| Dear Members,
The Directors have pleasure in presenting the Twenty Fifth Annual
Report of your Company and the Audited Statements of Accounts for the
year ended 31st March, 2015.
I. FINANCIAL RESULTS:-
DESCRIPTION 2014-15 2014-15
(Rs. in Lakhs) (Rs. in Lakhs)
(Standalone) (Consolidated)
SALES - Domestic 47,279 47,279
- Exports 14,194 14,194
- Trading - 17,823
Total 61,473 79,296
Operating Profit 6,116 7,538
Less:- Financial charges 3,979
Profit Before Depreciation, Preliminary / 2,137 2,645
FCCB & GDR Expenses W/o
Depreciation, Preliminary / FCCB & 1,722 1,722
GDR Expenses W/o
Net Profit Before Tax 415 923
Less : Provision for Taxation 56 56
Less : Provision for Deferred Tax (28)
Profit After Tax 387 895
Add : Balance brought forward 6,004 5,304
Profit available for appropriation 5,680 5,488
Appropriation:
Proposed Dividend - -
Corporate Dividend Tax - -
Transfer to Reserve - -
Balance Profit carried to Balance sheet 5,680 5,488
Earnings per share: (Face Value Rs. 10/-)
Basic (Rs.) 3.44 7.96
Diluted (Rs.) 3.02 6.98
DESCRIPTION 2013-14 2013-14
(Rs. in Lakhs) (Rs. in Lakhs)
(Standalone) (Consolidated)
SALES - Domestic 45,028 45,028
- Exports 10,908 10,908
- Trading - -
Total 55,936 55,936
Operating Profit 6,398 6,381
Less:- Financial charges 4,893 4,734
Profit Before Depreciation, Preliminary / 2,332 1,647
FCCB & GDR Expenses W/o
Depreciation, Preliminary / FCCB & 2,093 2,092
GDR Expenses W/o
Net Profit Before Tax 239 (445)
Less : Provision for Taxation (180) (180)
Less : Provision for Deferred Tax 307 307
Profit After Tax 112 (572)
Add : Balance brought forward 5,892 5,952
Profit available for appropriation 6,004 5,381
Appropriation:
Proposed Dividend - -
Corporate Dividend Tax - -
Transfer to Reserve - -
Balance Profit carried to Balance sheet 6,004 5,381
Earnings per share: (Face Value Rs. 10/-)
Basic (Rs.) 1.00 (5.08)
Diluted (Rs.) 0.88 (4.48)
II. PERFORMANCE:-
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 in revenue was due to rise in volumes and
prices as well. During the year under review, exports 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 the previous year, a increase of 73.64%
? FCC Bonds which are maturing on 26th April, 2016 carrying 5%YTM.
The Company is confident of generating sufficient cash flows at
maturity if the bond holders opt for redemption on due date.
? The Company is having 3.30 MW Windmills capacity and 10 MW Co-gen
Power Plant, and 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
Analysis Report.
III. DIVIDEND:-
Considering the significant expansion plans of your company which
require substantial investments and the dip in Profits for the year,
the Board of Directors think it prudent to 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 and operational performance is contained in the 'Management
Discussion and Analysis Report' 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, Corporate Governance report together with the certificate
from the company's auditors confirming the compliance of conditions on
Corporate Governance is given in (Annexure -2)
Section 134(3) of the Companies Act, 2013 requires the Board's report
to include several additional contents and disclosures compared to the
earlier Law. Most of them have accordingly been made in the Corporate
Governance report at the appropriate places that forms an integral part
of this report.
A Certificate from the Auditors of the Company regarding Compliance
with the conditions of Corporate Governance as stipulated under Clause
49 of the Listing Agreement is attached to 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 AND OUTGO, RESEARCH AND DEVELOPMENT:-
Information relating to conservation of energy, technology absorption
and foreign exchange earnings and outgo as required under Section
134(3)(m) of the Companies Act, 2013 read 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 the recurring expenditure on Research and Development. The R &
D expenditure as a % of sales 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) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 is annexure here to as (Annexure- 4)
IX) DIRECTORS' RESPONSIBILITY STATEMENT PURSUANT TO SECTION 134(3)(c):-
Pursuant to Section 134(3)(c) of the Companies Act, 2013 with respect
to the Directors Responsibility Statement, your Board confirms that:
a) in the preparation of the annual accounts, the applicable accounting
standards have been followed.
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 at the end of the financial year and of the Profit of
the company for the year.
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities.
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 the company and that said internal financial controls are
adequate and were operating effectively.
f) the Directors have devised proper systems to ensure compliance with
the provisions of 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 of Section 73 of the Companies Act, 2013 and The
Companies (Acceptance of Deposit) Rules, 2014 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 Stock Exchange Limited,
Madras Stock Exchange Limited, and Cochin Stock Exchange Limited has
been allowed to exit as stock exchange vide SEBI's order dated
03.04.2013.
The Foreign Currency Convertible Bonds and Global Depository Receipts
of the Company are 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 Pte Ltd, which has been incorporated on 9th April,
2012 in Republic of Singapore for the purpose of carrying the business
of importers, exporters, whole salers and agents of Urea, Packaging
materials and other general commodities.
XIII. COMMITTEES OF THE BOARD
In compliance with the provisions of Sections 135, 177, 178 of the
Companies Act, 2013, the Board constituted Corporate Social
Responsibility Committee, Audit Committee, Nomination and Remuneration
Committee and Stakeholders Relationship Committee (Committees). The
details of composition of the Committees, their meeting and attendance
of the members are given in the Corporate Governance Report forming
part of this annual report.
XIV. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The brief outline of the CSR Policy of the Company and the initiatives
undertaken by the Company on CSR activities during the year are given
in (Annexure-6) to this report in the format prescribed in Companies
(Corporate Social Responsibility Policy) Rules, 2014. The said policy
is available on the Company's website.
XV. NOMINATION AND REMUNERATION POLICY
The Board has on the recommendation of Nomination and Remuneration
Committee framed a policy for selection and appointment of Directors,
Senior Management Personnel and their remuneration. The Nomination and
Remuneration Policy adopted by the Board is available on the Company's
website www.Karurkcp.in
XVI. EVALUATION OF THE BOARD
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the listing agreement entered into with the Stock Exchanges, the Board
had carried out an annual performance evaluation of its own
performance, the directors individually as well as committees of the
Board.
A structured questionnaire was prepared after taking into consideration
inputs received from the Directors, covering aspects of the Board's
functioning such as adequacy of the composition of the Board and its
committees, execution and performance of specific duties, obligations
and governance.
A separate exercise was carried out to evaluate the performance of
Individual Directors including the Chairman of the Board. The Directors
performance was evaluated on parameters such as level of engagement and
contribution in safeguarding the interest of the Company etc. The
performance of every Director was evaluated by the Nomination and
Remuneration Committee.
The Independent Directors at their separate meeting reviewed the
Performance of the Board 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 a familiarization programme for the Independent Directors with
regard to their role, rights, responsibilities in the Company, nature
of the industry in which the Company operates, business model of the
Company etc. The Board Members are provided with all the necessary
documents / reports and internal policies to enable them to familiarize
with the Company'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 or made any investments falling within the ambit
of Section 185/186 of the Companies Act, 2013.
XIX. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY
The Corporate Governance Report contains relevant details on the nature
of Related Party 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 on arm's length basis and were in the ordinary
course of business.
During the financial year 2014-15, there were no materially significant
transactions with the related parties which might be deemed to have had
a potential material conflict with the interest of the Company at
large.
All Related Party Transactions are placed before the Audit Committee as
also the Board for approval. Prior omnibus approval of the Audit
Committee is obtained for transaction with the related parties which
are routine and repetitive in nature.
The summary statement of transactions entered into with the related
parties pursuant to the omnibus approval so granted are reviewed and
approved by the Audit Committee and the Board of Directors on a
quarterly basis.
The particulars of Contracts or arrangements with the related parties
under section 188 in Form AOC-2 is enclosed herewith (Annexure-7).
XX. INTERNAL CONTROLS
The details of internal control system and the adequacy of internal
financial controls with respect to financial statements are given in
the corporate governance report which forms part of the annual report.
The company has laid down adequate systems and well drawn procedures
for ensuring internal financial controls. It has appointed an external
audit firm as internal auditors for periodically checking and
monitoring the internal control measures.
Internal auditors are present at the Audit Committee meetings where
their reports are discussed alongside of management comments and the
final observation of the internal auditor.
The Board of Directors have adopted various policies like Related Party
Transactions Policy and Whistle Blower Policy and put in place
budgetary control and monitoring measures for ensuring the orderly and
efficient conduct of the business of the company, the safeguarding of
its assets, the prevention and detection of frauds and errors, the
accuracy and completeness of the accounting records and the timely
preparation of reliable financial information
XXI. RISK MANAGEMENT
During the year, the risk assessment parameters were reviewed and
modified. The audit committee reviewed the element of risks and the
steps taken to mitigate the risks. Except for the risk stated in para
(i) (e) of the management and analysis report in the opinion of the
Board, there are no major elements of risk which has the potential of
threatening the existence of the Company.
XXII. WHISTLE BLOWER POLICY / VIGIL MECHANISM
The Company has established a whistle blower policy/vigil mechanism to
provide an avenue to raise concerns. The mechanism provides for
adequate safeguards against victimization of employees who avail of it
and also for appointment of an Ombudsperson who will deal with the
complaints received. The policy also lays down the process to be
followed for dealing with the complaints and in exceptional cases, also
provides for direct access to the Chairperson of the Audit Committee.
The Whistle Blower Policy established by the Board is available on the
Company's website.
XXIII. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption,
foreign exchange earnings 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 this annual report.
XXIV. INDUSTRIAL RELATIONS:-
During the year under review, industrial relations remained cordial and
stable. The directors wish to place on record their sincere
appreciation for the co-operation received from employees at all
levels.
XXV. SBLC FACILITY:-
Your Company has availed Stand By Letter of Credit Facility with The
Karur Vysya Bank Ltd., for USD 28.36 million favouring Bank of India,
Dubai Branch on behalf of its Wholly Owned Subsidiary Company M/s.
Shriudha Ventures Pte Ltd., Singapore above said facility is exempt
with in the purview of Section 185 and 186 of the Companies Act, 2013
read with the Companies (Meetings of Board and its Powers) Rules, 2014.
XXVI. DIRECTORS:-
Smt. P. Annammal (DIN 00060871) retires by rotation at the ensuing
Annual General Meeting and in accordance with the requirements of the
Act and Articles of Association of the Company, she being eligible
offer herself for reappointment, is hereby reappointed as Director of
the Company.
Shri V.S. Murali Kriishanan (DIN 00527793) Non-executive - Independent
Director has submitted his resignation on 1st August,2015 and the Board
has accepted his resignation with regrets.
Shri A. Ganesh Kumar (DIN 07278155), who was appointed by the Board as
an Additional Director w.e.f 7th September, 2015, of the Company in the
casual vacancy caused by the resignation of Shri V.S. Murali Kriishnan.
All the Independent Directors have given the declaration that they met
the criteria on independence as laid down under Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement. The
performance evaluation of Independent directors has been done by the
entire Board of Directors meeting. The Board on the basis of such
performance evaluation determined to continue the term of appointment
of all the independent directors who have been appointed by the company
at its Twenty Fifth Annual General Meeting for a fixed tenure of Five
years till Twenty Nineth Annual General Meeting.
XXVII. AUDITORS:-
i) Statutory Auditor
M/s. MSS SRIRAM & Co., Chartered Accountants, Karur (FRN:007909S) has
been appointed as Statutory Auditors of the Company till the conclusion
of Twenty Seventh Annual General Meeting respectively subject to
ratification by members at ev- ery Annual General Meeting. Accordingly
requisite resolution for ratifying their appointment is proposed 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 by the Board of Directors on recommendation of Audit
Committee in terms of Section 148 and other applicable provisions of
the Companies Act, 2013, read with Companies ( Cost records and Audit)
Rules 2014, to conduct the Cost Audit in respect of Paper and Paper
Products for the financial year 2014-15, whose appointment has been
approved by the Central Government. The Cost Audit Report for the
financial year ended 31st March, 2014 had been e-filed with the
Ministry of Corporate Affairs, New Delhi, vide, SRN S38045092 dated
01-06-2015. The remuneration of the Cost Auditor is subject to
ratification by the member at the ensuing Annual General Meeting.
iii) Secretarial Auditor
Shri V.Suresh, Practicing Company Secretary (Registration Number
:2969), 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 him as Secretarial
Auditor to undertake the Secretarial Audit of the Company.
The Report of the Secretarial Audit in Form MR3 for the financial year
ended March 31, 2015 is annexed as (Annexure - 8) to the Report.
The following qualifications were observed by the Secretarial Auditor
in his Report to which the Board has shared the following explanations:
Qualification 1:
The Company has appointed a CFO (Chief Financial Officer) before 31st
March 2015 but the ROC compliances are made belatedly.
Response.1:
The Company has subsequently filed necessary forms with the Registrar
of Companies, Pondicherry in respect of said appointment.
Qualification 2:
The Company has not regularized an Independent Director's appointment
as required under Section 149 of the Act. Response 2:
The Company shall regularize the appointment of Independent Director in
the upcoming Annual General Meeting. Qualification 3:
The following Policies are framed by the Company, but not placed before
the Audit Committee/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 Listing Agreement
* Risk Management Policy under Section 134(3)(n) of the Act.
* Related Party Transaction Policy as required under Clause 49 of the
Listing Agreement.
Response 3:
The Company has since placed all the said policies before Audit
Committee/Nomination and Remuneration Committee/Board of Directors, as
required.
Qualification 4:
The Company has not constituted a CSR Committee as required under
Section 135 of the Act, 2013.
Response 4:
CSR activities already commenced formally as in the past. The Company
has constituted the CSR Committee during this Financial year ,
2014-2015 and regularised subsequently as per Section 135 of the Act,
2013.
Qualification 5:
The Company has not filed Form 5 INV and Form 1 INV as required under
Section 124 of the Companies Act, 2013. Response 5:
The Company is taking steps to file the said form 5 INV and 1 INV.
Qualification 6:
The Company has to upload the Letter of Appointment for Independent
Directors and the above mentioned Policies stated in Point No.3 in its
website.
Response 6:
The Directors are taking steps to upload the letter of appointment of
Independent Director and other documents as mentioned in point no.3 in
the Company's website.
Qualification 7:
The Company has not filed the Form MGT-15 after the Annual General
Meeting held on 29.09.2014, as required under Section 121 of the
Companies Act, 2013.
Response 7:
The company has since filed the Form MGT 15 with the Registrar of
Companies, Pondicherry.
Qualification 8:
Proper Compliances of The Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011 are
not made, with specific reference to Regulation 30 of the stated
Regulations;
Response 8:
Directors are taking steps to ensure proper compliance of the same in
the current year.
Qualification 9:
Proper compliances of The Securities and Exchange Board of India
(Prohibition of Insider Trading) Regulations, 1992 are not made;
Response 9:
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 appointed by the Company as an Internal Auditor to conduct the
Internal Audit.
XXVIII. BANKERS:-
The Board of Directors thank the Consortium of Bankers consisting of
State Bank of India (Lead Bank), Union Bank of India, The Karur Vysya
Bank Limited, IDBI Bank Limited and Canara Bank, who have supported the
Company for the credit requirements.
XXIX. ACKNOWLEDGEMENT:-
The Board of Directors takes this opportunity to place on record their
appreciation for the co-operation, commitment and dedication of all the
employees of the Company, and the support extended by the customers,
vendors, business associates, banks, government authorities and all
concerned, without which it would not have been possible to achieve all
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
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