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Your Directors take pleasure in presenting the 21st Annual Report of the Company together with its audited accounts for the year ended 31st March 2016.
Your Directors take pleasure in presenting the 21st Annual Report of the Company together with its audited accounts for the year ended 31st March 2016.
FINANCIAL HIGHLIGHTS & PERFORMANCE
Your Directors wish to inform that during the financial year ended 31st March, 2016 the revenue from operations of the Company increased from Rs. 15,434 million to Rs. 17,834 million registering a growth of 15.55%. The profit before tax for the year under review has increased to Rs. 3,443 million from Rs. 2,933 million of last year, which is an increase of 17.39%. The net profit stood at Rs. 2,327 million as against Rs. 1,960 million of the previous year representing a growth of 18.72%.
During the year 2015–16, your Directors have declared three interim dividends on 28th May, 2015 (Rs. 19 per share), 9th November, 2015 (Rs. 21 per share) and 11thFebruary, 2016(Rs. 21 per share) on an equity share value of Rs. 10 each and are also pleased to recommend a final dividend of Rs. 24 per share aggregating to a total dividend of Rs. 85 per share of an equity share value of Rs.10 each amounting to Rs.948.08 Million for the year ended 31stMarch, 2016.
Jockey brand is available in 1400+ cities and towns. The products are sold through Exclusive Brand Outlets (EBO), Large Format Stores (LFS), Multi Brand Outlets (MBO), Traditional hosiery stores and Multi–purpose stores spread across India.
During the year 2015–16, the Company through its authorised franchisees opened 82 EBOs including 7 Jockey EBOs catering exclusively to our women customers, taking the total number of EBOs to 265. These outlets are spread throughout India even covering Tier II and Tier III cities. This is an indicator of the growth potential of the Jockey brand in such cities.
Presently, the company has 4 EBOs in UAE and 1 EBO in Sri Lanka. While these markets are still in a nascent stage, your company is confident of promising opportunities in these new regions for the brand.
The Company has launched its own B2C e–commerce channel and further tied up with various leading online retailers to increase reach of our products.
The Speedo brand has achieved a turnover of Rs. 295 Million as against previous year sales of Rs.235 Million, which is an increase of 26%. During the year under review, the Company has opened one more EBO taking the total number to nine. Speedo brand is available in 1060 stores including 146 large format stores across 106 cities and nine EBOs.
Studies on the swimming market in India by AC Nielsen, commissioned by the Company, show a promising and fast evolving market for both swimwear and swim equipment. Your Directors are confident that the Speedo business would experience healthy growth in the years to come as Speedo becomes a dominant brand in the premium swimwear market.
EXPANSION AND NEW INVESTMENTS
In order to meet growing market demand, the company has geared up to augment its production capacity. During the period under review, we have expanded our installed capacity across our various units spread over 1.97 Million square feet in 13 locations in the state of Karnataka.
During the year under review, the Company has started commercial production at the Tiptur Unit.
A further expansion has been planned in KIADB Industrial Area, Hassan, where five acres of land was allotted by KIADB on 99 years lease. During the current financial year, the Company commenced the civil works and the commercial production is expected to be commenced during the next financial year.
Your company is highly encouraged by the enduring strong brand equity, image and leadership of the Jockey brand and the rising strength of the Speedo brand in the respective markets. Your company will continue its unrelenting endeavour to satisfy consumers with the finest products in terms of style, design, comfort, fit and quality in all verticals; Jockey Men's and Women's Innerwear, Leisurewear and Active wear, as well as Speedo Swimwear and Swimwear related equipment.
The Jockey brand continues to live up to the results of an independent 'brand health' study carried out by Nielsen Research Agency in a previous year that has rated the Jockey brand health in India among the most powerful brands in their research experience across all categories. The research involved fourteen cities in all four zones across the nation. The Jockey brand scored a Brand Equity Index of 4.6 on a scale of ten in the Men's Innerwear category and 2.9 in the Women's innerwear category. To put things in perspective, worldwide only 23% of brands across all product categories score a Brand Equity Index of 3.0 or over on a scale of ten and only 8% of brands score 5.0 and above. Jockey India's Brand Equity Index scores were way above all other brands in both the Men's and Women's Innerwear categories.
With the continued support from Jockey International, USA, and access to ideas, trends and innovations from forty other Jockey International licensees throughout the world, your company's long term commitment to newness and innovation will never waver, be it product, technology up–gradation, back end processes or marketing. With the Company's strong in–house product development and back end capabilities, manufacturing expertise and state of the art technology that is continuously evolving, combined with a very strong distribution network, your Directors remain optimistic about the future prospects of the Company and expect continued healthy sales growth and profitability in the coming years, further consolidating its position in the premium market for Innerwear, Leisurewear and Active wear.
HUMAN RESOURCES/INDUSTRIAL RELATIONS
A detailed section on Human Resources/Industrial Relations is provided in the Management Discussion and Analysis Report, which is part of this Annual Report.
ENVIRONMENT, HEALTH AND SAFETY:
The Company strictly adheres to the internal polices and best practices related to EHS in all the units and has a dedicated compliance team to ensure the same. Your Company's commitment to ensuring implementation of Safety, Health and Environment standards, has resulted in adoption of a customized software tool 'Compliance Mantra'. This tool helps us capture and monitor compliance status across all our facilities on an ongoing basis, in a systematic and transparent manner.
In order to strengthen our focus, bring clarity and better communication on EHS, the Company has formulated an EHS Policy that outlines its philosophy, commitment, guidelines and intended purposes. EHS policy is provided in Annexure – I
Environment: Your Company is an environment friendly organization as the manufacturing units are not generating any pollution and effluent.
World Environment Day was celebrated across all our units, based on the theme of 'Global Warming'. Competitions like Miniature Garden, 3R (Reduce, Recycle, Reuse), slogan writing, sapling at the manufacturing units and spread awareness on utilizing naturally available resources in our surroundings. Rain water harvesting model was another commendable project that educated us on water recycling, which is essential in cities like Bangalore, where water availability is constrained.
Health: Though the manufacturing units of the Company are non–hazardous in nature, the Directors are committed to ensure health of employees. Each unit is established with a medical centre equipped with required medical facilities along with competent Doctors, Nurses and supporting staff to achieve "Zero Harm" to employees, staff and visitors. We have established best in class creche facilities at all our units. In addition to nutritious snacks, we provide the children with learning tools and exercises to support their cognitive development. We provide monthly health check–ups, vitamin supplements and de–worming medicines periodically, in addition to, celebration of Children's Birthday, Mother's Monthly Meeting, etc.
Few of our other best practices include, (i) special attention to pregnant workers, (ii) Periodical medical check–up for caterers and house–keepers, (iii) Half–yearly TT immunization to employees at Maintenance Department and (iv) Conducting periodical health awareness programmes.
Safety: Safety at workplace for all employees, contractors and visitors is one of the prime objectives of the organization. Your Company conducts periodical Internal and External Safety & Electrical Audit to assess the Workplace Condition at every unit. Each unit is equipped with Fire Hydrants, Fire Extinguishers and such other firefighting / preventing equipment. Identified personnel at the respective units are well trained by competent outside agencies to handle fire–fighting and first–aid activities at regular intervals.
As part of the periodic assessment and audit, potential risk factors are identified and action plans are drawn up, to ensure 'emergency readiness'. Mock drills and safety awareness programmes are conducted at regular intervals. Safety team has been strengthened, keeping in mind the increasing complexity and spread of our operations, and ensuring that employee well–being remains a top priority.
The Company has constituted an internal complaints committee in compliance with the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act 2013.
We actively celebrate the National Safety Day every year. This initiative creates awareness among employees on maintaining a safe and conducive work place.
BOARD OF DIRECTORS AND KEY MANAGEMENT PERSONNEL
During the year under review, four Board Meetings and four Audit Committee Meetings were convened and held; the details of which are given in the Corporate Governance Report.
The composition, category, date of Board meeting, attendance and other details are provided in Corporate Governance Section to this Annual Report.
The Board of Directors consists of a balanced profile of members specializing in different fields that enables it to address the various business needs of the company, while placing very strong emphasis on corporate governance.
Mr. Pradeep Jaipuria has been re–appointed as an Independent director of the Company for the further period of 5 years with effect from 11th February 2016; his appointment was approved by the shareholders through postal ballot by special resolution.
During the year under review the following directors have been appointed:
At the last AGM held on 13th August 2015, Mr. Sandeep Kumar Maini and Mr. Vikram Gamanlal Shah have been appointed as Independent Directors for a period of 5 years.
Re–appointment of Managing Director:
At the 15th AGM of the Company, the members of the Company appointed Mr. Sunder Genomal as Managing Director for a period of 5 years up to 31st July 2016. Considering his valuable contribution to the growth of the Company, the Nomination and Remuneration Committee and Board of Directors at their meeting held on 24th May 2016 have recommended to re–appoint Mr. Sunder Genomal as Managing Director of the Company for another term of 5 years commencing from 1st August 2016 to 31st July 2021.
Retirement by Rotation:
As per the provisions of the Companies Act 2013 and the Articles of Association of the Company, Mr. Pius Thomas and Mr. Shamir Genomal, Directors of the Company will be retiring by rotation at the ensuing AGM and being eligible have offered themselves for re–appointment.
The details pursuant to Regulation 36(3) of SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 relating to appointment and re–appointment of directors at the AGM are provided in the Notice to the members.
Key Managerial Personnel:
In Compliance with Section 203 of the Companies Act 2013, the Board of Directors of Company has appointed the following Key Managerial Personnel:
1. Mr. Sunder Genomal – Managing Director,
2. Mr. Vedji Ticku – Chief Executive Officer,
3. Mr. Pius Thomas – Chief Financial Officer and
4. Mr. C Murugesh – Company Secretary.
As per the succession plan of the Company and considering the contribution of Mr. Vedji Ticku, the Board of Directors at their meeting held on 11th February, 2016 elevated him as Chief Executive Officer with effect from 12th February, 2016.
Committees of the Board of Directors:
The Company has constituted the following committees in compliance with the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015:
1. Audit Committee,
2. Nomination and Remuneration Committee,
3. Stakeholders Relationship Committee and
4. Corporate Social Responsibility Committee.
The Board has accepted all the recommendations of the above committee.
The brief description, composition and other required details of the above committees are provided in Corporate Governance Section to this Annual Report.
Nomination and Remuneration Policy:
The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and to fix their remuneration. The Nomination and Remuneration Policy is given in the Corporate Governance Report and is also available on the Company's website at www.jockeyindia.com/page/investor–relationship
Corporate Social Responsibility:
Annual Report on Corporate Social Responsibility (CSR) containing composition of CSR Committee and its terms of policy is provided in Annexure–II.
As said in the last year's Directors report, the Company has identified and partnered with Grassroots Research and Advocacy Movement (GRAAM) to identify and spend the CSR wisely and effectively towards good cause in a sustainable fashion. GRAAM has been assigned with the followings tasks:
I. Review of policy document
II. Assessment report on Community needs
III. Strategy document and
IV. Detailed plan document
Accordingly, GRAAM has submitted the above documents for the review of the CSR committee. The CSR Committee thoroughly perused the above documents and approved the same.
In the year under review, GRAAM has conducted assessment study in and around the existing units by making series of visits and submitted the following documents to the Committee:
1. Strategy document on CSR projects and
2. Detailed plan document on CSR project implementation
The Committee deliberated on the GRAAM's documents and selected few CSR projects and recommended to the Company.
During the year under review, considerable amount of time was spent in the community need assessment and CSR plan execution strategy. Hence, during the year, the Company was not able to spend prescribed amount in the CSR projects. In the subsequent years the Company would increase its contribution towards the CSR projects.
During the year under review, the Company has spent an amount of INR 8.00 Million against a prescribed amount of INR 46.07 Million.
Evaluation of Board of Directors, Committees and Directors:
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, the Board has carried out an annual performance evaluation of its own performance, directors individually and working of the Board Committees. The manner in which the evaluation has been carried out is explained in the Corporate Governance Report. Further, pursuant to regulation 25(4) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, Independent Directors met separately to evaluate the Non Independent Directors and Chairman of the Board.
Vigil Mechanism / Whistle Blower Policy:
The Company has constituted a Vigil mechanism / Whistle Blower mechanism to report genuine concerns about unethical behaviour, actual or suspected fraud. The details are explained in the Corporate Governance Report. The Policy is available on the Website of the Company.
Related party transactions:
All related party transactions that were entered into during the financial year were at arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
All Related Party Transactions were placed before the Audit Committee and the Board for approval. Prior omnibus approval of the Audit Committee has been obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into, pursuant to the omnibus approval granted, are placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.
The Company has framed a Related Party Transactions policy for the purpose of identification and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board is available in the Company's website at www.jockeyindia.com/page/investor–relationship
Risk Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks. The Board has a policy to oversee the risk mitigation performed by the executive management, which includes identification, assessment, monitoring and reporting of risks. The major risk and mitigation plans have been explained in the Management Discussion and Analysis Report.
Ratio of remuneration:
Details / Disclosures of Ratio of Remuneration to each Director to the median employee's remuneration and particular of employees pursuant to Section 197(12) of the Companies Act 2013, read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in Annexure–III.
The Company has not accepted any fixed deposits during the year under review.
Particulars of Loans, Guarantees or Investments:
Disclosure on particulars of loans and guarantees are provided in the schedule 14 to the financial statements. The Company has not made any investment in other entity.
Significant and Material Orders Passed by the Regulators or Courts:
There have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's future operations.
Extract of the annual return:
The Extract of Annual return is provided in the Annexure– IV.
Shares of the Company are listed in the Bombay Stock Exchange Limited, Mumbai (BSE) and National Stock Exchange of India Limited, Mumbai (NSE) and the listing fees have been duly paid.
Unclaimed Shares Suspense Account:
There are no shares remaining unclaimed and are lying in the escrow account.
Statutory Auditors:– At the 19th AGM, M/s Haribhakti & Co LLP., Chartered Accountants, has been re–appointed as auditors of the Company to hold office from the conclusion of 19th AGM to the conclusion of 22nd AGM subject to ratification of the appointment at every AGM held.
Due to their internal reasons, the Auditors have tendered their resignation. The Audit Committee discussed the resignation in detail and took note of the same.
The Audit Committee, after having a detailed discussion, identified M/s S.R. Batliboi & Associates LLP, Chartered Accountants, Bangalore (Firm Registration No. 101049W/E300004) as Statutory Auditor of the Company for a term of 5 years commencing from the conclusion of 21st AGM to the conclusion 26th AGM (both inclusive) and proposed their appointment for Board's consideration. The Board of Directors at their meeting held on 24th May 2016, considered the proposal and accordingly it recommends the appointment of M/s S.R. Batliboi & Associates LLP, Chartered Accountants, Bangalore (Firm No. 101049W/E300004) to the shareholders for their approval.
The proposed Auditors have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for their appointment as Auditors of the Company. Further, as required under Regulation 33(1)(d) of SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
The Auditors report to the shareholders for the year under review does not contain any qualification, reservation, adverse remark or disclaimer.
Secretarial Auditor:– Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed Mr. R Vijayakumar, Company Secretary in Practice [FCS–6418; COP–8667] to undertake the Secretarial Audit of the Company.
The Report of the Secretarial Audit Report forms part of this Annual report, marked as Annexure– V. The Auditors report to the shareholders for the year under review does not contain any qualification, reservation, adverse remark or disclaimer.
Cost Audit Report:– For the year under review the cost auditing is not applicable pursuant to Notification G.S.R.01(E) dated 31st December 2014.
The Company is committed to maintaining the highest standards of corporate governance. The report on corporate governance as stipulated in the SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 forms part of the annual report. A certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance is also annexed to the report on Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT :
Management Discussion and Analysis Report is enclosed as part of this Annual Report.
Internal Control System and Adequacy:
The details are stated in the Management Discussion Analysis.
ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014:
a. Conservation of Energy
The Company continually takes steps to absorb and adopt the latest technologies and innovations in the Garment Industry. These initiatives should enable the facilities to become more efficient and productive as the company expands, thus helping conserve energy.
All machinery and equipment are continuously serviced, updated and overhauled in order to maintain them in good condition. This resulted in consumption of lesser energy consumption.
Conservation of Energy continues to receive increased emphasis at all the units of the Company. Energy audits and Inter unit studies are carried out on a regular basis for taking steps for reduction of the energy consumption.
b. Technology Absorption, Adaptation and Innovation
Research and Development
In addition to product and raw material development which continues to be strengthened, Research and Development activities on fashion designing are carried out on on–going basis. Absorbing technologies with state of art machineries like automated cutting machine, automated fabric inspection machines, etc., the quality of the products and efficiency of the systems have been substantially improved. By applying those technologies, the cost of production was under control.
During the last three financial years, the Company has not imported any technology. The nature of activities of the Company does not warrant any exclusive R&D department.
c. Foreign Exchange Earnings and Outgo
Foreign exchange earnings during the year were Rs.90 Million from exports. Outflow on account of import of raw materials, machinery, spares etc amounted to Rs. 1,702 Million.
DIRECTORS' RESPONSIBILITY STATEMENT
In compliance of Section 134(5) of the Companies Act, 2013, the Directors of your Company confirm that:
• In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
• They 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 of the company for that period;
• They 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 other irregularities;
• They had prepared the annual accounts on a going concern basis;
• They had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;
• They had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
DECLARATION OF INDEPENDENT DIRECTOR
The Company has received declaration from Independent Directors of the Company that they meet with the criteria of their Independence laid down in Section 149 of the Companies Act, 2013 and SEBI (LODR) Regulation, 2015.
Industrial relations are cordial at all levels and your Directors sincerely acknowledge the exemplary dedication of all its employees.
AWARDS AND ACCOLADES
1. Mr. Sunder Genomal, Managing Director, received the award for INDIA'S BEST CEO (Textiles) 2015 during the fourth edition of the Business Today Best CEO Awards held in December 2015 at New Delhi.
2. Mr. Pius Thomas, Executive Director – Finance has been chosen by an eminent Jury– as the winner in the "Sustained Wealth Creations–Medium Category at the YES Bank Business World Best CFO Award 2015–16. Honorable Minister of Railways Suresh Prabhu and Chairman of TERI, Shri Ashok Chawla presented the award on 8th April 2016.
3. It is a matter of great pride that in recognition of the Company's effort Business Standard has selected your Company as the best performer in the SME Sector for 2012.The award was handed over to Mr. Sunder Genomal, Managing Director by the Honourable President of India in a function held at Mumbai on 23rd March, 2013.
4. The Company has been awarded the International licensee of the year award by Jockey International Inc (USA) for the year 2005, 2009 and 2013.
5. The "Licensee of Decade" award was granted to the Company by Jockey International Inc (USA) in 2010 in recognition of the Company's record growth year after year, offering world class products and maintaining global quality standards across all operations.
6. As a recognition of our corporate best practices, we are certified by the USA based WRAP (Worldwide Responsible Apparel Production) and
7. The company has received the award for the 'Outstanding Growth and Expansion Jockey Retail Store by Jockey International in 2016.
The Directors acknowledge the support given by the Licensors, M/s Jockey International Inc., USA, and Speedo International Limited as well as all our business associates. The Board also wishes to place on record their sincere thanks and appreciation to the Government of Karnataka, our bankers, suppliers, distributors, all other stakeholders and the wholehearted dedication and cooperation extended by the employees at all levels.
By Order of the Board For and on behalf of the Board of Directors
Pradeep Jaipuria Chairman(DIN: 00121685)
Sunder Genomal Managing Director (DIN: 00109720)
24th May, 2016