K P R Mill Ltd Directors Report.

Dear Members,

The Board of Directors take pleasure in presenting the report on the operations and business of the Company along with Audited Financial Statements for the Financial Year ended 31st March, 2020.

FINANCIAL RESULTS

(Rs in Lakhs)

tarticulars Standalone Consolidated
2019-20 2018-19 2019-20 2018-19
Sales and Other Income:-
Domestic Sales 1,61,954 1,62,490 1,85,795 1,84,642
Export Sales 1,18,246 1,25,835 1,34,781 1,41,780
Other Income 13,253 13,265 18,333 15,669
2,93,453 3,01,590 3,38,909 3,42,091
Profit before Interest & Depreciation 51,099 54,444 65,841 64,865
Less interest 3,541 3,586 4,965 4,894
Depreciation 9,891 9,583 13,709 13,113
Profit Before Tax 37,667 41,275 47,167 46,858
Less: Taxation:-
Provision for Current Tax 10,084 12,726 11,850 13,956
Tax relating to earlier years (944) (273) (927) (408)
9,140 12,453 10,923 13,548
Deferred Tax expense / Credit (934) (89) (1,424) (177)
Profit After Tax 29,461 28,911 37,668 33,487
Other Comprehensive Income (Net of tax)
Total Comprehensive Income 29,461 28,911 37,668 33,487

REVIEW OF OPERATIONS

The major part of the year under review has witnessed a steady growth in the performance. But the sudden emergence of COVID-19 Pandemic in the fourth quarter impacted the growth level. The Company posted a Net profit ofRs 294.61 Crores. While domestic demand for cotton yarn has improved this fiscal, the US- China trade war has impacted the demand for yarn in China, the major importer from India. Consequently the margin in the yarn segment has also strained. The slowdown in global trade has affected the growth in export of Garments. Availability of Power and Labour continued to be comfortable. Amidst the unhealthy market condition the financial performance of the Company during the year is considered to be satisfactory.

COVID-19 IMPACTS

In compliance with the Statutory Lock-down Directions applicable to all industries and Companies in India, the operations of the Company were suspended from 24-03-2020 until further announcement from the Government. The Lock down was extended by the Tamilnadu Government upto 3rd May 2020. Stoppage of all Units has affected the operations of the Company.

Commenced partially and gradually and with restricted workforce in line with the Guidelines with effect from 6th May 2020. Ramping up of operations is in progress. It is expected to have some impact on the financial results of the Company for FY 2020-21.

WAY FORWARD

People are our biggest assets, and their health and safety becomes more important than anything else in such times. All guidelines in this regard are strictly followed. Empowered by strong fundamentals and the reputation as the supplier of high quality products and on time deliveiy the Company hopes to continue its stride once the operations and economy are normalized post COVID issue. Our recently entered retail segment and increased Garment capacity are likely to strengthen our operations.

BRANDED RETAIL BUSINESS RETAIL SEGMENT-FASO

As indicated in the earlier Report well supported by its key strengths KPR entered the promising Retail segment with the successful launch of 100% organic Premium Mens innerwear and athleisure segment. FASO - Italian at Heart (Fashion Adapted Sustainable and Organic), the brand launched by KPR Mill Limited provides 100% super fine compact yarn which is skin friendly and soft. Entire yarn for FASO products is produced through ultraU modern spinning machines and subjected to various quality parameters. To ensure superior quality the products passes through stringent quality control devices at every stages of production. Italian at Heart as the tagline goes; the brand focuses on providing luxuiy through three segments known as Comfort, Style and Supreme. FASO uses combed organic cotton, micro nylon elastic and have product categories that include Brief, Trunk, Boxer Shorts, Vest, Gym Vest, Muscle Tee and Athleisure. Initially we have launched the FASO Products in South India through distribution network and planning Pan India during the current year depending on the market conditions due to COVID-19. The initial response to the Product has been good.

WHY FASO (Specialities)

All FASO products are manufactured with Entire activities in-house facilitating quality 100% sustainable organic cotton.

Superfine compact yarn.

Super soft micro nylon elastics with the best workmanship. These key factors ensure ultra-soft comfort and skin friendly.

BUYBACK

After obtaining the approval of Shareholders by way of Postal Ballot the Buyback of 3750,784 Equity Shares ofRs 5/- each was completed on 20.11.2019. The present Paid-up Capital of the Company is Rs 34,40,50,000/-.

DIVIDEND

The Interim Dividend @ 75% on equity shares (Rs 3.75/- per Equity Share) declared by the Board of Directors at their meeting held on 03.02.2020 was paid to the shareholders.

The Board in its meeting held on 2706.2020 has recommended a Final Dividend of 15% (Rs 0.75) on Equity Shares of Rs 5 each (Rupees Five only), subject to the approval of the Members at the 17th (Seventeenth) Annual General Meeting.

RESERVES

During the year under review the Company has not transferred any amount to its General Reserve.

FINANCE

During the year, we have repaid some of the high cost long term debt from the own cash profits, continued efforts to reduce the finance cost.

SUBSIDIARY COMPANIES

In respect of statements pursuant to Section 129(3) of the Companies Act, 2013 (Hereinafter referred to as the Act) in Form AOC - 1 containing the details of following Wholly Owned Subsidiary Companies forms part of this Annual Report. However as required by the Act, we give below a brief report on their performance.

I. QUANTUM KNITS PVT. LIMITED II. K.P.R SUGAR MILL LIMITED III. jAHNVI MOTOR PRIVATE UMrTED IV. GALAXY KNITS UMITED

V. KPR EXPORTS PLC VI. KPR MILL PTE. LTD.

QUANTUM KNITS PVT. LIMITED

The garment business has been consolidated for effective management.

K.P.R. SUGAR MILL UMITED

In the FY 2019-20 the sugarcane crushing commenced in November 2019 and produced 65,390 MT of sugar. Out of 938.80 Lakh units of power generated 672.88 Lakh units were sold and 265.92 lakh units were captively consumed. The monthly sugar sales quota system introduced by the Central Government to the Sugar Mills fixing the quantity as well as the price at which sugar can be sold every month continues. During the year we have exported 25,588 MT of Sugar.

Ethanol plant

A State of the Art Ethanol plant with 90KLPD capacity has been commissioned in January 2020. After obtaining the consent for operation from Karnataka State Pollution Control Board commercial production has been commenced in February 2020. During the year 4007 KL of Ethanol was produced, using Sugar Syrup and Molasses. 2106 KL was sold to oil marketing Companies. We hope for bright prospects in this segment also.

IAHNVI MOTOR PRIVATE LIMITED

The global economic slowdown, tight credit conditions, moderating economy and the transition to BS-VI emissions standards have impacted the Indian automotive sector. During the year the company booked 143 cars and 100 bikes earning a revenue ofRs 90.33 Crores.

GALAXY KNITS UMITED

The Company has not yet commenced its operation.

K P R EXPORTS PLC - ETHIOPIA

With the successful completion of COC Audit by the Buyers, Production has been commenced and ramping up is in progress. During the year it has made sales revenue of Rs 10.30 Crores.

KPR MILL PTE. LTD - SINGAPORE

On 12th April 2019, a Private Limited Company under the name ‘KPR MILL PTE LTD with the registration number 201911917K was incorporated at Singapore. It has a Paid-up Capital of S$1000. As we hold its entire Shares, KPR MILL PTE LTD is a wholly owned subsidiary of K.P.R Mill Limited. During the year it has made sales revenue ofRs 1.80 Crores.

FIXED DEPOSITS

The Company has not accepted any fixed deposits from public during the year under review.

DIRECTORS

The Company has adequate Independent Directors in compliance with the Act and Listing Regulations. Familiarization Program on the Company and its operation was conducted for the Independent Directors. Requisite declaration from the Independent Directors of the Company under Section 149 (7) of the Act confirming that they meet with the criteria of their Independence laid in Section 149 (6) have been obtained. Mr. K.P. Ramasamy, Executive Chairman, Mr. KPD Sigamani, Managing Director, Mr. P. Nataraj, Managing Director were re-appointed for further term by special resolutions passed through Postal Ballot on 23.03.2020.

Mr. C.R. Anandakrishnan, Executive Director, Mr. E.K. Sakthivel, Executive Director and Mr. P. Selvakumar, Whole-Time Director, Dr. S. Ranganayaki, Women Independent Director whose term will be over before the ensuing/next Annual General Meetings, suitable Resolutions for their re-appointment for further term of 5 years have been included in the notice of ensuing Annual General meeting. The Nomination & Remuneration Committee and the Board have recommended their re-appointment.

Mr. C.R. Anandakrishnan, Executive Director, who retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.

KEY M ANAGERIAL PERSONNEL AND M ANAGERIAL REMUNERATION CRITERIA

In pursuance of the Act the Company has Key Managerial Personnel. None of the Managing Directors or Whole Time Directors receives any remuneration or commission from the Subsidiary Companies and the remuneration paid to them is within the purview of the provisions of Section 197 of the Act. The Company pays remuneration by way of Salary, Perquisites etc., to its Chairman, Managing Directors and fixed monthly remuneration to its Executive Directors and Whole Time Director in line with the approvals accorded by the General Meetings and in pursuance of the recommendation of the Nomination and Remuneration Committee as per the guiding principles laid down in the Nomination and Remuneration Policy. The information as required by Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended.

ANNUAL PERFORMANCE EVALUATION

In line with the criteria evolved by the Nomination and Remuneration Committee, the performance of all Directors, Committees, Chairman etc., have been evaluated pursuant to the provisions of the Act and the Listing Regulations.

COMMITTEES

As required by the provisions of the Act and Listing Regulation, the Company has already formed the following Committees, the details of which are disclosed in the Report on Corporate Governance forming part of this Report.

I. Audit Committee

II. Stakeholders Relationship Committee III. Nomination and Remuneration Committee IV. Corporate Social Responsibility (CSR) Committee V. Risk Management Committee

POUCIES

In pursuance of the Act and the Listing Regulation, the following policies have been framed and disclosed on the Companys website www.kprmilllimited.com/

I. Nomination & Remuneration Policy II. Related Party Transaction Policy III. CSR Policy

IV. Whistle Blower Policy consisting of Vigil Mechanism V. Policy on Determining Material Subsidiaries

VI. Code for Fair Disclosure VII. Risk Management Policy VIII. Dividend Distribution Policy

IX. Policy for Disclosure of Material Events / Information

X. Policy on Succession Planning for Board and Senior Management

RISK MANAGEMENT

Pursuant to section 134(3) (n) of the Act & Regulation 17(9) of the Listing Regulation, the Company has framed a Risk Management Policy and has constituted a risk management committee. The Risk Management Committee held its first meeting on 20.03.2020 in which all members were present.

VIGIL MECHANISM & WHISTLE BLOWER POUCY

The Company has an established Vigil Mechanism for Directors / Employees to report concerns about unethical behaviors, actual or suspected fraud or violation of the code of conduct or ethics policy. It also provides for adequate safeguards against victimization of Directors / Employees who avail of the mechanism. The Company affirms that no personnel have been denied access to the Audit Committee. The Company has formulated a Policy of Vigil Mechanism and has established a mechanism that any personnel may raise Reportable Matters. All suspected violations and Reportable Matters can be reported to the Chairman of the Audit Committee at e-m ail id whistleblowerOkprmill.com. The key directions/actions can be informed to the Chairman/Managing Director of the Company. The Whistle Blower Policy has been framed and displayed in the company website.

CSR EXPENDITURE

During the year, in pursuance of the recommendations of the CSR committee the Company has contributed Rs 691.42 Lakhs being 2.01% of the average three years net profit of the Company towards implementing the CSR activities. Annual Report on CSR, as required by the Act, is appended.

BOARD MEETINGS

The Board of Directors met Four times during the financial year on 29.04.2019, 29.07.2019, 24.10.2019 and 03.02.2020. The Composition of Board, procedure, dates and other details are included in the Corporate Governance Report that forms part of this Report.

CONSOUDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated

Financial Statements pursuant to the provisions of the Act and the Listing Regulations entered into with the Stock Exchanges. They are prepared in accordance with the Ind-AS prescribed by the Institute of Chartered Accountants of India, in this regard. The Consolidated Financials also marked a significant increase in its Revenue as well as Profitability.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

The Company has duly complied with the provisions of Section 186 of the Act and as required therein the details of the Borrowals, Security, Investment etc., are annexed by way of notes to accounts.

RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered into during the financial year were only between Holding Company and Wholly owned Subsidiary Companies in the ordinary course of business, whose accounts are consolidated with Holding Company and placed before the shareholders at the General Meeting for approval.

The Transactions as required under Indian Accounting Standards AS-24 are reported in Note 38 of the Notes to Accounts of the Consolidated Financial Statements as well as Note 39 of the Notes to Accounts of the Standalone Financial Statements of your Company. The Companys Policy on dealing with related party transactions is available on the Companys website.

EMPLOYEE WELFARE

KPR follows one of the best HR Policies in the Industry extending social comfort, healthy & proper working conditions to the employees that ensure betterment of employees, their families and society as a whole. This in turn develops a sense of responsibility and belonging among the employees thereby improving their productivity and efficiency levels at workplace. Our workforce represents a combination of regional and migrated employees. Though the Corona pandemic created an urge in the minds of the workers in the Industiy to move to their far off native places, almost all employees of KPR opted to stay back. This itself proves the success of the unique HR Practices KPR adopts.

As regards Higher Education Programme extended to Employees repeating their glory in the Government conducted Examinations, in the Tamil Nadu Open University (TNOU) 8th Convocation held at our Arasur Mill, 329 Employees including 301 Under Graduates 8c

28 Post Graduates, received Degree Certificates from the Vice- Chancellor of TNOU. Among them 5 were Gold Medalist, 15 were

Rank holders and one Employee secured CEMCA Award. This clearly evidences the standard of Education and related infrastructures extended by KPR to its Employees.

To ensure the safety, health and hygiene of our employees, the Company implemented all measures in compliance with COVID-19 Guidelines.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the Company Secretary in advance.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 provides for protection against sexual harassment of women at workplace and for the prevention and redressal of complaints of sexual harassment and also for the matters incidental thereto. The Company has accordingly adopted the policy against Sexual Harassment of Women at Workplace, for the purpose of preventing, prohibiting and redressing sexual harassment of female employees at all the workplace within the Company which are based on fundamental principles of justice and fair play.

According to the notifications of corporate affairs ministry dated 31st :uly 2018, Internal Complaints Committee under the sexual harassment of women at workplace (prevention, prohibition and redressal act) 2013, has been formed and complied with. Further, Anti Sexual Harassment Committee has been constituted at each unit which shall be responsible for redressal of complaints related to sexual harassment. The details of all such Complaints and its proper redressal through prompt corrective steps are informed to the Top Management so as to ensure that suitable processes and mechanisms are put in place to ensure that issues of sexual harassment, if any, are effectively addressed. During the year, no complaints of sexual harassment were received by the Company from any of its Units.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act read with the Companies (Accounts) Rules, 2014 are provided in the Annexure to the Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 134(5) of the Act, the Board of Directors of the Company hereby state and confirm that;

I. In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

II. The Directors have selected accounting policies and applied them consistently and made judgements 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 record 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 arranged preparation of the accounts for the financial year ended 31.03.2020 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 systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CORPORATE GOVERNANCE REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS STATEMENT

Corporate Governance Report and Management Discussion and Analysis Statement are attached to this Report. Certificate from the Statutory Auditors of the Company confirming the compliance with the conditions of Corporate Governance as stipulated under Schedule V of the Listing Regulation is also attached to this report.

BUSINESS RESPONSIBILITY REPORT

In pursuance of Regulation 34(2)(6) of the SEBI (LODR) Regulations, 2015, the Business Responsibility Report, containing the initiatives taken by the company from environmental, social and governance perspective, forms part of this Report.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The details of internal financial control and their adequacy are included in the Report of management Discussion & Analysis, which forms part of this report.

RATIO OF REMUNERATION TO EACH DIRECTOR

Details / Disclosures of Ratio of Remuneration of Director to the median employees remuneration as required by the Act and Companies Rules are appended.

SIGNIFICANT & MATERIAL ORDER PASSED BY THE REGULATORS

No significant and material order was passed by any Regulators that have any impact on the going concern status and the operations of the Company.

DETAILS REGARDING ISSUE OF SHARES

During the year under review the Company has not issued any shares. However the Company has resorted to Buyback.

AUDITORS

In the 14th Annual General Meeting of the Company held on 28.08.2017 M/s. B S R & Co LLP, Chartered Accountants (ICAI Firm Regn. No. 101248W/W-100022) were appointed as Statutory Auditors of the Company for a period of 5 Years from the Financial Year 2017 - 18. The Audit committee and the Board recommend the continuity of BSR & Co LLP, Chartered Accountants as Statutoiy Auditors for the FY 2020-21.

AUDITORS REPORT

The Auditors Report to the Shareholders does not contain any qualification.

COST RECORDS

Pursuant to Section 148 of the Act, the company falls under the limits specified under this section and hence the company has maintained proper books of accounts with all the particulars relating to the utilization of material, labour and to other items of cost.

COST AUDIT

In pursuance of Companies (Cost Records and Audit) Rules, 2014, the Company has appointed a Cost Auditor for the Company to audit the cost records for the Financial Year 2020-21.

SECRETARIAL AUDIT REPORT & CERTIFICATES AND SECRETARIAL STANDARDS COMPLIANCE

The Company has complied with the applicable Secretarial Standards issued by ICSI. As required by the Act a Secretarial Audit Report issued by a Company Secretaiy in Practice (PCS) in Form MR 3 is annexed with this report and it does not contain any qualification. Certificate from PCS that none of the Directors are debarred or disqualified forms part of this Annual Report.

Annual Secretarial Compliance Report certifying compliance of SEBI Regulations has been obtained and filed with the Stock Exchanges.

EXTRACT OF ANNUAL RETURN

Pursuant to section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 has been uploaded in the companies website: http://www.kprmilllimited.com/

MATERIAL CHANGES

No material changes and commitments except COVID-19 impact affecting the financial position of the Company occurred between the end of the financial year as on 31.03.2020 and the date of this Report. A note on the COVID impact is provided elsewhere in this report.

NO CHANGES IN THE BUSINESS

Your Directors would like to inform that Company is doing its regular business and there has been no change in its objectives.

ACKNOWLEDGEMENT

Your Directors acknowledge with gratitude and express their appreciation for the assistances and co-operation received from the Bankers, Government Authorities, Customers, Vendors, and Members during the year under review. Your Directors also wish to thank the employees at all levels for their co-operation and dedication.

FOR AND ON BEHALF OF THE BOARD
K.P. Ramasamy
Coimbatore Chairman
27.06.2020 DIN: 00003736