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, 2019.

(Rs in Lakhs)

2018-19 2017-18 2018-19 2017-18
Sales and Other Income:-
Domestic Sales 1,61,890 1,67371 1,84,806 1,76,009
Export Sales 1,26,435 77255 1,41,616 1,14,104
Other Income 13,265 8,124 15,669 13,857
3,01,590 2,52,750 3,42,091 3,03,879
Profit before Interest & Depreciation 54,444 44,502 64,865 58,943
Less: Interest 3,586 3,049 4,894 5,156
Depreciation 9,583 10,497 13,113 13,985
Profit Before Tax 41,275 30,956 46,858 39,802
Less: Taxation:-
Provision for Current Tax 12,726 8,050 13,956 10,094
Tax relating to earlier years (273) 213 (408) 232
Less: MAT Credit Entitilement - - 262 28
12,453 8,263 13,286 10,298
Deferred Tax expense / Credit (89) 196 85 466
Profit After Tax 28,911 22,497 33,487 29,038
Other Comprehensive Income (Net of tax) 30 30
Total Comprehensive Income 28,911 22,527 33,487 29,068

REVIEW OF OPERATIONS

KPR delivered a successive growth during the year under review also. Its Turnover rose by 19% and the Net Profit by 28 % over previous year. The operating results were driven by volume growth in most of the Segments. Supported by the expanded activities the Garment saw good traction. The revenue from spinning segment has crossed Rs.2000/- Crores. The Strong product pipeline gives us confidence on continuing operating strength. Operations in eco-friendly Processing Unit 2 and sophisticated high resolution Printing Division have commenced. Availability of power continues to be comfortable. Strategic planning in inventory supported by our integrated activities and captive power source ensure economized cost of production. The Brownfield expansion of 10 Million Garment capacity has elevated our total Garment capacity to 115 Million Garments per annum, one of the Largest Garment Manufacturers in India. We have expanded our Processing capacity also to match the increased garments requirements; We are able to attract the required additional workforce for our expanded activities due to our best HR activities.

K P R EXPORTS PLC - ETHIOPIA

KPR has developed a new Garment Unit with a production capacity of 10 Million Garments per annum at Ethiopia. Employees were recruited and trained at our Training wing at Arasur. Required capital equipments and materials were imported and commercial Production had commenced and trial consignments have been shipped. Preliminary activities with the leading Brands are in progress so as to enhance the business. We hope to have full-fledged activities during the current year.

BRANDED RETAIL BUSINESS

To start with, the Premium segment of Mens inner wear is chosen. The Product line is designed and finalized. The brand name and logo are decided. The products launch is planned in phases during the first quarter of current financial year. Distributors have been appointed and initially we will be targeting the South Indian market.

FUTURE OUTLOOK

Indias Textile Sector may see higher growth following strong domestic demand, waning impact of the disruptions due to GST, demonetization and rising exports. The Positive trend in the entire textile value chain has been the result of pragmatic approach towards textile industiy by the Central Government over the past few years. Export of overall cotton textiles, including cotton yarn, rose almost by 10% over earlier year. Apparel exports too surged after the Centre announced reimbursement of embedded taxes and are expected to rise further. Taking advantage of increased fabric demand, the yarn market has gained momentum in recent times with increase in its prices. Empowered by strong fundamentals, vast capacities, promising leadership, growth mindset, commitment, determined drive for prospects, KPR is striving for elevating the entity to the next higher level.

BUYBACK

As mentioned in the earlier Report, the Company has completed the Buyback of 13,35,000 Equity Shares of Rs.5/- each initiated during FY 2017-18 on 13.04.2019. The Board of Directors of the Company in its meeting held on 29.04.2019 announced a Buyback of 3750,784 fully paid-up equity shares (5.17% of the pre Buyback equity share capital) of the face value of Rs.5/- each from all the existing shareholders on a proportionate basis, through the Tender Route process at a price of Rs.702/- per Equity Share payable in cash. The total consideration amounted to Rs. 263.31 Crores representing 17.61% of the aggregate of the paid-up equity share capital and free reserves, as per the audited accounts of the Company for the year ended March 31, 2019. Approval through Postal Ballot and E-voting is expected to be completed byjune 2019.

DIVIDEND

The Board in its meeting held on 29.04.2019 has recommended a Dividend of 15% (? 0.75) on Equity Shares of Rs. 5/- each (Rupees Five only), subject to the approval of the Members at the 16th (Sixteenth) Annual General Meeting.

RESERVES

During the year under review the Company has not transferred any amount to its General Resen/e.

FINANCE

Our prompt repayments of loan and interest continued. The funds are effectively managed to reduce the cost of interest. The comfortable cash position is expected to continue with the prospective outlook

SUBSIDIARY COMPANIES

In respect of statements pursuant to Section 129(3) of the Companies Art, 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 LIMITED

IV. GALAXY KNITS LIMITED

V. KPREXPORTSPLC

QUANTUM KNITS PVT. LIMITED

The garment business of this company has been consolidated for effective management.

K.P.R. SUGAR MIL! LIMITED

In the FY 2018-19 the sugarcane crushing commenced in October 2018 and produced 90,844 MT of sugar as against 88,136 MT of last year. Out of 1,076 Lakh units of power generated 781 Lakh units were sold and 295 lakh units captively consumed. The Central Government has introduced the monthly sugar sales quota system to the Sugar Mills fixing the quantity as well as the price at which sugar can be sold every month.

Ethanol plant

Setting up of Ethanol plant at our Sugar Factory in Karnataka with a capacity of 90 KLPD is in progress at a project cost of Rs. 120 Crores. Production is expected to commence from 2019-20 sugar season. This will increase the value addition and reduce the volatility in the sugar business.

JAHNVI MOTOR PRIVATE LIMITED

For Indian Automobile Industiy the year was challenging because of high fuel prices, non-availability of credit and unimpressive festival demand which did not pull customers to the showroom as expected. During the year the company booked 168 cars and 83 bikes contributing revenue of Rs. 91.53 Crores. Its performance is expected to be stable in the current year. Growing urbanization and higher income levels are expected to improve the market sentiments in the future.

GALAXY KNITS UMITED

The Company has not yet commenced its operation.

FIXED DEPOSITS

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

DIRECTORS

The Company has adequate Independent Directors incompliance 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 and Regulation 25 (8) of SEBI (LODR) confirming that they meet with the criteria of their Independence laid in Section 149 (6) have been obtained. Mr. KNV. Ramani, Dr. K. Sabapathy, Mr. G.P. Muniappan, Mr. AM. Palanisamy, Mr. C. Thirumurthy were reappointed as Independent Directors for a further term of 5 years upto 31.03.2024 in the 15th Annual General Meeting.

KEY MANAGERIAL PERSONNEL AND MANAGERIAL 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 Subsidiaiy Companies and the remuneration paid to them is with in 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 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 SEBI Listing Obligations and Disclosure Requirements (LODR) [hereinafter refered to as 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

POLICIES

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

RISK MANAGEMENT

Pursuant to section 134 (3) (n) of the Companies Act, 2013, Regulation 17(9) and 21 of the Listing Regulation, the Company has framed a Risk Management Policy and has constituted a risk management committee.

VIGIL MECHANISM & WHISTLE BLOWER POLICY

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 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-mail id whistleblower@kprmill.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. 589.67 Lakhs being 2.10% 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 2018-19 on 30.04.2018, 30.07.2018, 29.10.2018 & 28.01.2019. The Composition of Board, procedure, dates and other details are included in the Corporate Governance Report that forms part of this Report.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to the provisions of the Act and the Listing Regulations. 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.

PAKTTCULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has duly complied with the provisions of Section 186 of the Act and as required there in 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. Pursuant to the provisions of Section 177 of the Companies Act 2013, the related party transactions entered during the year have been approved by the Audit Committee.

The Transactions as required under Indian Accounting Standards AS-24 are reported in Note 37 of the Notes to Accounts of the Consolidated Financial Statements as well as Standalone Financial Statements of your Company. The Companys Policy on dealing with related party transactions is available on the Companys website.

EMPLOYEE WELFARE

KPR strongly believes that, a companys success is not only measured by the financial performance but also by the state of well-being of the workers. The Company continues to adhere to the best employee welfare practices that have set a trend to the Industry as a whole. With the accretion in migrated work force from other States, their special needs, wherever required, are also taken care of. As an innovative way of motivating employees, the better performing Employees were felicitated with free air trip to Chennai for sightseeing. Sustaining the winning streak in the Government conducted Examinations, in the Tamil Nadu Open University (TNOU) 7th Convocation held at our Arasur Mill, 321 Employees including 288 Under Graduates & 33 Post Graduates, received Degree Certificates from the Vice-Chancellor of TNOU. Among them 47 were Rank holders and one Employee secured CEMCA Award. The welfare of the employees not only at the work place but also towards their societal uplift is also ensured.

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 women employees at all the workplace within the Company which are based on fundamental principles of justice and fair play.

According to the notifications of Ministiy of Corporate Affairs dated 31st July 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 Companies Act, 2013, the Board of Directors of the Company hereby state and confirm that;

I. In 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 31.03.2019 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 Secretarial 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 Statutoiy Auditors of the Company for a period of 5 Years from the Financial Year 2017 -1 8. The Audit committee and Board recommends the continuity of BSR & Co LLP, Chartered Accountants as Auditors for the FY 2019-20.

AUDITORS REPORT

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

COSTRECORDS

Pursuant to Section 148 of the Companies Act, 2013 the company has maintained proper books of accounts with all the particulars relating to the utilization of material or 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 2018-19.

SECRETARIAL AUDIT REPORT

As required by the Act a Secretarial Audit Report issued by a Company Secretary in practice in Form MR 3, Annual Secretarial Compliance report and report on Non-disqualification of Directors are annexed with this report.

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 companys website www.kprmilllimited.com

MATERIAL CHANGES

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year as on 31.03.2019 and the date of this Report.

NO CHANGES IN THE BUSINESS

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

ACKNOWLEDGMENT

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
29.04.2019 DIN: 00003736

ANNEXURE TO THE DIRECTORS REPORT

Form AOC - 1

(Pursuant to first provision to sub-section 12 read with Rule 5 of the Companies (Accounts) Rules, 2014)

Financial Summaiy of Subsidiaiy Companies

(? in Lakhs)

K.P.R Quantum Galaxy Knits KPR Exports
Particulars Sugar Mill Knits PVT. Jahnvi Motor
Lmited Limited Limited Private Limited
Share Capital 583 10 5 193 136
Reserves & Surplus 31,908 2,022 1 749 2
Total Assets 70,753 2,062 4 3,915 1,421
Total Liabilities 38,262 30 - 2,973 1,283
Investments (Excluding investment in subsidiaries) _ _ _ _ _
Turnover 45,344 - - 9,150 68
Profit / (loss) Before Tax 5,347 (17) - 277 2
Provision for Tax 926 - - 81 -
Profit After Tax 4,421 (17) - 196 2
Proposed Dividend - 196 - 2 -
% Share Holding 100 100 100 100 100

Form AOC-2 - (All the transactions are at arms length basis only)

Particulars of Employees- (Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014)

a). Information as per Rule 5(1) of Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

1. Remuneration paid to Whole-Time Directors (WTD)

Name of the Director Title

% Increase Over Previous year

Ratio of Remuneration to MRE
Mr. K. P. Ramasamy Chairman 34.25 181.29
Mr. KPD Sigamani Managing Director 34.25 181.29
Mr. P. Nataraj Managing Director 34.25 181.29
Mr. C. R. Anandakrishnan Executive Director - 3.71
Mr. E.K. Sakthivel Executive Director - 2.78
Mr. P. Selvakumar Whole time Director 10.61 1.71

2. Remuneration paid to Non-Executive Directors

The Non-Executive Directors of the Company are entitled for sitting fee only and its details are provided in the Corporate Governance Report

3. Remuneration paid to other Key Managerial Personnel (KMP)

Name of the KMP Title

% Increase Over Previous year

Mr. PL Murugappan Chief Financial Officer 11.23%
Mr. P. Kandaswamy Company Secretary 5.71%

4. Percentage increase in the Median Remuneration of employees in the financial year: 8.81%

5. Number of Peimanent Employees on the roll of the Company at the end of the yean 18,631

6. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the Managerial Remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the Managerial Remuneration.

The average annual increase in the salaries of employees during the year was 8.81% while the average increase in managerial remuneration during the year was 33.62%. The Managerial Remuneration is fixed by the Shareholders on recommendation of Nomination and Remuneration Committee and Board.

7. It is hereby affirmed that the remuneration paid during the year is as per the Remuneration policy of the Company.

For and on behalf of the Board
K.P. Ramasamy
Coimbatore Chairman
29.04.2019 DIN : 00003736