DIRECTORS’ REPORT Your Directors are pleased to present the 25th Annual Report and Audited Financial Statements of the Company for the financial year ended on March 31, 2015. CORPORATE OVERVIEW The Company operates in diversified business segments viz. Textiles, Paper and Chemicals. The Company also has captive power plant to cater to needs of its various business segments. Amalgamation of Trident Corporation Limited with the Company The Hon’ble High Court for the states of Punjab and Haryana at Chandigarh had approved the Scheme of Amalgamation of Trident Corporation Limited with the Company vide its Order dated March 14, 2014. Accordingly, the Scheme has became effective on April 18, 2014 and Trident Corporation Limited has been amalgamated with the Company w.e.f. April 1, 2014, the Appointed Date and the undertakings of Trident Corporation Limited stands transferred and vested to the Company w.e.f April 1, 2014. Results of Operations Financial performance and review The net sales of the Company during the year under review have been Rs.37,535.5 million as against Rs.38,688.6 million in the previous financial year. The Operating Profit (EBIDTA) for the year has been Rs.6,950.9 million as compared to Rs.7,438.8 million in the previous financial year and the net profit was Rs.1,178.2 million as against Rs.1,970.3 million in the previous financial year. The Company’s earnings per share was Rs.2.47 and cash earnings per share was Rs.9.19 during the current year. An amount of Rs.305.4 million and Rs.2,542.8 million was transferred to Capital Reserve and Securities Premium account, respectively, during the year under review. A detailed discussion on financial and operational performance of the Company is given under “Management Discussion & Analysis Report” forming part of this Annual Report. Changes in Share Capital The Board of Directors in their meeting held on May 15, 2014 had allotted 136,352,000 equity shares of Rs.10/- each of the Company at a premium of Rs.18.61 per share, fully paid-up, in the proportion of 16 equity shares of Rs.10/- each of the Company for every 25 equity shares of Rs.10/- each of the erstwhile Trident Corporation Limited, to the shareholders of Trident Corporation Limited named in the Register of Members as on the record date fixed for the purpose i.e. April 30, 2014. Further, the Board has allotted 60,000,000 equity shares to holders of convertible warrants pursuant to exercise of conversion option attached to convertible warrants issued on preferential basis on September 30, 2013 pursuant to the approval of shareholders vide their resolution dated September 21, 2013. The Company also allotted 1,202,757 equity shares of Rs.10/- each to employees of the Company pursuant to exercise of options in terms of Trident Employee Stock Options Plan, 2007, resulting increase in the total paid up capital of the Company from Rs.3,110.9 million to Rs.5,086.4 million. Further, the Company has also allotted 206,219 equity shares of Rs.10/- each to employees of the Company pursuant to exercise of options in terms of Trident Employee Stock Options Plan, 2007 on May 27, 2015. Consequent to this allotment, the Paid Up Equity Share Capital of the Company stands increased to Rs.5,088.4 million. Dividend Your directors are pleased to announce that during the year under review, the Company has adopted a Dividend Policy to reward its shareholders whilst also ensuring availability of sufficient funds for growth and expansion projects of the Company. During the year under review, the Board has declared two Interim Dividends each of C0.30 (3%) per equity share of C10/- each aggregating to Rs.0.60 (6%) per equity share of Rs.10/- each amounting to Rs.340.6 million (Inclusive of tax of Rs.53.4 million) in its meeting held on August 6, 2014 & February 12, 2015 respectively. The Board has not recommended payment of any final dividend for the financial year 2014-15. The dividend payout for the year under review has been in accordance with the Dividend Policy (Annexure-VIII). Contribution to the National Exchequer The Company contributed a sum of Rs.464.5 million (previous year Rs.406.6 million) to the exchequer by way of central excise duty in addition to other direct and indirect taxes during the year under review. Exports The exports of the Company accounted for about 50 percent of net sales. During the year under review, export sales were marginally increased to Rs.18,668.9 million as against Rs.18,536.4 million in the previous year. Expansions/Modernisations The Company is undertaking the implementation of a composite textile project in the Home Textiles Segment consisting of Bed Linen Unit with a capacity of 500 Looms and an integrated spinning unit of 189,696 spindles to manufacture high end count from 40 to 100 Ne. The above projects are being implemented at an estimated total project cost of Rs.16,669.0 million and are expected to be completed by second half of FY16. Being an integrated project, the production from the spinning segment would seamlessly flow into the bed linen segment, adding value in the textile chain and making Company a one-stop-shop for home textiles products. Further, during the year under review the Company has commissioned an open-end yarn spinning project by installation of 1920 rotors, having manufacturing capacity of approximately 10,000 TPA of cotton open end yarn for meeting its yarn requirement for the terry towel unit in Budni. The said projects are being part financed from term loans and internal cash accruals. Consolidated Financial Statements The Audited Consolidated Financial Statements prepared by the Company, in accordance with the applicable accounting standards, are provided in the Annual Report of the Company. During the year under review, there was no change in the status of any of the Subsidiary and Associate Companies. Subsidiary and Associate Companies As on the last day of financial year under review, the Company had one Indian wholly owned subsidiary “Trident Global Corp Limited”. The audited accounts of the Subsidiary Company are available on the official website of the Company at www. tridentindia.com/content/statutory-disclosures.aspx. The annual accounts of the Company and of the Subsidiary Company are open for inspection by any investor at the Registered Office as well as corporate office of the Company and of the Subsidiary Company. The Company will also make available copies of these documents to investors upon receipt of request from them. The investors, if they desire, may write to the Company to obtain a copy of the financial statements of the Subsidiary Company. The Company has adopted Policy for determining Material Subsidiary and the same is also available on the official website of the Company at the following link: www.tridentindia.com/ content/policies.aspx Further, Trident Infotech Inc. and Trident Global Inc. are two foreign Associate Companies of the Company. A statement containing salient features of the financial statements of Subsidiary and Associate Companies for the financial year ended on March 31, 2015 is attached as Annexure ‘AOC-I’ to the consolidated financial statements of the Company for the reference of the members. The said statement also indicates the performance and financial position of each of the Subsidiary and Associate Companies and the same is not being repeated here for the sake of brevity. Directors Pursuant to provisions of Companies Act, 2013 (‘Act’) and the Articles of Association of the Company Mr. Rajinder Gupta and Mr. Deepak Nanda, Directors of the Company, retire at the ensuing Annual General Meeting and offer themselves for reappointment. The Nomination and Remuneration Committee and Board of Directors have recommended their re-appointments for the approval of the shareholders of the Company. During the year under review, Mr. S K Tuteja was appointed as an Additional Director & Chairman of the Board and his appointment was approved by the shareholders in the Annual General Meeting held on September 24, 2014. Further Dr. M A Zahir ceased to be a director of the Company and Mr. Rajinder Gupta was re-designated as Co-Chairman of the Company w.e.f. May 15, 2014. The appointment of Mr. S K Tuteja, Ms. Pallavi Shroff and Mr. Rajiv Dewan as Independent Directors of the Company for a period of five years was approved by the members in the Annual General Meeting held on September 24, 2014. The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the Act and Listing Agreement(s). Number of Board Meetings During the year under review, the Board duly met six (6) times with a maximum gap of 89 days between any two consecutive meetings. The details of the Board meeting are set out in the Corporate Governance Report which forms part of this Report. Review of performance of the Board The Board has approved Nomination and Remuneration Policy prescribing inter-alia the criteria for appointment, remuneration and performance evaluation of the directors. As mandated by Section 134 and Section 178 read with Schedule IV of the Act, and Clause 49 of the Listing Agreement(s) entered into by the Company with the Stock Exchanges, the Independent Directors in their separate meeting held on February 12, 2015 have reviewed the performance of non-independent directors, Chairman and Board as a whole alongwith review of quality, quantity and timeliness of flow of information between Board and management and expressed their satisfaction over the same. Further the Board, in its meeting held on May 27, 2015 also reviewed the performance of the Board, its committees and all Individual Directors of the Company and expressed its satisfaction over the performance of the Board, its Committees and individual Directors. Key Managerial Personnel The appointment of Mr. Deepak Nanda, Managing Director as Key Managerial Personnel in terms of Companies Act, 2013 was reconfirmed by the Board in its meeting held on May 15, 2014. Further during the year under review, Mr. Pawan Jain, Company Secretary and Mr. Arun Goyal, Chief Financial Officer relinquished their offices and were succeeded to by Ms. Shakti Jindal and Mr. Gunjan Shroff respectively. Ms. Shakti Jindal who joined as Company Secretary of the Company, ceased to hold office of Company Secretary and was succeeded to by Mr. Pawan Babbar as Company Secretary of the Company. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo Energy conservation continues to be an area of major emphasis in your Company. A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with Section 134(3)(m) of the Act, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed as Annexure I hereto and forms part of this report. Disclosure on ESOP The relevant disclosures on Company’s stock options scheme as per applicable guidelines are provided in Annexure II hereto and form part of this report. The Certificate from the Auditors of the Company that the Scheme has been implemented in accordance with the applicable SEBI Guidelines and the resolution passed by the shareholders would be placed at the Annual General Meeting for inspection by members. The Board in its meeting held on May 27, 2015 has also approved and recommend the Trident Employee Stock Options Scheme, 2015, through trust route, for the approval of Shareholders of the Company. Responsibility Statement of Directors Directors’ Responsibility Statement pursuant to the provisions of Section 134(3)(c) read with Section 134(5) of the Act is annexed as Annexure III hereto and forms part of this report. Nomination and Remuneration Policy The Nomination and Remuneration Policy of the Company containing criteria of performance evaluation of Independent Directors has been designed to keep pace with the dynamic business environment and market linked positioning. The Policy has been duly approved and adopted by the Board pursuant to recommendations of Nomination and Remuneration Committee of the Company and forms part of this report as Annexure IV. Familiarisation Program for Independent Directors The details of familiarisation program for independent directors are available on the official website of the Company at the following link: www.tridentindia.com/content/policies.aspx Statutory Committees The Company has duly constituted Board level Committees as mandated by the applicable laws, details of the same are provided in the Corporate Governance Report of the Company which forms part of this report. Audit Committee The Audit Committee of the Board is duly constituted in terms of the requirement of Companies Act, 2013 and listing agreement(s) applicable on the Company. It comprises of Mr. S K Tuteja (Chairman of the Committee), Mr. Rajiv Dewan and Mr. Deepak Nanda, members of the Committee Vigil Mechanism & Whistle Blower policy The Company has implemented Vigil Mechanism & Whistle Blower policy and the oversight of the same is with Audit committee of the Company. The policy inter-alia provides that any Directors, Employees, Stakeholders who observe any unethical behaviour, actual or suspected fraud or violation of the company’s code of conduct or ethics policies, improper practices or alleged wrongful conduct in the Company may report the same to Chairman of the Audit Committee or e-mail on the email-Id: whistleblower@tridentindia.com. Identity of the Whistle Blower shall be kept confidential to the greatest extent possible. The detailed procedure is provided in the policy and the same is available on official website of the company at following link: www.tridentindia.com/content/policies.aspx During the year under review, there were no instances of fraud reported to the Audit Committee/ Board. Further, all recommendations of the Audit Committee were accepted by the Board. Corporate Social Responsibility (CSR) Committee CSR Committee comprises of Mr. Rajiv Dewan, (Chairman of the Committee), Mr. S K Tuteja and Mr. Deepak Nanda, members of the Committee. The disclosure of the contents of CSR Policy as prescribed and amount spent on CSR activities during the year under review are disclosed in ‘Annual Report on CSR activities’ annexed hereto as Annexure V and forms part of this report. Risk Management Policy The Company has adopted a Risk Management Policy with the objective of ensuring sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues. The detailed Risk management framework has been provided in the Management Discussion & Analysis Report of the Company. Internal Control The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. The details of Internal Control System are provided in the Management Discussion & Analysis Report of the Company. Fixed Deposits During the year under review, your Company has not accepted any fixed deposits nor any amount was outstanding as principal or interest as on balance sheet date and disclosures prescribed in this regard under Companies (Accounts) Rules, 2014 are not applicable. No Default The Company has not defaulted in payment of interest and/or repayment of loans to any of the financial institutions and/or banks during the year under review. Corporate Governance Your Company is committed to adhere to the best practices & highest standards of Corporate Governance. It is always ensured that the practices being followed by the Company are in alignment with its philosophy towards corporate governance. The well-defined vision and values of the Company drive it towards meeting business objectives while ensuring ethical conduct with all stakeholders and in all systems and processes. Your Company proactively works towards strengthening relationship with constituents of system through corporate fairness, transparency and accountability. In your Company, prime importance is given to reliable financial information, integrity, transparency, fairness, empowerment and compliance with law in letter & spirit. Your Company proactively revisits its governance principles and practices as to meet the business and regulatory needs. Detailed compliances with the provisions of Clause 49 of the listing agreement(s) for the year 2014-15 are given in Corporate Governance Report, which is attached and forms part of this report. The Auditors’ certificate on compliance with corporate governance norms is also attached thereto. Human Resource Development and Industrial Relations The human resources development function of the Company is guided by a strong set of values and policies. Your Company strives to provide the best work environment with ample opportunities to grow and explore. Your Company maintains a work environment that is free from physical, verbal and sexual harassment. The details of initiatives taken by the Company for development of human resources are given in Management Discussion & Analysis Report. The Company maintained healthy, cordial and harmonious industrial relations at all levels during the year under review. Further, no case was filed under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 during the year under review. Auditors & Auditors’ Report M/s Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a certificate from M/s Deloitte Haskins & Sells, Chartered Accountants, under Section 139 of the Act confirming their eligibility and willingness to accept the office of the Statutory Auditors for the year 2015-16, if re-appointed. The Statutory Auditors of the Company have submitted Auditors’ Report on the financial statements of the Company for the financial year ended on March 31, 2015. The Auditors’ Report for the year is self explanatory & does not contain any qualification/adverse remarks, hence need no comments. Cost Audit The Board of Directors of your Company, on the recommendations of the Audit Committee, have re-appointed M/s Ramanath Iyer & Co., Cost Accountants, New Delhi as cost auditors for the financial year 2015-16 to carry out an audit of cost records of the Company in respect of textiles, paper and chemical divisions. The Cost Auditors’ Report for the previous financial year ended on March 31, 2014, does not contain any qualification/adverse remarks and requires no comments, has been filed with Central Government within the prescribed time limit. The Company has voluntarily appointed M/s Ramanath Iyer & Co., Cost Accountants, New Delhi as cost auditors for the financial year 2014-15 to carry out an audit of cost records of the Company as the same was not applicable on the Company in terms of the Companies (Cost Records and Audit) Rules, 2014, as applicable. Secretarial Audit M/s Vinod Kothari & Co., Company Secretaries, Kolkata have conducted the Secretarial Audit of the Company for the financial year 2014-15 in accordance with the provisions of Section 204 of the Act and relevant rules read therewith. The Secretarial Auditor’s Report is annexed as Annexure VI and forms part of this report. The Secretarial Auditor’s Report for the year is self explanatory & does not contain any qualification/adverse remarks, hence need no comments. Extract of Annual Return The extract of annual return in Form No. MGT-9, is annexed as Annexure VII and forms part of this report. Particulars of loans, guarantees or investments During the year under review, your Company has not provided loans within the meaning of Section 186 of the Act. The Particulars of investments and guarantees are provided in the notes to financial statements. Disclosures regarding Managerial remuneration and particulars of employees Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding this information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. The full Annual Report including the aforesaid information is being sent electronically to all those members who have registered their email addresses and is available on the Company’s website at www.tridentindia.com/content/annual-reports.aspx. Contracts or arrangements with related parties All contracts/arrangements/transactions entered by the Company during the year under review with related parties were in the ordinary course of business and on an arm’s length basis. During the period under review, the Company had not entered into any contract/arrangement/transaction with related parties which could be considered material in accordance with the Policy on Materiality of and Dealing with Related Party Transactions. The related party disclosures are provided in notes to financial statements. Hence discloures in Form No. AOC-2 is not applicable. The Policy on Materiality of and Dealing with Related Party Transactions as approved by the Board is available on the official website of the Company at the following link: www.tridentindia.com/content/policies.aspx General Your Directors state that no disclosure or reporting is required with respect to the following items as there were no transactions on these items during the year under review: 1. Disclosure in respect of voting rights not exercised directly by the employees in respect of shares to which the ESOP scheme relates, as there is no provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees. 2. Material changes and commitments after the closure of the financial year till the date of this Report, which affects the financial position of the Company. 3. Change in the nature of business of the Company. 4. Details relating to deposits covered under Chapter V of the Act. 5. Issue of equity shares with differential rights as to dividend, voting or otherwise. 6. Any remuneration or commission received by Managing Director of the Company, from any of its Subsidiary. 7. Significant or material orders passed by the Regulators or Courts or Tribunals which impacts the going concern status and Company’s operations in future. Acknowledgments It is our strong belief that caring for our business constituents has ensured our success in the past and will do so in future. Your Directors acknowledge with sincere gratitude the cooperation and assistance extended by the Central Government, Government of Punjab, Government of Madhya Pradesh, Financial Institution(s), Bank(s), Customers, Dealers, Vendors and society at large. Your Directors also wish to convey their appreciation for collective contribution & hard work of employees across all levels. The Board, also, takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders and their confidence in management and look forward to their continued support in future too. For and on behalf of the Board S K TUTEJA Chairman DIN: 00594076 DEEPAK NANDA Managing Director DIN: 00403335 Place : Chandigarh Date : May 27, 2015 |