DIRECTORS' REPORT & MANAGEMENT ANALYSIS Dear Shareholders, The Directors present their Fifty third Annual Report together with the audited statement of accounts for the year ended 31st March, 2015. The management discussion and analysis report have been included at the appropriate places in this report. INDUSTRY STRUCTURE AND DEVELOPMENTS Results The turnover of the company for the year is Rs. 22194 lakhs as against Rs. 24773 lakhs last year. The company earned an EBIDTA Rs. 1267 lakhs The Food division earned an EBIDTA of Rs. 930 lakhs on milling of 56292 Metric tons of wheat accounting for 59 % of the turnover of the Company. The Textile Division has incurred an EBIDTA of Rs. (-) 231 lakhs and Engineering Division has earned an EBIDTA of Rs. 568 lakhs. CAPITAL INVESTMENT Company has made a total capital investment of Rs. 426 lakhs. These investments will result in increase in production, cost reduction and improvement in quality. ECONOMIC OUTLOOK FOR THE YEAR The economic growth in 2014 was modest with positive contributions. In 2015, the growth rate is expected to be better due to new Government policies. Opportunities, Challenges, Risks & Concerns Food Division Wheat production for the current year has been lower due to unseasonal rains. International grain prices, quality and availability being favourable, the milling industry is optimistic. Demand being consistent, this division can look forward to a positive contribution this year. Textile Division Due to continuous losses and considering the uncertainty in this sector, the Board of Directors have recommended to discontinue the operations. The company has obtained necessary approval from the shareholders pursuant to Section 180 (1) (a) of the Companies Act, 2013 by postal ballot and e-voting. The detailed resolution as approved by the shareholders is available in the Corporate Goverance Report. Engineering Division Increased production was achieved due to availability of dedicated power supply. Increased prodction and improved performance is expected this year. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY Planned periodic reviews are carried out resulting in identification of control deficiencies and formulation of time bound action plans to improve efficiency. The adequacy of the internal control systems are reviewed by the Audit committee. This, supplemented with existing periodical management reviews, will enable the company to improve its monitoring system at all levels. The company has internal control procedures commensurate with its size and the nature of its business for purchase of raw materials, plant and machinery, components, other items and sale of goods. SEGMENT-WISE AND PRODUCT - WISE PERFORMACE Segment-wise and product-wise results are stated separately under segment reporting FINANCE Your company continued to avail need based working capital facilities from Canara Bank and HDFC Bank Limited CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION & ANALYSIS REPORTS The Corporate governance and Management Discussion & Analysis Report form an integral part of this Report. A report on corporate governance is annexed to this report. The company has complied with the conditions relating to the above as stipulated in Clause 49 of the listing agreement. The certificate from the statutory auditor relating to the above is annexed. SHARE CAPITAL The paid up Equity Share Capital as on 31st March, 2015 was Rs. 5,02,06,440/-. During the year under review, the Company has not issued any shares. DIVIDEND Your directors are unable to recommend any dividend for the year ended 31st March, 2015 TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF) The Company had transferred unpaid dividend amounts within the statutory period to the IEPF. During the financial year 2014-15, unpaid or unclaimed dividends Rs. 2,10,065/-relating to financial year 2006 - 07 was transferred to the IEPF. EXTRACT OF ANNUAL RETURN The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 is furnished in Annexure - B and is attached to this Report. MEETINGS During the year six board meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed that; i. In the preparation of the annual accounts, the applicable accounting standards have been followed. ii. 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 under review. iii. The Directors have taken proper and sufficient care 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. iv. The Directors have prepared the annual accounts for the financial year ended 31st March, 2015 on going concern basis. v. The Directors had laid down internal financial controls to be followed by the company and ensured that such internal financial controls are adequate and were operating effectively. vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DECLARATION GIVEN BY INDEPENDENT DIRECTORS All the Independent directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement. REMUNERATION POLICY The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their Remuneration. The Remuneration Policy is stated in Annexure - D AUDITORS Sri.P.Marimuthu, Auditor of the Company will retire at the forthcoming annual general meeting and is eligible for re-appointment. M/s Haribhakti & Co., LLP Chartered Accountants, branch auditors for the engineering division of the company will retire at the forthcoming annual general meeting and are eligible for re-appointment. COST AUDITOR Sri.M.Kannan, Cost Accountant has been appointed as Cost Auditor for the financial year 2014 - 2015 for the foundry division of the company and cost audit report will be filed on or before the due date. Cost audit report for the year ended 31st March, 2014 has been filed on 26th September, 2014 before the time limit prescribed under the Act. The Board of Directors at its meeting held on 29th May, 2015, based on the recommendation of the audit committee appointed Sri.M.Kannan, Cost Accountant as Cost Auditor for conducting the Cost Audit of the engineering division for the financial year 2015 - 2016. As required under the provisions of Section 148 of the Companies Act, 2013, necessary resolutions seeking member's ratification for the remuneration to Sri.M.Kannan is included as item Number 5 of the Notice convening the Fifty Third Annual General Meeting. SECRETARIAL AUDIT Pursuant to provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed Mr.M.D.Selvaraj, FCS, Proprietor of MDS & Associates, Company Secretaries, Coimbatore to conduct the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure-A" There are no qualifications, reservations or adverse remarks or disclaimers made by the Auditors/ Secretarial Auditor in their/ his report on the financial statements/secretarial audit report of the Company for the financial year ended 31st March, 2015 PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS U/S 186 There were no loans, guarantees or investments made by the Company under section 186 of the Companies Act, 2013 during the period under review and hence the said provision is not applicable. RELATED PARTY TRANSACTIONS All transactions entered into during the financial year ended 31st March, 2015 with Related Parties as defined under the Companies Act and Clause 49 of the Listing Agreement were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any transaction referred to in Section 188 of the Companies Act, with related parties which could be considered material under the Listing Agreement. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) of the Companies Act in Form AOC-2 is not applicable. Attention of Members is drawn to the disclosures of transactions with related parties set out in Notes to Accounts - Note No.16 forming part of the financial statements. The Company has developed a policy on Related Party Transactions for identification and monitoring of transactions. The policy on related party transactions as approved by the Board is uploaded on the Company's website and can be accessed at <http://www.klrf.in> MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which the financial statements relate and the date of this Directors' Report. RISK MANAGEMENT The Company has a structured risk management policy. The Risk management process is designed to safeguard the organisation from various risks through adequate and timely actions. It is designed to anticipate, evaluate and mitigate risks in order to minimize its impact on the business. The potential risks are inventorised and integrated with the management process such that they receive the necessary consideration during decision making. CORPORATE SOCIAL RESPONSIBILITY The Company has not developed and implemented any Corporate Social Responsibility initiatives as the said provisions are not applicable. BOARD EVALUATION The Board has made a formal annual evaluation of its own performance, Committees of the Board, Independent Directors and Individual Directors of the Company. The Board's performance was evaluated based on the criteria like Structure, Governance, Dynamics and Functioning, Approval and review of operations, Financials, Internal Controls etc., The performance of the Independent Directors as well as Individual Directors were evaluated based on the evaluation criteria laid down under the Nomination and Remuneration Policy and Code of Conduct as laid down by the Board. The Committees of the Board were evaluated based on the terms of reference specified by the Board to the said Committee. The Board of Directors were satisfied with the evaluation process which ensured that the performance of the Board, its Committees, Independent Directors and Individual Directors adhered to their applicable criteria. DIRECTORS AND KEY MANAGERIAL PERSONNEL At the Annual General Meeting of the Company held on 18th September, 2014, the Members had approved the appointment of Mr.Sudarsan Varadraj, Mr.K.Gnanasekaran as Independent Directors for a term of five years and Mr.S.Govindan as Independent Director upto 31st March, 2017. The shareholders at the annual general meeting held on 18th September, 2014 appointed Mr.R.Kannan as Executive Director and Chief Financial Officer for a period of five years with effect from 1st July, 2014 The Board of Directors at their meeting held on 19th March, 2015 have appointed Mrs.Kalyani Balasubramanian as Additional Director and she holds upto the ensuing annual general meeting. Notice under Section 160 of the Act, has been received by the Company from a Member, signifying his intention to propose the candidature of Mrs.Kalyani Balasubramanian as an Independent Director of the Company. The Board of Directors have recommended the appointment of Mrs.Kalyani Balasubramanian as Director as per the provisions of Section 160 and other applicable provisions of the Companies Act, 2013. The Board of Directors at their meeting held on 29th May, 2015 have re-appointed Mr.Suresh Jagannathan as Managing Director for a period of five years from 12th March, 2016, subject to approval of members at the ensuing annual general meeting. Mr.R.Kannan, Executive Director and Chief Financial Officer is liable to retire by rotation at the ensuing annual general meeting and being eligible offers himself for re-appointment. Your directors recommended their appointment / re-appointment. A brief resume, expertise, shareholding in the Company and details of other Directorships of these Directors as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange form part of the Notice of the ensuing Annual General Meeting. KEY MANAGERIAL PERSONNEL Key Managerial Personnel of the company as required pursuant to Section 2 (51) of the Companies Act, 2013 are Sri.Suresh Jagannathan, Managing Director, Mr.R.Kannan, Executive Director and Chief Financial Officer and Mr.S.Piramuthu, Company Secretary AUDIT COMMITTEE The Audit Committee of the Board of Directors of the Company, comprises three members namely Mr.Sudarsan Varadaraj, Mr.K.Gnanasekaran and Mr.S.Govindan, all of them being Independent Directors. Mr.Sudarsan Varadaraj, an Independent Director, is the Chairperson of the Audit Committee. The Board accepted the recommendations of the Audit Committee whenever made by the Committee during the year. CONSERVATION OF ENERGY a. Company ensures that the manufacturing operations are conducted in the manner whereby optimum utilization and maximum possible savings of energy is achieved. b. No specific investment has been made in reduction in energy consumption. c. As the impact of measures taken for conservation and optimum utilization of energy are not quantitative, its impact on cost cannot be stated accurately. TECHNOLOGY ABSORPTION Company's products are manufactured by using in-house know how and no outside technology is being used for manufacturing activities. Therefore no technology absorption is required. FOREIGN EXCHANGE EARNINGS AND OUT GO During the year under review, your Company has earned foreign exchange of Rs. 11.63
SUBSIDIARY COMPANIES The Company does not have any subsidiary , associate company or joint ventures. FIXED 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. The total deposits remained unpaid or unclaimed as at 31st March, 2015 is Nil. DISCLOSURE UNDER SECTION 197(12) AND RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 The requisite details relating to ratio of remuneration, percentage increase in remuneration etc. as stipulated under the above Rules are annexed as Annexure-C to this Report. DISCLOSURE UNDER RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 The disclosure referred to the Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 does not apply to the Company as there were no employees who are in receipt of remuneration in the aggregate at the rate of not less than Rs. 60,00,000/- if employed throughout the year or Rs. 5,00,000/- per month if employed for part of the year. VIGIL MECHANISM/ WHISTLE BLOWER POLICY Your Company has established a vigil mechanism for directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report forming part of this Annual Report. HUMAN RESOURCES / INDUSTRIAL RELATIONS The Company believes that its people are a key differentiator, especially in a knowledge driven, competitive and a global business environment. Adapting work culture to suit the dynamic balancing of people requirements and employee needs is an ongoing process. Fundamental HR processes which enable higher performance orientation, speed, skill and competency development, talent management are corner stones for the success of any organization. As in the past, the industrial relations continued to remain cordial in all the divisions of the Company. LISTING Your Company's shares are listed at BSE Limited. Necessary listing fees for the year have been paidORDERS BY REGULATORS, COURTS OR TRIBUNALS No significant and/or material orders were passed by any regulator or court or tribunal impacting the going concern status and the Company's operations in future. DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place an anti sexual harassment policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any sexual harassment complaint during the year 2014 - 2015. CAUTIONARY STATEMENT Management Discussion and Analysis forming part of this Report is in compliance with Corporate Governance Standards incorporated in the listing agreement with Stock Exchanges and such statements may be "forward looking" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company's operations include economic conditions affecting demand / supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors. GENERAL Your directors acknowledge with gratitude, the co-operation and assistance from banks and financial institutions. Your Directors would like to thank all Shareholders, Customers and Employees in appreciation of their continued support. May the Almighty Goddess Lakshmi continue to shower HER choicest blessings and continue to grant us prosperity in the years to come. By Order of the Board Sudarsan Varadaraj Director DIN :00133533 Suresh Jagannathan Managing Director DIN : 00011326 Place : Coimbatore Date : 29.05.2015 |