DIRECTORS REPORT Dear Members, The directors have pleasure in presenting the 6th Annual Report together with the audited accounts of your Company for the year ending 31st March 2015. Industry and Business Performance The outlook for India is for economic strengthening through higher infrastructure spending, increased fiscal devolution to states and continued reforms to financial and monetary policy. The government underscored its intention to move steadily to tackle politically difficult structural issues that have stalled investment and limited economic performance in recent years. Growth picked up in 2014, inflation markedly declined and the external position was comfortable, helped by positive policies and lower global oil prices. The opportunities for growth in India continue to be immense across all consumer categories. This fact is also reflected in high levels of competitive intensity in the marketplace. India's consumer confidence continues to remain robust. The total apparel retail market is worth USD 54.08 bn (Rs.324500 crs) and is growing at 20-21%. It is expected to be worth USD 94.13 bn (Rs.564972 crs) by 2017. Modern retail is estimated at 43.1% of this total market and is expected to grow by much higher growth rate. There has been no slowing down in modern retail and the industry estimates that it will be growing at 30-40%. The growth was primarily driven by the surge in demand for readymade apparel in semi-urban areas, rising income levels, youth population, rising influence of the social media and increasing preference for branded apparel. Your Brand being positioned as a premium, smart casuals brand today has a presence in 200+ towns and cities. The growing popularity of the Brand with a strong customer connect enabled the Company to achieve the revenues of over Rs.290 crs, a growth of 25.14% from previous year. Profit before Interest, Depreciation and Tax was up by 40.19 % and stood at Rs.34.29 crs as against Rs.24.46 crs previous year. The Net Profit After Tax stood at Rs.17.97 crores vis-a-vis Rs.9.88 crores representing whopping 81.90% increase for 31st March 2015. Raise of Capital through Qualified Institutional Placement The year under review was remarkable and marked a great momentum in paving the way for the future direction of the Company. Your Company raised Rs.75 crs as equity to provide the necessary capital to fuel the future growth through Qualified Institutional Placement during January 2015. Your Company issued 14.12 lakh shares at Rs.531/- each aggregating to Rs.75 crs to domestic and international funds. Consequent to the same, your Company's Paid-Up Share Capital increased by Rs.1.41 crs and the Securities Premium account increased by Rs.71.41 crs (after deduction of share issue expenses). The additional shares of 14.12 lakhs were admitted for listing in the National Stock Exchange of India Limited and Bombay Stock Exchange Limited on February 03 2015. Dividend With a view to conserve the resources, the Board of Directors have not recommended any Dividend for the current financial year. Finance and Accounts Your Company has a portion of Accumulated losses and unabsorbed depreciation transferred pursuant to Demerger and hence the Company is not liable to Current Tax. However, the Company has charged the Minimum Alternate Tax (MAT) of Rs.4.77 crores to Profit and Loss Account and has not considered MAT credit Entitlement as an asset as a matter of prudence. During the year under review, your company realigned its Depreciation Policy in accordance with Schedule II, Companies Act, 2013. Consequently with effect from 1st April 2014, the carrying value of assets is now depreciated over its revised remaining useful life. Where the remaining useful life of the assets is NIL as on 1st April 2014, carrying value of assets amounting to Rs.67.46 lakhs has been adjusted against opening reserves. Your Company has settled the dues of HDFC Bank in full during the year under review. Also your Company has prepaid the term loans of State Bank of India. The Company presently avails only working capital facilities from State Bank of India. The company has not accepted any deposits within the meaning of Section 73 of the Companies Act 2013. Cash flow Statement In conformity with the provisions of Clause 32 of the Listing Agreement with Stock Exchanges, the Cash Flow Statement for the year ended 31st March 2015 is annexed hereto. Related Party Transactions All the transactions with the Related Parties are in the Ordinary Course of Business and on Arm's length basis. The details on Related Party Transactions have been disclosed in the notes to accounts. Your Company has framed a policy on Related Party Transaction and the same has been displayed on the Company's website www. indianterrain.com The details of related party transactions pursuant to clause (h) of subsection (3) of section 134 of the Act is enclosed in form no. AOC-2 as Annexure-2 Corporate Governance Report The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The report on Corporate Governance as stipulated under Clause 49 of the Listing Agreement forms a part of the Annual Report. The requisite certificate from the Auditor, M/s CNGSN & Associates confirming the compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges forms a part of this report. Management's Discussion and Analysis Report A detailed review on the operations and performance of the Company along with the outlook is presented separately under the Management Discussion and Analysis Report which forms part of this Annual Report. Compliance with Code of Conduct Your Company has put in place a Code of Conduct for its Board Members and Senior Management Personnel. Declarations of Compliance with Code of Conduct have been received from all the Board Members and Senior Management Personnel. A Certificate to this effect from Mr. V. Rajagopal, Chairman and Managing Director forms part of this Report. Corporate Social Responsibility (CSR) Your Company has constituted a Corporate Social Responsibility Committee and the Board has adopted a CSR Policy as recommended by the Committee. The CSR policy is available in the Company's website www.indianterrain.com . The particulars relating to CSR committee and policy have been detailed in Corporate Governance Report. A sum of Rs.13.25 lakhs had been contributed to Prime Minister's Swatch Bharath Scheme for the year ended 31st March 2015. Establishment of Vigil Mechanism Your Company has in place a vigil mechanism pursuant to which a Whistle Blower Policy has been adopted by the Board Members. The Whistle Blower Policy covering all employees and directors is hosted on the Company's Website www.indianterrain.com Employee Stock Option Plan (ESOP) Your Company has introduced Employee Stock Option Plan 2011 in accordance with SEBI ESOP guidelines. The Particulars of the plans are given in a separate statement attached to this report and forms part of it. (Annexure-3) During the year, the Company pursuant to Employee Stock Option Plan 2011 has allotted 82,500 equity shares on conversion of options exercised by the employees. Pursuant to the same, your Company's Share Capital increased by Rs.8.25 lakhs and the Securities Premium Account increased by Rs.73.43 lakhs Directors In accordance with the provisions of Section 152 of the Companies Act 2013, Mrs. Rama Rajagopal retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for reappointment. All Independent Directors have given declaration 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 Extract of Annual Return The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure--4" Meeting of Board The particulars relating to the meeting of Board of Directors has been detailed in Corporate Governance Report which forms part of the report Key Managerial Personnel To comply with requirement of Section 203 of the Companies Act, Mr. V.Rajagopal, Chairman & Managing Director, Mr. M. Thiagarajan, CFO and Mr. J Manikandan, Company Secretary have been designated as the Key Managerial Personnel of the Company. Remuneration Policy The particulars relating to Directors of remuneration policy has been detailed in Corporate Governance Report which forms part of the report. Particulars of Loan, Guarantees or Investments The Company has not given any loans or guarantees covered under the provision of section 186 of the Companies Act, 2013. The details of the investments made by the company are given in the notes to the financial statements. Material changes & Commitment, if any affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statement relate and the date of the Report - Nil Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Appointment & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Report as per Section 134 read with Rule 8 sub rule 5 of Companies Accounts Rules 2014: Change in nature of business, if any: Nil Details of Director or KMP appointed or resigned: Nil (Only designated) Name of Companies which become or cease to be its subsidiaries, JV or associate during the year - Nil Details relating to deposits covered under Chapter V of Companies Act 2013: Nil Details of deposits which are not in compliance with the requirements of Chapter V of Companies Act 2013: Not Applicable Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future: The Company was not in receipt of any orders from the regulator / courts / tribunals impacting the going concern status of future operation of the Company. The Company was in receipt of the notice / order from statutory authorities during the year for claims not acknowledged by the company as debts. The details of the same have been provided in Note 27 of the financial statements. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director. 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, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board BUSINESS RISK MANAGEMENT: Pursuant to section 134 (3) (n) of the Companies Act, 2013 & Clause 49 of the listing agreement, the company has constituted a business risk management committee. The details of the committee and its terms of reference are set out in the corporate governance report which form part of the Boards report. At present the company has not identified any element of risk which may threaten the existence of the company. Familiarisation Programme for Independent Director: The Board members are provided with necessary documents / brochures, reports and internal policies to enable them to familiarize with the Company's procedures and practices. The details of such familiarization programmes for the Independent Directors are posted on the website of the Company (for details, please visit www. indianterrain.com ) Auditors M/s. Anil Nair & Associates and M/s. CNGSN Associates LLP, Chartered Accountants, Chennai are the Auditors of the Company. They were appointed in the 5th Annual General Meeting of the Company till the conclusion of third consecutive Annual General Meeting of the Company and subject to ratification by the shareholders at every Annual General Meeting. A motion for ratification will be placed before the Members of the Company in the 6th Annual General Meeting for their approval. M/s Anil Nair and Associates have applied for re-evaluation of certificate and the process is on-going. As on the date of signing this Balance Sheet, the Chartered Accountant Firm, M/s Anil Nair and Associates is yet to the receive the certificate from the Peer Review Board. Consequently as a matter of abundant prudence, M/s Anil Nair and Associates have abstained from signing the Balance Sheet of the Company. The Annual Accounts of the Company along with it Balance sheet, statement of Profit and Loss along with Cash flow statement have been audited and signed by CNGSN & Associates, LLP. Cost Auditor Since the Company is not in the purview of Cost Audit, the appointment of Cost Auditor under the requirement of the provisions under Section 148 of the Companies Act, 2013 is not required for the financial year 2015-16. Secretarial Auditor 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 Mr. Bhaskar, Company Secretary in Practice, to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed as "Annexure-5". Listing Fee The equity shares of your company are listed on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Your Company has paid the applicable listing fee to the Stock Exchanges upto date. Personnel Employee relations have been very cordial during the year ended 31st March 2015. The Board wishes to place on record its appreciation to all the employees in the company for their sustained efforts and immense contribution to the high level of performance and growth of the business during the year. The Management team of your Company comprises of young passionate driven professionals committed to the organizational goals. Policy on Prevention of Sexual Harassment of Woman at Workplace: Your Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment and Non-discrimination at Work Place in line with the requirements of Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. An Internal Compliants Committee (ICC) was set up to redress complaints received regarding sexual harassment and discrimination at workplace. During the year ended March 31, 2015, the ICC has received no complaints pertaining to sexual harassment / discrimination at work place. Directors Responsibility Statement In terms of Section 134(5) of the Companies Act, 2013, the directors would like to state that: i) In the preparation of the annual accounts, the applicable accounting standards have been followed with explanation related to material departures if any. ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss 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 this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. iv) The directors have prepared the annual accounts on a going concern basis. v) The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. vi) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. Conservation of Energy / Technology Absorption / Foreign Exchange i. Conservation of Energy: The operations of the Company are not energy-intensive. However, wherever possible, the Company strives to curtail the consumption of energy on a continuing basis. ii. Technology absorption: Not applicable. iii. Foreign Exchange Earning and Outgo: Total Foreign exchange earned (FOB Value) Rs.0.69 crs Total Foreign exchange outgo Rs.6.17 crs Appreciation Your Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment. The unstinted efforts of the employees have enabled your Company to achieve its goals during the year. The Board places on record its appreciation for the support and co-operation your Company has been receiving from its suppliers, distributors, retailers, business partners and others associated with the Company as trade partners. The Directors are sincerely thankful to the esteemed Shareholders, Customers, Banks, Government Departments and Regulatory Authorities for their continued support. For and on Behalf of the Board V. Rajagopal Chairman & Managing Director Chennai, 21st May 2015 |