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Directors Report of K G Denim Ltd.

Mar 31, 2016

Dear Shareholders,

We have pleasure in presenting the Twenty-Fourth Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March 2016.

FINANCIAL RESULTS

(Rs. in lakhs)

Standalone

Consolidated

For the year ended

For the year ended

For the year ended

For the year ended

PARTICULARS

31st March 2016

31st March 2015

31st March 2016

31st March 2015

Gross Profit

8827

5093

8845

5203

Less : Finance Cost

3241

2797

3355

2874

Profit prior to Depreciation and write off

5586

2296

5490

2329

Less : Depreciation

2048

2098

2072

2118

Net Profit

3538

198

3418

211

Current, Deferred & earlier year tax

1426

177

1376

174

Net Profit for the year

2112

21

2042

37

Balance Brought forward

1556

2197

1147

1775

Proposed Dividend & Tax thereon

232

232

232

232

Additional Depreciation (Net of DTL)

-

430

-

433

Balance Carried Forward

3436

1556

2957

1147

STATE OF THE COMPANY’S AFFAIRS

During the period under review, the Company has earned revenue of Rs.65173 lakh and Net Profit of Rs.2112 lakh on standalone basis and Rs.71553 lakh and Rs.2042 lakh respectively on consolidated basis.

PERFORMANCE OF THE COMPANY

The Company has two main product segments viz., Denim, Apparel Fabric and Home Textiles.

During the year ended 31.03.2016, total Fabric production was 361 lakh meters as against 316 lakh meters in 2014-15.

Sale of Fabric was 360 lakh meters as against 309 lakh meters in 2014-15.

The improved profitability is mainly due to Denim division performing well both in terms of volume as well as realization.

DIVIDEND

The Board of Directors recommends a dividend of 7.50 % (i.e. Rs.0.75) per equity share of the Company for the year 2015-16. The Dividend tax payable amounts to Rs.39 lakh.

INDUSTRY STRUCTURE & DEVELOPMENT

The Indian denim industry is growing steadily with new mills being added and also existing mills increasing capacity. We are looking at increasing sales in international markets though it depends on the market conditions in Europe and USA. We have identified new markets in the Far East countries like Vietnam, Thailand and Indonesia to increase our sales. We are also focusing to increase our sales in African markets at Kenya and Tanzania .The fabrics are undergoing transformation in terms of colors, fibers and finishes. Trends are considered for new developments to cater to brands and retailers in both domestic and international markets.

OPPORTUNITIES AND THREATS

The Company is targeting full capacity utilization of production and sales volume for Denim Fabric in the current year. Efforts are being made to increase apparel fabrics and home textile exports.

The Company has successfully commissioned 9.9 MW Power Plant during the year. Sale of excess power generated is expected to happen in the second half of FY 2016-17.

The Company is subjected to risks of volatility in the prices of raw materials and fashion changes.

High interest rates and exchange rate volatility are areas of serious concern for the Company. The Company has taken steps to increase the exports and is actively managing the exchange risk by suitable forward cover.

LISTING OF EQUITY SHARES

The Company’s Equity shares are listed at the following Stock Exchange:

(I) BSE Limited, Phiroze JeeJeebhoy Towers, Dalal Street, Mumbai-400 001.

The Company has paid the Annual Listing Fees to the said Stock Exchange for the financial year 2016-17.

PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES

The Company’s wholly owned subsidiary Trigger Apparels Limited is engaged in the manufacture and marketing of readymade garments. During the year 2015-16 it has undertaken export of garments besides the domestic marketing of Trigger brand jeans.

During the year, the gross turnover in Trigger Apparels Limited was Rs.92.83 crore against Rs.27.40 crore during the previous year. The Subsidiary Company has registered a loss of Rs.69.65 lakh as against a profit of Rs.15.56 lakh in the previous year.

No activity has taken place at KG Denim (USA) Inc. during the year.

As per the provisions of Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the Subsidiary companies is prepared in Form AOC-1 and same is enclosed to this report as Annexure-1.

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated financial statements have been prepared by the Company’s Management in accordance with the requirements of Accounting Standards 21 issued by The Institute of Chartered Accountants of India (ICAI) and as per the provisions of Companies Act, 2013.

As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its subsidiaries on its website www.kgdenim.com and copy of separate audited financial statements of its subsidiaries will be provided to the shareholders at their request.

CEO/CFO CERTIFICATION

The Managing Director and Chief Financial Officer of the Company have submitted a Certificate to the Board as required under Clause 49 of the Listing Agreement for the year ended 31st March, 2016.

MEETINGS OF THE BOARD OF DIRECTORS

During the year ended 31st March, 2016, four Board Meetings were held.

The dates on which the Board meetings were held are 23rd May 2015, 31st July 2015, 05th November 2015 and 05th February 2016.

A meeting of the Independent Directors of the Board was held on 05th February, 2016.

Details of meetings of the Board and its Committees are disclosed in the report on Corporate Governance.

DIRECTORS’ RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134 OF THE COMPANIES ACT, 2013

Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to the Directors’ Responsibility Statement the Board of Directors of the Company hereby confirms:

i) that in the preparation of the Annual Accounts, the applicable accounting standards have been followed;

ii) that 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 the Company as at 31st March 2016 and Statement of Profit and Loss Account of the Company for that period;

iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) that the Directors have prepared the Annual Accounts for the Financial Year ended 31st March, 2016 on a going concern basis;

v) that the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi) that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB-SECTION (7) OF SECTION 149 OF THE COMPANIES ACT, 2013

The independent directors have submitted the declaration of independence, as required pursuant to Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6).

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee consists of the following members namely Shri K N V Ramani, Chairman with Shri G V S Desikan and Shri V Jagadisan as members.

Brief description of terms of reference:

1. identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board for their appointment and removal;

2. carry on the evaluation of every director’s performance;

3. formulation of the criteria for determining qualifications, positive attributes and independence of a director;

4. recommend to the Board a policy relating to the remuneration of the directors, key managerial personnel and other employees;

5. formulation of criteria for evaluation of Independent Directors and the Board;

6. devising a policy on Board diversity; and

7. any other matter as the Board may decide from time to time.

NOMINATION AND REMUNERATION POLICY THE OBJECTIVES OF THE POLICY

1. To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration.

2. To determine remuneration based on the Company’s size and financial position and trends and practices on remuneration prevailing in peer companies.

3. To carry out evaluation of the performance of Directors.

4. To provide them reward linked directly to their effort, performance, dedication and achievement relating to the Company’s operations.

5. To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

The Nomination and Remuneration Committee has recommended fixation of fixed remuneration for Executive Chairman and Managing Directors from 01.04.2016 instead of 3% share of net profits on consideration of improved profitability. Further the Committee has recommend revision of remuneration to Smt T Anandhi, Non-Executive Director from 1% to 0.50% of net profit from 01.04.2016. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT, 2013

The details of Loans, Guarantees given and Investments made during the Financial Year ended on 31st March, 2016 are given in the notes to Financial Statements in compliance with the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014.

PARTICULARS OF CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SUB-SECTION (1) OF SECTION 188 OF COMPANIES ACT, 2013

The Company adopted a Related Party Transaction Policy in terms of SEBI regulations for compliance with Corporate Governance and Clause 49 of the Listing Agreement. The policy has also been hosted on the Company’s website. All transactions entered into with Related Parties for the year 2015-16 were on Arm’s length basis.

There were no material related party transactions in terms of the Related Party Transaction Policy adopted.

Thus disclosure in Form AOC-2 as per Companies Act, 2013 and Rule 8 of Companies (Account) Rules, 2014 is not required.

Further there were no material related party transaction with the Promoters, Directors or Key Managerial Personnel during the year.

All related party transaction are placed before the Audit Committee as also to the Board for approval on a quarterly basis. Omnibus approval was obtained for transaction of repetitive nature.

TRANSFER OF AMOUNT TO RESERVES

The Company does not propose to transfer any amount to the general reserve for the Financial Year ended 31st March, 2016. EXTRACT OF ANNUAL RETURN

The extract of Annual Return is prepared in Form MGT-9 as per the provisions of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 and the same is enclosed as Annexure - 2 to this Report.

THE CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO PURSUANT TO PROVISIONS OF SECTION 134(3)(m) OF THE COMPANIES ACT, 2013 (ACT) READ WITH THE COMPANIES (ACCOUNTS) RULES, 2014

Information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is prepared and the same is enclosed as Annexure - 3 to this Report.

RISK MANAGEMENT COMMITTEE

Risk Management Committee consists of the following persons namely Shri B Sriramulu as Chairman, Shri S Muthuswamy and Shri M Balaji as members.

The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat the risk. The Risk management procedure is reviewed by the Audit Committee and Board of Directors on a Quarterly basis at the time of review of Quarterly Financial Results of the Company.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

Corporate Social Responsibility is commitment of the Company to improve the quality of life of the workforce and their families and also the community and society at large. The Company believes in undertaking business in such a way that it leads to overall development of all stakeholders and Society.

The Board of Directors of the Company has constituted Corporate Social Responsibility Committee consisting of following persons namely Shri KG Baalakrishnan, Chairman, Shri G V S Desikan, Member and Shri A Velusamy, Member and adopted policy for Corporate Social Responsibility.

Corporate Social Responsibility policy was adopted by the Board of Directors on the recommendation of Corporate Social Responsibility Committee.

The Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure - 4.

EVALUATION OF BOARD

Evaluation of all Board members is done on an annual basis. The evaluation is done by the Board, Nomination and Remuneration Committee and Independent Directors with specific focus on the performance and effective functioning of the Board and Individual Directors.

The manner in which the evaluation has been done is explained in the report on Corporate Governance.

DIRECTORS

Shri M J Vijayaraaghavan, Independent Director expired on 10.06.2015.

The Board placed on record the valuable services rendered by him and prayed Almighty for the eternal peace of the departed soul. Shri Surinder Chhibber, Independent Director and Shri S Muthuswamy, Director resigned from the Board on 31.07.2015. The Board placed on record the valuable services rendered by them.

Shri A P Seturaaman was appointed as an Additional Director by the Board on 05.11.2015. He is seeking election as an Independent Director at the ensuing Annual General Meeting.

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Company’s Articles of Association no. 34, Shri B Sriramulu retires by rotation at the forthcoming Annual General Meeting and being eligible offers himself for re-appointment.

KEY MANAGERIAL PERSONNEL

The following are the Key Managerial Personnel of the Company :

1. Shri B Sriramulu - Managing Director

2. Shri B Srihari - Managing Director

3. Shri S Muthuswamy - Company Secretary

4. Shri M Balaji - Chief Financial Officer

DEPOSITS

The Company has not accepted any deposits from the public in terms of Section 73 of the Companies Act, 2013.

STATUTORY AUDITORS

The Shareholders of the Company at the Annual General Meeting held on 28th September, 2015 have appointed M/s. Gopalaiyer and Subramanian, Chartered Accountants as Statutory Auditors of the Company.

The term of M/s. Gopalaiyer and Subramanian, Chartered Accountants, Statutory Auditors will expire on the date of 24th Annual General Meeting to be held on 28th September 2016.

It is proposed to re-appoint them as Statutory Auditors of the Company for a further period of one year. The members are requested to consider their re-appointment and authorize the Board of Directors to fix their remuneration.

M/s. Gopalaiyer and Subramanian, Chartered Accountants (ICAI Regn. No.000960S) have confirmed that their appointment, if made, shall be in accordance with the provisions of Section 139 of the Companies Act, 2013.

AUDITORS REPORT

M/s.Gopalaiyer and Subramanian, Chartered Accountants (ICAI Regn. No.000960S) have issued Auditors Report for the Financial Year ended 31st March, 2016 and there are no qualifications in Auditors’ Report.

INTERNAL AUDITORS

The Board of Directors of the Company have appointed M/s Mohan & Venkatramanan, Chartered Accountants to conduct Internal Audit of the Company.

COST AUDITORS

As per the requirement of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out audit of cost records relating to Textile Divisions every year.

The Board of Directors, on the recommendation of Audit Committee, has appointed Messrs M Nagarajan, Cost Accountants, (Firm Registration Number 6384) as Cost Auditor to audit the cost accounts of the Company for the financial year 2016-17. As required under the Companies Act, 2013, a resolution seeking member’s approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting for their ratification.

AUDIT COMMITTEE

Audit Committee consists of the following Directors namely Shri V Jagadisan, Chairman, Shri K N V Ramani and Shri G V S Desikan as members. All the members of the Audit Committee are Independent Directors.

There is no such incidence where Board has not accepted the recommendation of the Audit Committee during the year under review.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange, forms part of the Annual Report - Annexure - 5.

VIGIL MECHANISM

The Board of Directors have adopted a Whistle Blower Policy which is hosted on the Company’s website. The Whistle Blower Policy aims for conducting the affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. All permanent employees of the Company are covered under the Whistle Blower Policy.

A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairperson of the Audit Committee in exceptional cases.

SECRETARIAL AUDITORS REPORT

As per the provisions of Section 204 of the Companies Act, 2013, the Board of Directors have appointed Shri M.R.L.Narasimha, Practising Company Secretary (C.P.No:799) as Secretarial Auditor to conduct Secretarial audit of the Company for the Financial Year ended on 31st March, 2016.

Secretarial Audit Report issued by Shri M.R.L.Narasimha, Practising Company Secretary in form MR-3 is enclosed as Annexure - 6 to this Annual Report. There are no qualifications in Secretarial Audit Report.

STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL

The Statement of particulars of Appointment and Remuneration of Managerial personnel as per Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure - 7 to this Annual Report.

ENVIRONMENT

The Company holds due certification under ISO 14001 : 2004 which is primarily focused on environmental management system. It ensures that the manufacturing of products is carried on without affecting the environment in the working area and surroundings. The Company is a member of Sustainable Apparel Coalition (SAC). SAC provides credible, practical and industry wide guidelines and provides tools to define, measure and evaluate industry’s product environmental and social performance support.

The Company has achieved one of the best scores in the apparel industry as verified by a leading brand assessor.

During the current year, the Company has implemented various environmental measures and reduction program like Green House Gas inventory measurement, replacement of freon gas air conditioners, increasing the area of plantation etc.

The Company has improved effluent water treatment system conforming to the Pollution Control Board parameters. A new plant has been added which has increased the Biological treatment capacity by 60%. An advanced technology of Biological Diffuser Aeration system has been introduced which has resulted in reduction in chemicals usage. Consequently, reduction in sludge, improvement in outlet water quality and consistence and improvement in RO recovery were achieved. The highlights of our sustainability effort can be seen in the link https://youtu.be/uZGhiwq6XSM

HEALTH AND SAFETY

The Company has obtained certification under OHSAS 18001 : 2007 (Occupational Health and Safety Management Assessment Standard) which is an Integrated Management System focusing on an organization’s occupational health and safety management system. This standard guides us to identify and control the conditions and factors that affect the well-being of employees, contractors, visitors and any other person in the work place.

The Company is implementing various health and safety practices in continuous manner as per OHSAS-18001 standards and legal requirements.

POLICY ON SEXUAL HARASSMENT

The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the financial year ended 31st March,

2016, the Company has not received any complaints pertaining to sexual harassment.

LEGAL REQUIREMENTS

The Company is conscious of improving the occupational and personal health of its employees. In addition to free medical camps, the Company also organizes employees’ health check up in outside hospitals on an annual basis.

The Company provides a safer work environment for its employees. Basic equipments are provided to ensure safety from fire. Awareness classes are being conducted periodically with the help of external agencies about the basic safety, fire fighting, mock drills, mass evacuation, first aid etc.,

SOCIAL RESPONSIBILITIES

The Company is maintaining a hospital for serving the community including supply of medicines at subsidized costs. As a part of social environmental protection, agro forestry has been developed with a demo plant with the technical support of Forest College, Coimbatore.

INSURANCE

All properties and insurable interests of the Company including building, plant and machinery and stocks have been fully insured.

FINANCE

Your Directors acknowledge with gratitude, the valuable assistance and support extended by our Bankers for term loans and working capital ie., Indian Bank, Bank of India, Allahabad Bank, State Bank of India, Indian Overseas Bank and The South Indian Bank Limited.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

1. The Company maintains all its records in ERP System and the work flow and approvals are routed through ERP System;

2. The Company has appointed Internal Auditors to observe the Internal Controls, whether the work flow of organization is being done through the approved policies of the Company. In every Quarter during the approval of Financial Statements, Internal Auditors will present the Internal Audit Report and Management Comments on the Internal Audit observations; and

3. The Board of Directors of the Company have adopted various policies like Related Party Transactions Policy, Whistle Blower Policy, Policy to determine Material Subsidiaries and such other procedures for ensuring the orderly and efficient conduct of its business for safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

CHANGE IN THE NATURE OF BUSINESS

There is no change in the nature of business of the Company.

THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE.

No Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future.

Details of pending legal cases are furnished in Note No.29 to the accounts.

MATERIAL CHANGES AND COMMITMENTS

There are no Material changes and commitments in the business operations of the Company from the Financial Year ended 31st March, 2016 to the date of signing of the Director’s Report.

ACKNOWLEDGMENT

The Directors take this opportunity to place on record their sincere thanks to the Banks and Financial Institutions, Insurance Companies, Central and State Government Departments and the shareholders for their support and co-operation extended to the Company from time to time.

PERSONNEL

The Directors wish to place on record their appreciation for the co-operation extended by all sections of the employees. CAUTIONARY STATEMENT

The statement in this Directors’ Report & Management Discussion and Analysis contain forward looking statements regarding Company’s projections & expectations and the actual results could differ materially from those expressed on account of various factors like raw material prices, change in demand, government regulation etc., and the readers are cautioned against placing undue reliance on the same.

PARTICULARS OF EMPLOYEES

Information pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure - 7 to this report.

The particulars in respect of employees in receipt of remuneration exceeding Rs.60 lakhs per annum as per Section 197(12) read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure-8.

The Company has presented in this Report, the consolidated financial statements of the holding company and all its subsidiaries, duly audited by the Statutory Auditors. The Company will make available the audited annual accounts and related information of its subsidiaries, upon request by any of its shareholders. The annual accounts of the subsidiary companies will also be kept for inspection by any member at the Registered Office of the Company and its subsidiary companies.

Our humble prayers to Sri Venkateswaraswamy Vari of Then Thirumalai for the continued prosperity of the Company.

On behalf of the Board

KG Baalakrishnan

Coimbatore Executive Chairman

26.05.2016 DIN: 00002174


Mar 31, 2014

Dear Shareholders,

We have pleasure in presenting the Twenty-Second Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March 2014.

FINANCIAL RESULTS (Rs. in lakhs)

PARTICULARS For the year ended For the year ended 31st March 2014 31st March 2013

Gross Profit 5149 6115

Less : Finance Cost 2805 2576

Profit prior to 2344 3539 Depreciation and write off

Less : Depreciation 1335 1192

Net Profit 1009 2347

Current, Deferred & 350 794 earlier year tax

Net Profit for the year 659 1553

Balance Brought forward 1762 433

Proposed Dividend & Tax thereon 224 224

Balance Carried Forward 2197 1762

PERFORMANCE OF THE COMPANY

During the year ended 31.03.2014, the Company achieved an overall production of 316 lakh meters of fabrics against the previous year''s production of 296 lakh meters. The revenue for the year was Rs.59186 lakhs as against revenue of Rs.51483 lakhs during the previous year, representing a growth of 15 %. The Company has three main product groups Denim and Apparel Fabrics, Home Textiles and Sale of Apparel. Denim Sales have inceased marginally but profitability was affected on account of increase in input costs.

In the Home Textiles category, Company has registered significant growth rate in sales compared to the previous year.

In the Ready Made Garments group also the Company has registered significant growth in sales and profit.

The Board of Directors recommends a divdend of 7.50 % (i.e. Rs.0.75) per equity share of the Company for the year 2013-14. The Divdend tax payable amounts to Rs.31 lakhs.

INDUSTRY STRUCTURE & DEVELOPMENT

The Indian denim industry is showing steady growth in domestic and international markets.

Our focus remains on sales to leading domestic and international brands in India and also to large exporters of readymade garments. We are concentrating on the Far East Countries of Vietnam, LaosPDR and China besides direct sales to North America. Products are being developed to cater to both retailers and fashion brands thereby gaining advantage in both segments and increasing volumes. Sale of home textiles and apparels improved during the year.

OPPORTUNITIES AND THREATS

The Company is targeting higher production and sales volume for denim in the next year. Sale of Home Textiles and Apparel are also expected to achieve higher volumes.

The Company is subjected to risks of volatility in the prices of raw materials and fashion changes.

High interest rates and exchange rate volatility are areas of serious concern for the Company. The Company has taken steps to increase the exports and is actively managing the exchange risk by suitable forward cover.

FINANCE

Your Directors acknowledge with gratitude, the valuable assistance and support extended by our Bankers for term loans and working capital ie., Indian Bank, Bank of India, Allahabad Bank, State Bank of India, State Bank of Hyderabad, Indian Overseas Bank and The South Indian Bank Limited.

PERSONNEL

The Directors wish to place on record their appreciation for the co-operation extended by all sections of the employees.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards had been followed.

b) The Directors had 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 the Company at the end of the financial year and of the Profit or Loss of the Company for that period.

c) Company''s Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities.

d) The annual accounts have been prepared on a going concern basis.

CONSOLIDATED ACCOUNTS

In accordance with the requirements of Accounting Standard (AS-21) prescribed by The Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries are annexed to this Report.

SUBSIDIARIES

During the year, the gross turnover in Trigger Apparels Limited was to Rs.39.22 crores against Rs.38.20 crores during the previous year. The subsidiary has been able to register a profit of Rs.15.44 lakhs compared to profit of Rs.31.95 lakhs in the previous year. No activity has taken place at KG Denim (USA) Inc. during the year.

CEO/CFO CERTIFICATION

The Managing Directors and Director & Company Secretary of the Company have submitted a Certificate to the Board as required under Clause 49 of the Listing Agreement for the year ended 31st March, 2014.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange, forms part of the Annual Report.

LISTING

The Company''s shares are listed in the Bombay Stock Exchange Limited, Mumbai.

CAPITAL EXPENDITURE

The Company incurred a Capital Expenditure of Rs.2202.75 lakhs during the year.

DIRECTORS

Section 149 of the Companies Act, 2013 provides for the appointment of Independent Directors on non-rotational basis. Accordingly, Shri K N V Ramani, Shri V Jagadisan and Shri Surinder Chhibber, Independent Directors who are retiring at the ensuing Annual General Meeting are now being reappointed on non-rotational basis for a period of 5 years till 31st March, 2019.

Further, Shri G V S Desikan, Shri M J Vijayaraaghavan and Shri G P Muniappan, Independent Directors who are liable to retire by rotation are now being re-appointed on non-rotational basis for a period of 5 years till 31st March, 2019.

AUDITORS

The present Auditors M/s Gopalaiyer and Subramanian retire at the ensuing Annual General Meeting and are eligible for re-appointment. Cost Audit Report for the financial year ending 31st March 2014 will be submitted to the Central Government in accordance with Cost Audit Report Rules, 2011.

CORPORATE SOCIAL RESPONSIBILITY

The Company is fully aware of its Corporate Social Responsibilities to various stakeholders and has taken appropriate steps to meet the same. With the enactment of Companies Act, 2013, Corporate Social Responsibility has acquired statutory recognition. The Company had already initiated several steps to meet its Corporate Social Responsibilities.

ENVIRONMENT

The Company holds due certification under ISO 14001 : 2004 which is primarily focused on environmental management system. It ensures that the manufacturing of products is carried on without affecting the environment in the working area and surroundings. The Company is a member of Sustainable Apparel Coalition (SAC). SAC provides credible, practical and industry wide guidelines and provides tools to define, measure and evaluate industry''s product environmental and social performance support.

The Company has achieved one of the best scores in the apparel industry as verified by a leading brand assessor.

During the current year, the Company has implemented various environmental measures and reduction program like Green House Gas inventory measurement, replacement of floras gas air conditioners, increasing the area of plantation etc.

The Company has improved effluent water treatment system conforming to the Pollution Control Board parameters. A new plant has been added which has increased the Biological treatment capacity by 60%. An advanced technology of Biological Diffuser Aeration system has been introduced which has resulted in reduction in chemicals usage. Consequently, reduction in sludge, improvement in outlet water quality and consistence and improvement in RO recovery were achieved.

HEALTH AND SAFETY

The Company has obtained certification under OHSAS 18001 : 2007 (Occupational Health and Safety Management Assessment Standard) which is an Integrated Management System focusing on an organization''s occupational health and safety management system. This standard guides us to identify and control the conditions and factors that affect the well-being of employees, contractors, visitors and any other person in the work place.

The Company is implementing various health and safety practices in continuous manner as per OHSAS-18001 standards and legal requirements.

LEGAL REQUIREMENTS

The Company is conscious of improving the occupational and personal health of its employees. In addition to free medical camps, the Company also organizes employees'' health check up in outside hospitals on an annual basis.

The Company provides a safer work environment for its employees, basic equipments are provided to ensure safety from fire. Awareness classes are being conducted periodically with the help of external agencies about the basic safety, fire fighting, mock drills, mass evacuation first aid etc.,

SOCIAL RESPONSIBILITIES

The Company is maintaining a hospital for serving the community including supply of medicines at subsidised costs. As a part of social environmental protection, agro forestry has been developed with a demo plant with the technical support of Forest College, Coimbatore.

CAUTIONARY STATEMENT

The statement in this Directors'' Report & Management Discussion and Analysis contain forward looking statements regarding Company''s projections & expectations and the actual results could differ materially from those expressed on account of various factors like raw material prices, change in demand, government regulation etc., and the readers are cautioned against placing undue reliance on the same.

STATUTORY INFORMATION

During the year there were no employees in receipt of remuneration covered by Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended vide GSR 289 (E) dated March 31, 2011 [Companies (Particulars of Employees) Amendments Rules, 2011].

Information pursuant to sub-section 1 (e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure to this Report.

The Company has presented in this Report, the consolidated financial statements of the holding company and all its subsidiaries, duly audited by the Statutory Auditors. The Company has also disclosed in the Consolidated Balance Sheet the information required to be provided as per the aforesaid Notification dated February 8, 2011. The Company will make available the audited annual accounts and related information of its subsidiaries, upon request by any of its shareholders. The annual accounts of the subsidiary companies will also be kept for inspection by any member at the Registered Office of the Company and its subsidiary companies.

Our humble prayers to Sri Venkateswaraswamy Vari of Then Thirumalai for the continued prosperity of the Company.

On behalf of the Board

Coimbatore KG Baalakrishnan 24.05.2014 Executive Chairman


Mar 31, 2013

Dear Shareholders,

The have pleasure in presenting the Twenty-First Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March 2013.

FINANCIAL RESULTS

(Rs. in lakhs) For the year ended For the year ended PARTICULARS 31st March 2013 31st March 2012

Gross Profit 6115 4735

Less : Finance Cost 2576 2323

Profit prior to Depreciation and write off 3539 2412

Less : Depreciation 1192 1308

Net Profit 2347 1104

Current, Deferred & earlier year tax 794 367

Net Profit for the year 1553 737

Balance Brought forward 433 152

Arrears of Preferential Dividend & Tax thereon 232

Proposed Dividend & Tax thereon 224 224

Balance Carried Forward 1762 433

FINANCE

Your Directors acknowledge with gratitude, the valuable assistance and support extended by our Bankers for term loans and working capital ie., Indian Bank, Bank of India, Allahabad Bank, State Bank of India, State Bank of Hyderabad and Indian Overseas Bank.

PERSONNEL

The Directors wish to place on record their appreciation for the co-operation extended by all sections of the employees.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards had been followed.

b) The Directors had 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 the Company at the end of the financial year and of the Profit or Loss of the Company for that period.

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities.

d) The annual accounts have been prepared on a going concern basis.

CONSOLIDATED ACCOUNTS

In accordance with the requirements of Accounting Standard (AS-21) prescribed by The Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries are annexed to this Report.

SUBSIDIARIES

During the year, the gross turnover in Trigger Apparels Limited increased to Rs.38 crores from Rs.31 crores for the previous year. The subsidiary has been able to register a profit of Rs.31.95 lakhs compared to profit of Rs.10.59 lakhs in the previous year. No activity has taken place at KG Denim (USA) Inc. during the year.

CEO/CFO CERTIFICATION

The Managing Directors and Director & Company Secretary of the Company have submitted a Certificate to the Board as required under Clause 49 of the Listing Agreement for the year ended 31st March, 2013.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange, forms part of the Annual Report.

LISTING

The Company’s shares are listed in the Bombay Stock Exchange Limited, Mumbai.

CAPITAL EXPENDITURE

The Company incurred a Capital Expenditure of Rs.3052.46 lakhs during the year.

DIRECTORS

Shri G P Muniappan, Shri M J Vijayaraaghavan and Shri G V S Desikan retire by rotation and being eligible offer themselves for reappointment at the ensuing Annual General Meeting.

The term of office of Shri KG Baalakrishnan, Executive Chairman, Shri B Sriramulu and Shri B Srihari, Managing Directors comes to an end on 02.11.2013. The Board has, subject to approval of shareholders in the forthcoming Annual General Meeting, re-appointed them as Executive Chairman and Managing Directors of the Company for a term of five years effective from 03.11.2013 to 02.11.2018.

AUDITORS

The present Auditors M/s Gopalaiyer and Subramanian retire at the ensuing Annual General Meeting and are eligible for re-appointment. Cost Audit Report for the financial year ending 31st March 2013 will be submitted to the Central Government in accordance with Cost Audit Report Rules, 2011.

Auditors.

The Audit Committee also closely reviews with the internal and external auditors on the adequacy of internal control systems.

The Company has also initiated steps to obtain ISO 27001 : 2005 (Information Security Management System-ISMS) to control and manage our data in secured manner.

The Company further has an Integrated Management System (IMS) in terms of ISO 9001:2008 and is concerned with establishing quality management system to achieve target set by top management and aims at continual improvement based on the customer requirements.

ISO 14001:2004 is primarily focused on environmental management system which guide us to manufacture the products without affecting the environment in the working area and surroundings of our organization. OHSAS 18001 : 2007 (Occupational Health and Safety Management Assessment Standard) which is an Integrated Management System focusing on an organization’s occupational health and safety management system. This standard guide us to identify and control the conditions and factors that affect the well-being of employees, contractors, visitors and any other person in the work place.

STATUTORY INFORMATION

During the year there were no employees in receipt of remuneration covered by Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended vide GSR 289 (E) dated March 31, 2011 [Companies (Particulars of Employees) Amendments Rules, 2011].

Information pursuant to sub-section 1 (e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure to this Report.

As per Section 212 of the Companies Act, 1956, the Company is required to attach the Directors’ Report, Balance Sheet, and Statement of Profit and Loss of subsidiaries. The Central Government has granted general exemption from complying with Section 212 of the Companies Act, 1956 to all companies vide Notification No.5/12/2007-CL-III dated February 8, 2011. Accordingly, your Company has presented in this Report, the consolidated financial statements of the holding company and all its subsidiaries, duly audited by the Statutory Auditors. The Company has also disclosed in the Consolidated Balance Sheet the information required to be provided as per the aforesaid Notification dated February 8, 2011. The Company will make available the audited annual accounts and related information of its subsidiaries, upon request by any of its shareholders. The annual accounts of the subsidiary companies will also be kept for inspection by any member at the Registered Offices of the Company and its subsidiary companies. Our humble prayers to Sri Venkateswaraswamy Vari of Then Thirumalai for the continued prosperity of the Company.

On behalf of the Board

Coimbatore KG Baalakrishnan

29.05.2013 Executive Chairman


Mar 31, 2012

The have pleasure in presenting the Twentieth Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March 2012.

FINANCIAL RESULTS (Rs. in lakhs) For the year ended For the year ended PARTICULARS 31stMarch 2012 31st March 2011

Gross Profit 4735 3887

Less : Finance Cost 2323 1918

Profit prior to Depreciation and write off 2412 1969

Less : Depreciation 1308 1293

Net Profit 1104 676

Current, Deferred & earlier year tax 367 226

Net Profit for the year 737 450

Balance Brought forward 152 -298

Arrears of Preferential Dividend & Tax thereon 232 -

Proposed Dividend & Tax thereon 224 -

Balance Carried Forward 433 152

PERFORMANCE OF THE COMPANY

During the year ended 31.03.2012, the Company achieved an overall production of 229 lakh meters of fabrics against the previous year's production of 241 lakh meters. The revenue for the year was Rs.40007 lakhs as against sales of Rs.34359 lakhs during the previous year, representing an increase of 16 %. The company has three main product groups, Denim and Apparel Fabrics, Home Textiles and sales of Apparel. All the product groups are showing double digit growth levels and have contributed to the profitability of the company.

The Company has been able to improve its profitability on account of higher sales realization. The operating margins were maintained in spite of lower production and increasing power costs.

Our investments in the home textiles category have started paying off as we see large sales to well established retail houses abroad. The recent depreciation of the rupee has helped our garment sales in export markets.

The Board of Directors recommends a dividend of 7.50 % (i.e. Rs.0.75) per equity share of the company for the year 2011-12. The Board further recommends payment of arrears of cumulative preference dividend to erstwhile preference shareholders at the rate of 10 % for the years 2005 to 2007 amounting to Rs.200 lakhs. The Dividend tax payable amounts to Rs.63 lakhs.

INDUSTRY STRUCTURE a DEVELOPMENT

The Indian denim industry continues to enjoy a high growth potential. The domestic as well as international demand is expected to grow. The demand for the denim fabrics is increasing in the domestic market; our sales to both premier international brands operating in India and also to large exporters of readymade garments have increased. The recent financial crisis in Europe has affected our sales in that region. Our sales effort in the South American market has started to yield results, to balance the negative sentiment in Europe. We are seeing sales increase in North America as fashion has favored our products.

OPPORTUNITIES AND THREATS

The Company is expecting higher volumes in denim sale. The Company will continue its focus on home textiles sales and is expected to do well in this segment in the next year. Apparel exports is expected to be maintained at current levels.

The Company is subjected to the risks of volatility in the prices of raw material. Denim sales is highly dependant on fashion. The previous year saw cotton prices reaching a peak of 200 cent/lb and then coming down to 100 cent/lb.

The higher interest rates and the volatility in exchange rates are serious concerns facing the Company. The Company is taking steps to mitigate the effects of cost increases by suitable product mix changes and also by actively managing the exchange risk.

FINANCE

Your Directors acknowledge with gratitude, the valuable assistance and support extended by our Bankers fcr term loans and working capital ie., Indian Bank, Bank of India, Allahabad Bank, State Bank of India, State Bank of Hyderabad and Indian Overseas Bank.

PERSONNEL

The Directors wish to place on record their appreciation for the co-operation extended by all sections of the employees.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards had been followed.

b) The Directors had 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 the Company at the end of the financial year and of the Profit or Loss of the Company for that period.

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities.

d) The annual accounts have been prepared on a going concern basis.

CONSOLIDATED ACCOUNTS

In accordance with the requirements of Accounting Standard (AS-21) prescribed by The Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries are annexed to this Report.

SUBSIDIARIES

During the year, the gross turnover in Trigger Apparels Limited increased to Rs.31.19 crores from Rs.30.48 crores for the previous year. The subsidiary has been able to register a profit of Rs.10.59 lakhs compared to loss of Rs.68.42 lakhs in the previous year. No activity has taken place at KG Denim (USA) Inc. during the year.

CEO/CFO CERTIFICATION

The Managing Directors and Director & Company Secretary of the Company have submitted a Certificate to the Board as required under Clause 49 of the Listing Agreement for the year ended 31!t March, 2012.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange, forms part of the Annual Report.

LISTING

The Company's shares are listed in the Bombay Stock Exchange Limited, Mumbai.

CAPITAL EXPENDITURE

The Company incurred a Capital Expenditure of Rs.644.27 lakhs during the year.

DIRECTORS

Shri V Jagadisan, Shri Surinder Chhibber and Smt T Anandhi retire by rotation and being eligible offer themselves for reappointment at the ensuing Annual General Meeting.

Shri S Muthuswamy, Director and Company Secretary (Whole-time), term of office came to an end on 29.05.2012. The Board has subject to approval of shareholders in the forthcoming Annual General Meeting, re-appointed him as Director and Company Secretary (Whole-time) of the Company for a term of five years effective from 30.05.2012 to 29.05.2017.

AUDITORS

The present Auditors M/s Gopalaiyer and Subramanian retire at the ensuing Annual General Meeting and are eligible for re-appointment. Cost Audit Report for the financial year ending 31st March 2012 will be submitted to the Central Government in accordance with Cost Audit Report Rules, 2011.

INTERNAL CONTROL SYSTEMS a THEIR ADEQUACY

The Company has put in place adequate internal control system and is implementing the same to ensure reliability of financial and other datas and their accuracy. Company is also strengthening its review control system by appointing External Consultants as Auditors.

The Audit Committee also closely reviews with the internal and external auditors on the adequacy of internal control systems. The Company has also initiated steps to obtain ISO 27001 : 2005 (Information Security Management System-ISMS) to control and manage our data in secured manner.

The Company further has an Integrated Management System (IMS) which consisting of ISO 9001:2008 is concerned with establishing quality management system to achieve target set by top management and continual improvement based on the customer requirements.

ISO 14001:2004 is primarily focused on environmental management system which guide us to manufacture the products without affecting the environment in the working area and surrounding of our organization.

OHSAS 18001 : 2007 (Occupational Health and Safety Management Assessment Standard) which is an Integrated Management System focusing on an organization's occupational health and safety management system. This standard guide us to identify and control the conditions and factors that affect the well-being of employees, contractors, visitors and any other person in the work place.

CAUTIONARY STATEMENT

The statement in this Directors' Report & Management Discussion and Analysis contain forward locking statements regarding Company's projections & expectations and the actual results could differ materially from those expressed on account of various factors like raw material prices, change in demand, government regulation etc., and the readers are cautioned against placing undue reliance on the same.

STATUTORY INFORMATION

During the year there were no employees in receipt of remuneration covered by Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended vide GSR 289 (E) dated March 31, 2011 [Companies (Particulars of Employees) Amendments Rules, 2011].

Information pursuant to sub-section 1 (e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure to this Report.

As per Section 212 of the Companies Act, 1956, the Company is required to attach the Directors' Report, Balance Sheet, and Statement of Profit and Loss of subsidiaries. The Central Government has granted general exemption from complying with Section 212 of the Companies Act, 1956 to all companies vide Notification No.5/12/2007-CL-llt dated February 8, 2011. Accordingly, your Company has presented in this Report, the consolidated financial statements of the holding company and all its subsidiaries, duly audited by the Statutory Auditors. The Company has also disclosed in the Consolidated Balance Sheet the information required to be provided as per the aforesaid Notification dated February 8, 2011. The Company will make available the audited annual accounts and related information of its subsidiaries, upon request by any of its shareholders. The annual accounts of the subsidiary companies will also be kept for inspection by any member at the Registered Offices of the Company and its subsidiary companies. Our humble prayers to Sri Venkateswaraswamy Vari of Then Thirumalai for the continued prosperity of the Company.

On behalf of the Board Coimbatore KG Baalakrishnan

07.06.2012 Executive Chairman


Mar 31, 2011

Dear Shareholders,

We have pleasure in presenting the Nineteenth Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March 2011.

FINANCIAL RESULTS (Rs. in lakhs)

For the year ended For the year ended PARTICULARS 31st March 2011 31st March 2010

Gross Profit 3911 3452

Less: Interest 1914 1965

Loss due to exchange variation 4 101

Profit prior to Depreciation and write off 1993 1386

Less:Depreciation 1293 1290

Add : Prior Year Income / (Expenditure) (Net) 19 2

Net Profit 681 94

Current, Deferred, FBT Tax & earlier year tax 231 77

Net Profit for the year 450 17

Balance Brought forward -298 -315

Balance carried forward 152 -298

PERFORMANCE OF THE COMPANY

During the year ended 31.03.2011, the Company achieved an overall production of 241 lakh meters of fabrics against the previous year's production of 229 lakh meters. The sales for the year was Rs.32723 lakhs as against sales of Rs.25851 lakhs during the previous year, representing an increase of 27 %.

The increased turnover coupled with the ability of the Company to pass on the effects of higher raw material prices to the customers helped the company in achieving higher profits for the year.

INDUSTRY STRUCTURE & DEVELOPMENT

The Indian denim industry has consolidated its position in the global denim fabric and garment manufacturing during 2010-11. Its contribution to the nation's GOP has been increasing significantly.

During 2010-11, the domestic as well as export demand continued to show a healthy growth. The processed fabrics, particularly bed linens picked up during the year. Apparel exports increased but were moderately affected by rising input costs.

In the apparel segment, the preference by overseas customers for packaged ready made garments continued to increase.

OPPORTUNITIES AND THREATS

The domestic demand for denim continued to aid the company's growth plans. The company has stepped up its home textiles sales and is expected to do well in this segment in the next year. Apparel exports is expected to be maintained at current levels.

The increase in cotton and yarn prices during 2011-12, the higher interest rates and the volatality in exchange rates are the serious concerns facing the company. The company is taking steps to mitigate the effects of cost increases by suitable product mix changes and also by actively managing the exchange risk.

FINANCE

Your Directors acknowledge with gratitude, the valuable assistance and support extended by our Bankers for term loans and working capital ie., Indian Bank, Bank of India, Allahabad Bank, State Bank of India, State Bank of Hyderabad and Indian Overseas Bank.

PERSONNEL

The Directors wish to place on record their appreciation for the co-operation extended by all sections of the employees.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards had been followed.

b) The Directors had 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 the Company at the end of the financial year and of the Profit or Loss of the Company for that period.

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities.

d) The annual accounts have been prepared on a going concern basis.

CONSOLIDATED ACCOUNTS

In accordance with the requirements of Accounting Standard (AS-21) prescribed by The Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries are annexed to this Report.

SUBSIDIARIES

During the year, the gross turnover in Trigger Apparels Limited increased to Rs.30.48 crores from Rs.26.37 crores for the previous year. The subsidiary has been able to reduce it losses to Rs.68 lakhs from Rs.150 lakhs in the previous year.

No activity has taken place at KG Denim (USA) Inc. during the year.

CEO/CFO CERTIFICATION

The Managing Directors and Director & Company Secretary of the Company have submitted a Certificate to the Board as required under Clause 49 of the Listing Agreement for the year ended 31st March, 2011.

TRANSFER OF UNCLAIMED DEBENTURE TO IEPF

Pursuant to Section 205C of the Act, all unpaid/ unclaimed mature Debentures and interest thereon, remaining unpaid/ unclaimed for a period of 7 years from the date they became due for payment, have been transferred to the Investors Education and Protection Fund (IEPF) established by the Central Government.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange, forms part of the Annual Report.

LISTING

The Company's shares are listed in the Bombay Stock Exchange Limited, Mumbai.

CAPITAL EXPENDITURE

The Company incurred a Capital Expenditure of Rs.264.67 lakhs during the year.

DIRECTORS

Shri M J Vijayaraaghavan, Shri G V S Desikan and Shri K N V Ramani retire by rotation and being eligible offer themselves for reappointment at the ensuing Annual General Meeting.

AUDITORS

The present Auditors M/s Gopalaiyer and Subramanian retire at the ensuing Annual General Meeting and are eligible for re-appointment. Cost Audit report for the financial year ending 31st March 2011 will be submitted to the Central Government in accordance with Cost Audit Report Rules, 2001.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

Company already holds Certification under ISO 14001 : 2004 and ISO 9001 : 2008 to ensure confirmation of its process procedures to strict quality standard. Company is also strengthening its review control system by appointing External Consultants as Auditors. The Audit Committee also closely reviews with the internal and external auditors on the adequacy of internal control systems.

CAUTIONARY STATEMENT

The statement in this Directors' Report & Management Discussion and Analysis contain forward looking statements regarding Company's projections & expectations and the actual results could differ materially from those expressed on account of various factors like raw material prices, change in demand, government regulation etc., and the readers are cautioned against placing undue reliance on the same.

STATUTORY INFORMATION

During the year there were no employees in receipt of remuneration covered by Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended vide GSR 289 (E) dated March 31, 2011 [Companies (Particulars of Employees) Amendments Rules, 2011].

Information pursuant to sub-section 1 (e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure to this Report.

As per Section 212 of the Companies Act, 1956, the Company is required to attach the Directors' Report, Balance Sheet, and Profit and Loss account of subsidiaries. The Central Government has granted general exemption from complying with Section 212 of the Companies Act, 1956 to all companies vide Notification No.5/12/2007-CL-III dated February 8, 2011. Accordingly, your Company has presented in this Report, the consolidated financial statements of the holding company and all its subsidiaries, duly audited by the Statutory Auditors. The Company has also disclosed in the Consolidated Balance Sheet the information required to be provided as per the aforesaid Notification dated February 8, 2011. The Company will make available the audited annual accounts and related information of its subsidiaries, upon request by any of its shareholders. The annual accounts of the subsidiary companies will also be kept for inspection by any member at the Registered Offices of the Company and its subsidiary companies.

Our humble prayers to Sri Venkateswaraswamy Vari of Then Thirumalai for the continued prosperity of the Company.

On behalf of the Board

KG Baalakrishnan Executive Chairman

Coimbatore 27.05.2011


Mar 31, 2010

We have pleasure in presenting the Eighteenth Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March 2010.

FINANCIAL RESULTS (Rs. in lakhs)

For the year ended For the year ended PARTICULARS 31st March 2010 31st March 2009

Gross Profit 3452 1872

Less: Interest 1965 1978

Loss due to exchange variation 101 277

Profit prior to Depreciation and write off 1386 -383

Less:Depreciation 1290 1306

Add : Prior Year Income/(Expenditure) (Net) 2 20 Net Profit / (Loss) 94 -1709

Current, Deferred, FBT Tax & earlier year tax 77 -493

Net Profit / (Loss) for the year 17 -1216

Balance Brought forward -315 901

Balance carried forward -298 -315

PERFORMANCE OF THE COMPANY

During the year ended 31.03.2010, the Company achieved an overall production of 229 lakh meters of fabrics against the previous years production of 215 lakh meters. The sales for the year ended 31.03.2010 was Rs.25851 lakhs as against sales of Rs.22054 lakhs during the previous year, representing an increase of 17 %.

The company has been able to stem the losses of earlier years and achieve positive results for the year.

INDUSTRY STRUCTURE & DEVELOPMENT

The Indian denim industry occupies an important position in the global denim fabric and garment manufacturing. After China, it has the strongest denim manufacturing base in Asia.

During 2009-10, the Indian denim industry witnessed a surge in demand, particularly, in the domestic market. The exports were partially affected by rise in the value of the rupee. In the processed fabric sector, especially the bed linen demand for US markets showed signs of improvement only towards the end of the year.

In the apparel segment, the preference by overseas customers for packaged ready made garments continued to increase.

OPPORTUNITIES AND THREATS

The domestic demand for denim is growing and the company is focussing on new product developments in this segment. The company is also concentrating on increase sale of its home textiles. Apparel exports is expected to grow significantly in the next year. The increase in cotton and yarn prices in the beginning of 2010-11, the higher interest rates and the volatality in exchange rates are the serious concerns facing the company. The company is taking steps to mitigate the effects of cost increases by suitable product mix changes and also by actively managing the exchange risk.

SEGMENT WISE PERFORMANCE

The segment wise results are presented in item 2.19 of the Notes on Accounts. Both fabric and Apparel division have done well during the year in terms of volume and profitability.

Sales of denim fabrics in domestic market increased in this year. The exports were maintained at previous year levels. The sales of processed fabrics, including home textiles were also maintained. However, the order position for home textiles improved in the last quarter of the year. The company also augmented its income by doing job work for processed fabrics for outsiders.

In the apparel segments, the sales nearly doubled with improved profitability aided by the customer preference for packaged garments.

The higher sales volume and lower cotton and yarn costs helped in posting positive results for the year, 2009-10.

FINANCE

Your Directors acknowledge with gratitude, the valuable assistance and support extended by our Bankers for term loans and working capital ie., Indian Bank, Bank of India, Allahabad Bank, State Bank of India, State Bank of Hyderabad, State Bank of Indore and Indian Overseas Bank.

PERSONNEL

The Directors wish to place on record their appreciation for the co-operation extended by all sections of the employees.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm that:

a) In the preparation of the annual accounts, the applicable accounting standards had been followed.

b) The Directors had 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 the Company at the end of the financial year and of the Profit or Loss of the Company for that period.

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and irregularities.

d) The annual accounts have been prepared on a going concern basis.

CONSOLIDATED ACCOUNTS

In accordance with the requirements of Accounting Standard (AS-21) prescribed by The Institute of Chartered Accountants of India, the Consolidated Accounts of the Company and its subsidiaries are annexed to this report.

SUBSIDIARIES

The Annual report of the Subsidiaries of the Company Viz., Trigger Apparels Limited and KG Denim (USA) Inc., is annexed to this report. Trigger Apparels Limited is expected to consolidate its market position with improved sales and profitability during the next year. No activity has taken place at KG Denim (USA) Inc. during the year.

CEO/CFO CERTIFICATION

The Managing Directors and Director & Company Secretary of the Company have submitted a certificate to the Board as required under Clause 49 of the Listing Agreement for the year ended 31st March, 2010.

CORPORATE GOVERNANCE

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange, forms part of the Annual Report.

LISTING

The Companys shares are listed in the Bombay Stock Exchange Limited, Mumbai.

CAPITAL EXPENDITURE

The Company incurred a capital expenditure of Rs.132.63 lakhs during the year.

DIRECTORS

Shri Surinder Chhibber, Smt T Anandhi and Shri G P Muniappan retire by rotation and being eligible offer themselves for reappointment at the ensuing Annual General Meeting.

AUDITORS

The present Auditors M/s Gopalaiyer and Subramanian retire at the ensuing Annual General Meeting and are eligible for re-appointment. Cost Audit report for the financial year ending 31st March 2010 will be submitted to the Central Government in accordance with Cost Audit Report Rules, 2001.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

Company already holds Certification under ISO 9002 and ISO 14001 to ensure confirmation of its process procedures to strict quality standard. Company is also strengthening its review control system by appointing External Consultants as Auditors.

The Audit Committee also closely reviews with the internal and external auditors on the adequacy of internal control systems.

CAUTIONARY STATEMENT

The statement in this Directors Report & Management Discussion and Analysis contain forward looking statements regarding Companys projections & expectations and the actual results could differ materially from those expressed on account various factors like raw material prices, change in demand, government regulation etc., and the readers are cautioned against placing undue reliance on the same.

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956.

The information required as per Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is enclosed. The particulars of employees covered under Section 217 (2A) of the Companies Act, 1956 during the period under review is enclosed.

Our humble prayers to Sri Venkateswaraswamy Vari of Then Thirumalai for the continued prosperity of the Company.

On behalf of the Board Coimbatore KG Baalakrishnan 26.05.2010 Executive Chairman

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