BOARD'S REPORT Your Directors are pleased to present the 51st Annual Report and the audited accounts for the financial year ended 31st March 2015 Dividend Considering the profits for the current year, your Directors recommend a dividend of 500 % 50.00 per share of Rs. 10 each) for the year ended 31st March, 2015, including the interim dividends declared by the Board of Directors of the Company on 12th February, 2015 and 25th March, 2015 aggregating to Rs. 30 per equity share of Rs. 10 each, absorbing a total amount of Rs. 19,22,23,248 (including dividend distribution tax and cess thereon). The final dividend of Rs. 20 per equity share of Rs. 10 each as recommended by the Board of Directors of the Company at their meeting held on 30th May, 2015, if approved at the ensuing annual general meeting, will be paid to those shareholders, whose names appear in the Company's register of members as on 19th September, 2015. In respect of equity shares held in dematerialised form, the final dividend will be paid to those beneficial owners of the equity shares as at the end of business hours on 31st August, 2015 as per the details furnished by the depositories for this purpose." The dividend payout for the year 2014-15 has been decided in accordance with the Company's policy to pay sustainable dividend linked to long term growth objectives of the Company to be met out of internal cash accruals. Unpaid Dividend Pursuant to Section 124 and 125 of Companies Act, 2013, the Company has transferred the unpaid or unclaimed dividend upto and including for the financial year 2006-07 on due date to the Investor Education and Protection Fund administered by the Central Government. Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed dividends lying with the Company as on September 25, 2014 (date of last Annual General Meeting) on the website of the Company (<http://www.kselimited.com/investordetails>. aspx), as also on the website of the Ministry of Corporate Affairs. Transfer to Reserves The Company proposes to transfer Rs. 17.00 crore to the General Reserve out of amount available for appropriations and an amount of Rs. 962.68 lakhs is proposed to be retained as Surplus. Operating Results and Business Operations The over-all profit after tax is Rs. 4,363.41 lakhs in year 2014-15 compared to Rs. 1537.36 lakhs in the previous year. The turnover of the Company improved by 12 % from Rs. 806 crores to Rs. 900 crores during the year ended 31st March, 2015. Year 2014-15 was a favourable year for the Company. The cost of ingredients for the animal feed was steady throughout the year and there was no call for disturbing the selling prices of the feed. This has incidentally helped us to improve the sales volume of animal feed from 4.01 lakh tons to 4.40 lakh tons during the year 2014-15. The profit of the animal division also moved to Rs. 2,580.57 lakhs from the previous year figure of Rs. 1,701.50 lakhs. In the cake processing division the copra cake was available at reasonable rates, and the selling price of coconut oil was above Rs. 120 per kg. through out the year. This has also helped us to improve the volume of cake processed from 64,000 tons in the previous year to 68,500 tons in the year under report. The cake processing division reported in the year 2014-15 a profit of Rs. 2,956.03 lakhs compared to a profit of Rs. 784.44 lakhs in the previous year. In the Dairy division, followed with a volume increase of 14 % in the previous year, the volume of sale of ice cream was flat at 1088 kl. against 1125 kl. in the previous year. The profit of Dairy division was seriously affected by the erosion of margin provided to us by the difference in milk procurement price in Tamil Nadu and the selling price of milk in Kerala. Dairy division reported a profit of Rs. 19.98 lakhs compared to previous year figure of Rs. 159.69 lakhs. The situation in Dairy division is likely to continue grim in the next year also unless there is upward correction in the selling price of milk in Kerala. Since April, 2015, the ingredient prices are going up. We are having sustained demand for our cattle feed and are hopeful of suitable correction of selling price in tune with ingredient prices. We do not expect further reduction in the cost of cattle feed ingredients in the immediate future. We firmly believe that the sales volume of cattle feed will further improve in the current financial year. We expect to better our performance in Animal feed division, by optimising the feed formulation and making suitable adjustments in the selling prices to match the ingredient prices. In the current year 2015-16 arrival of local copra cake has improved and it is available in sufficient quantity at reasonable price. Indonesian and Philippine copra cake is also available at competitive rates as per requirement. As such we do not expect any shortage of supply of copra cake. The market price of coconut oil is above Rs. 130/kg. which is encouraging. If the price of coconut oil continues at this level, our margins on cake processing will improve and we are hopeful of a repetition of performance in Cake Processing Division. We are taking all steps to widen the market for ice cream by appointing new dealers in untapped areas to improve the volume of sales and thereby utilise more of the unused production capacity. In the current year we have allocated additional funds for promotion of Vesta Ice Cream. We expect to improve the volume of sale of ice cream and thereby better the margins of Dairy division. More information relating to the operations of the Company has been furnished in the Management Discussion and Analysis Report attached to and forming part of this Report as provided under Clause 49 of the Listing Agreement. Awards and Recognitions The Company has won the SEA Award constituted by Solvent Extractors' Association of India for highest processor of coconut oil cake for the year 2013-14. This Award is being received by the Company for the past 24 years consecutively since the inception of the award. Number of meetings of the Board Thirteen meetings of the board were held during the year. For details of the meetings of the board, please refer to the corporate governance report, which forms part of this report. Directors and Key Managerial Personnel Mr. K.P. John, Dr. Jose Paul Thaliyath, Mr. Joseph Xavier and Mrs. Sathi A. Menon were appointed as Independent Directors of the Company, in the Annual General Meeting held on 25th September, 2014, as per Section 149 of Companies Act, 2013, and hence are not liable for retirement by rotation. Due to ill-health, Mr. K.P. John, who was a member in the Board of your Company from15.04.1969, resigned from the directorship effective from 08.01.2015. The Board place on record its deep appreciation for the valuable contribution made by him in the growth of the Company, during his long association as a director with the Company. In the casual vacancy arising on the resignation of Mr. K.P. John, the Board has appointed Mr. Paul John (DIN: 00601440) as an Independent Director on 12.02.2015. Proposal for his appointment as an Independent Director of the Company to hold the office till the date the outgoing Director Mr. K.P. John would have held office, if it had not been vacated (that is upto 25.09.2019), is placed before the members for their approval. The Company has received declarations from all the independent directors of the Company confirming that they meet the criteria of independence as prescribed under the Companies Act, 2013 and as per Clause 49 of the Listing Agreement. Mr. A.P George and Mr. T.R. Ragulal will retire by rotation at the ensuing annual general meeting and being eligible, offer themselves for re-appointment. Mr. M.C. Paul, Managing Director, Mr. P.K. Varghese, Executive Director and Mr. R. Sankaranarayanan, Chief Financial Officer and Company Secretary are the Key Managerial Personnel of your Company in accordance with the provisions of Sections 2(51) and 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Policy on directors' appointment and remuneration and other details Remuneration policy in the Company is designed to create a high performance culture. It enables the Company to attract, retain and motivate employees to achieve results. The Company pays remuneration by way of salary, benefits, perquisites and allowances to its managing director and the executive director. During the year 2014-15, the Company paid sitting fees of Rs. 7,000 per meeting upto 6th October, 2014 and thereafter at Rs. 10,000 per meeting to its non-executive directors for attending meetings of the board. Further, the Company also paid Rs. 3,500 per meeting upto 6th October, 2014 and thereafter at Rs. 5,000 per meeting of committees of the board. The Nomination and Remuneration Policy for the Members of Board and Executive Management is attached to this report as "Annexure A" which forms part of the Board's Report. Evaluation of Board, Committees and Individual Directors The Company has devised a Policy for performance evaluation of Independent and other directors, Board as a whole and Committees thereof which include criteria for performance evaluation of the executive and non-executive directors. The Policy for evaluation of performance of the Board of Directors are attached to this report as "Annexure B" which forms part of the Board's Report. In terms of provisions of the Companies Act, 2013 read with Rules issued thereunder and Clause 49 of the Listing Agreement, the Board of Directors, on recommendation of the Nomination and Remuneration Committee, have evaluated the effectiveness of the Board during the financial year ended 31st March, 2015. The evaluation was based on questionnaire and feedback from all the Directors on the Board as a whole, Committees and self-evaluation. Directors, who were designated, held separate discussions with each of the Directors of the Company and obtained their feedback on overall Board effectiveness as well as each of the other Directors. Based on the questionnaire and feedback, the performance of every director was evaluated in the meeting of the Nomination and Remuneration Committee. The evaluation of the Directors was based on various aspects which, inter alia, included the level of participation in the Board Meetings, understanding of their roles and responsibilities, business of the Company along with the environment and effectiveness of their contribution. A separate meeting of the independent directors was convened, which reviewed the performance of the Board (as a whole), the non-independent directors and the Chairman. Internal financial control systems and their adequacy The Company has in place adequate internal financial controls with reference to the financial statements. Such controls were tested annually and during the year no reportable material weakness in the design or operation were observed. The details in respect of internal financial control and their adequacy are included in the Management Discussion and Analysis, which forms part of this report. Risk Management Your Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. Your Company periodically assesses risks in the internal and external environment, along with the cost of treating risks and incorporates risk treatment plans in its strategy, business and operational plans. The Board members are informed about the risk assessment and minimization procedures. The Board is responsible for framing, implementing and monitoring the risk management plan for the company. The Company manages, monitors and reports on the principal risks and uncertainities that can impact its ability to achieve its strategic objectives. The Company's management systems, organizational structures, processes, standards, code of conduct and behaviours together govern the business of the Company and manage associated risks. There are no risks which in the opinion of the Board threaten the existence of your Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report. Vigil Mechanism Your Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. The Company is committed to developing a culture where it is safe for all employees to raise concerns about any poor or unacceptable practice and any event of misconduct. Accordingly, the Board of Directors have formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177 (10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The policy provides for a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them. More details on the vigil mechanism and the Whistle Blower Policy of your Company have been outlined in the Corporate Governance Report which forms part of this report. The "KSEL Whistle Blower Policy and Vigil Mechanism" can be accessed on the Company's website at the link : <http://kselimited.com/whistleblower.aspx>. Directors' Responsibility Statement Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors confirm that: (a) in the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards and Schedule III of the Companies Act, 2013, have been followed and there are no material departures from the same; (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 your Company as at 31st March, 2015 and of the profit of the Company for the financial year ended 31st March, 2015; (c) proper and sufficient care has been taken 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; (d) the annual accounts have been prepared on a 'going concern' basis; (e) proper internal financial controls laid down by the Directors were followed by the Company and that such internal financial controls are adequate and were operating effectively; and (f) proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively. Corporate Governance Corporate Governance Report, Management Discussion and Analysis Report and Certificate from Auditors on Corporate Governance have been furnished separately and form part of this report. The disclosures made in these reports may be considered as compliance of various disclosures prescribed under the Companies Act, 2013 and Rules made thereunder. Corporate Social Responsibility The Corporate Social Responsibility (CSR) Committee has been formed in conformity with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 by the Board on its meeting held on 6th October, 2014. There are four members to the Committee. Dr. K.C. Vijayaraghavan is the chairman of the Committee. Mr. Joseph Xavier, Independent Director and Mr. John Francis K and Mr. T.R. Ragulal, Non-executive Directors are the other members of the Committee. The Committee's terms of reference includes the following: - formulate and recommend to the Board, a CSR Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013; - recommend the amount of expenditure to be incurred on the activities referred to above; - monitor the CSR Policy of the Company from time to time; - prepare a transparent monitoring mechanism for ensuring implementation of the projects/ programmes / activities proposed to be undertaken by the Company; and - such other activities as the Board of Directors may determine from time to time. During the year ended 31st March, 2015, the Committee met once on 30th December, 2014 and all members, except Mr. T.R. Ragulal, were present at the meeting. The Annual Report on CSR activities for the year ended 31st March, 2015 is given separately as "Annexure C", forming part of this Report. Public Deposits Your Company is accepting deposits within the meaning of Sections 73 and 76 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014. The details relating to such deposits as provided under Rule 8 of the Companies (Accounts) Rules, 2014 are provided in "Annexure D". The Company is not accepting any other deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013. Particulars of loans, guarantees and Investments The particulars of loans, guarantees and investments have been disclosed in the financial statements. Transactions with related parties All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. None of the transactions with related parties falls under the scope of Section 188(1) of the Act. Full disclosure of related party transactions as per Accounting Standard 18 issued by the Institute of Chartered Accountants of India is given under Note No. 29.9 of Notes to the Annual Accounts. The policy and procedures on related party transaction as approved by the Board may be accessed on the Company's website at the link: <http://kselimited.com/transactionpolicy.aspx>. Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given in "Annexure E" in Form AOC-2 and the same forms part of this report. Extract of annual return As provided under Section 92(3) of the Act, the extract of annual return is given in "Annexure F" in the prescribed Form MGT-9, which forms part of this report. Statutory Auditors M/s. Varma & Varma, Chartered Accountants have been appointed as Auditors of the Company in the annual general meeting held on 25th September, 2014 for a period of three years till the conclusion of 53rd annual general meeting to be held in financial year 2017, subject to ratification of their appointment at every annual general meeting. The Auditors' Report for the financial year 2014-15, does not contain any qualification, reservation or adverse remark. Cost Auditors With the prior approval of Central Government, M/s. A. R. Narayanan & Co., Cost Accountants, Ernakulam have been appointed as Cost Auditors for the financial year 2014-15 and they will be submitting their Cost Audit Report with in the time limit stipulated. Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed CS. Sathish V., Practicing Company Secretary to conduct the Secretarial Audit of your Company for the financial year ended 31st March, 2015. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed herewith as "Annexure G" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Disclosure as per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 The Company has zero tolerance for sexual harassment at workplace. During the financial year 2014-15, the Company has not received any complaints on sexual harassment and no complaints remain pending as of 31st March, 2015. Disclosure relating to Remuneration of Directors, Key Managerial Personnel and particulars of employees The information required under section 197 of the Act and rules made there-under, in respect of employees of the Company, is provided in "Annexure H" forming part of this report. None of the employees are in receipt of remuneration in excess of the limits specified under clause (2) of Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo The particulars as prescribed under Rule 8(3) of the Companies (Accounts) Rules, 2014, are set out in an "Annexure I" to this Report. Other Disclosures No disclosure is made in respect of the following items as there were no events during the year calling for reporting on these items: 1. There was no issue of equity shares with differential rights as to dividend, voting or otherwise. 2. There was no issue of shares (including sweat equity shares and ESOP) to employees of the Company under any scheme. 3. Your Company do not have any subsidiary, associate, joint venture company or holding company and disclosures required in that respect were not dealt with. 4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. 5. No frauds have been reported by auditors to the Audit Committee or Board under sub-section (12) of section 143 of the Companies Act, 2013. 6. There are no material changes or commitments affecting the financial position of the Company which have occurred between the end of the financial year under report and the date of this report. Acknowledgement Your Directors wish to place on record their sincere appreciation for the assistance and co-operation received from shareholders, bankers, especially ICICI Bank, Registrars and Share Transfer Agents, customers, distributors and suppliers. Board also acknowledge the valuable committed services of the executives, staff and workers of the Company. By Order of the Board Sd/- Dr. Jose Paul Thaliyath (DIN : 01773031) Chairman Irinjalakuda May 30, 2015 |