 31, 2016 pursuant to the provisions of Section 92 read with  Rule 12 of the Companies (Management and administration)  Rules, 2014 are furnished in “Annexure C” and is attached to this Report.

RELATED PARTY TRANSACTIONS

All related  party transactions that  were entered into  during the financial  year were on an arm's length  basis and were  in  the  ordinary  course of  business. There are no materially significant related  party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential  conflict  with the interest of the Company at large, suitable disclosures as required under AS-18 have been made in Note. 34 to the financial statements.

All Related Party Transactions are placed before the Audit Committee and also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of a foreseen and repetitive nature.  The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their  approval on a quarterly  basis. The statement  is supported by a Certificate  from  the CMD/CEO  & JMD/CFO. The Company has developed a Related  Party  Transactions Manual, Standard Operating Procedures for purpose of identification and monitoring of such transactions.

The particulars of contracts or arrangements with related parties referred to in Section 188(1), as prescribed in Form AOC - 2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013, are appended as “Annexure D”. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website (www.nagamills.com).

CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors has constituted  a Corporate Social Responsibility (CSR) Committee to monitor implementation of CSR activities  of your Company.

Based on the recommendation of the CSR Committee,  your Board has adopted a CSR Policy. The details of the CSR Committee,  CSR policy, CSR initiatives  and activities  during the year are given in the Annual Report on CSR activities  in  “Annexure - E” to this Report.

PARTICULARS REGARDING EMPLOYEES REMUNERATION

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report as “Annexure-F”.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Your Company has a vigil mechanism named Whistle Blower Policy to deal with  instance of fraud and mismanagement, if any. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future  operations.

INTERNAL  CONTROL  SYSTEMS AND THEIR ADEQUACY

The Company has a proper and adequate internal control system to ensure that all the assets of the Company safeguarded and protected against any loss and that all transactions are properly authorised and recorded.   Information  provided to Management is reliable  and timely  and statutory obligations are adhered to.  The details of the same are provided in the Management Discussion and Analysis Report attached as “Annexure A”  to this Report. The Company has established internal financial control policy.

The Internal Auditor  monitors and evaluates the efficacy  and adequacy of internal  control system in the Company, its compliance with  operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal  audit function,  they Board takes corrective action and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information  on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as “Annexure G”.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

As required  by the  Sexual Harassment of  Women at  Workplace (Prevention,  Prohibition  & Redressal) Act, 2013, the Company has formulated and implemented a policy on prevention of sexual harassment at workplace with a mechanism of lodging complaints. Its redressal is placed on the intranet  for the benefits of its employees. During the year under review, no complaints were reported to the Internal Committee / Board.

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report.

GREEN INITIATIVE

Your Company has taken  the  initiative of  going green and minimizing  the  impact  on the environment. The Company has been circulating  the copy of the Annual Report in electronic format to all those Members whose email address is available with the Company. Your Company would encourage other Members also to register themselves for receiving Annual Report in electronic form.

ACKNOWLEDGEMENTS

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully  acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other  business partners for  the excellent  support received from  them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution  to the Company.

FOR AND ON BEHALF OF THE 

BOARD OF DIRECTORS

K.S. KAMALAKANNAN

Chairman & Managing Director

Place    :  Chennai

Date     :  19.05.2016