KG Fabriks LimitedCIN : U65999TZ1994PLC005630

Registered Office : Plot No. FF - 1, SIPCOT IGC, Perundurai - 638 052

Ph: 0422 - 3019291 Fax: 0422 - 3019110 Email:csd@kgfabriks.com, www.kgfabriks.com

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NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the TWENTY-FIRST ANNUAL GENERAL MEETING of the Members of KGFABRIKS LIMITED will be held on Saturday, 26th September 2015 at 5.00 p.m. at the Registered OfficePremises, Plot No FF-1, SIPCOT IGC, Perundurai – 638052, to transact the following business:

ORDINARY BUSINESS

1. To consider and adopt the Financial Statements of the Company for the year ended 31st March2015, including Audited Balance Sheet as at 31st March 2015, Statement of Profit and Loss, CashFlow Statement and the Reports of the Directors and Auditors thereon.

2. To appoint a Director in place of Shri KG Baalakrishnan, (DIN No.00002174) who retires by rotationat this Annual General Meeting and being eligible, offers himself for re-appointment.

3. To consider and, if thought fit, to pass, with or without modification, the following Resolution relatingto the appointment of the Statutory Auditor of the Company.

“RESOLVED THAT pursuant to the provisions of Section 139 and any other applicable provisions,if any, of the Companies Act, 2013 and the rules made thereunder, (including any statutorymodifications or amendments or re- enactments thereof for the time being in force), Shri C AVenkatesan, Chartered Accountant, the retiring Auditors of the Company, be and are hereby re-appointed as Auditor of the Company, from the conclusion of this meeting until the conclusion ofthe next Annual General Meeting on such remuneration as shall be fixed by the Board of Directorsof the Company.”

SPECIAL BUSINESS

4. To consider and if thought fit, to pass with or without modification(s), the following resolutionas a special resolution:

“RESOLVED THAT pursuant to the provision of Sections 196, 197 and 203 read with Schedule V andall other applicable provisions, if any , of the Companies Act, 2013 and the Companies (Appointmentand Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification (s)or re-enactment thereof for the time being in force), subject to such sanctions as may be necessary,approval and sanction of the members be and is hereby accorded to the appointment of Shri AVelusamy, as Whole-time Director for 3 years and payment of the following remuneration, perquisitesand benefits:

1. Salary : Rs. 11,00,000 per annum.

2. Perquisites : in addition to the above salary.

Expenditure for medical treatment, leave travel concession, personal accident insurance premium,Company’s contribution to Provident Fund to the extent it is not taxable under the Income Tax Act,1961. Gratuity and Encashment of leave at the end of tenure as per the rules of the Company.

3. a. He shall be entitled to reimbursement of all actual expenses including entertainment andtraveling incurred in the course of the Company’s business.

b. The Company shall provide a car with driver and telephone facility at the residence of theDirector. Provision of car with driver for use on the Company’s business and telephone facilityat the residence will not be considered as perquisites. Personal long distance calls on thetelephone and use of car for private purposes shall be billed by the Company to the Director.

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“RESOLVED FURTHER THAT the remuneration and perquisites shall be subject to the overall ceilingunder Section 196,197,198 and 203 of the Companies Act, 2013. In the event of absence orinadequacy of profits in any financial year during the tenure of the Whole time Director, the remunerationwould be paid as above, subject to the ceiling under Para (I) of Section II of Part II of Schedule Vof the Companies Act, 2013 as modified from time to time.

5. To consider and, if thought fit, to pass, with or without modification, the following resolution asan ordinary resolution:

RESOLVED THAT Shri R Selvakumar, (DIN No. 00051608) who was appointed as an AdditionalDirector with effect from March 20, 2015 on the Board of the Company in terms of Section 161 ofthe Companies Act, 2013 who holds office up to the date of this Annual General Meeting, and inrespect of whom a notice has been received from a member in writing, under Section 160 of theCompanies Act, 2013 along with requisite deposit, proposing his candidature for the office ofDirector, be and is hereby appointed as a Director of the company, and whose term of office issubject to retirement by rotation.”

6. To consider and, if thought fit, to pass, with or without modification, the following resolution asan special resolution:

“RESOLVED THAT pursuant to the provisions of Section 149, 150, 152 read with Schedule IV andall other applicable provisions of the Companies Act, 2013 and the Companies (Appointment andQualification of Directors) Rules, 2014 (including any statutory modification(s) or re-enactmentthereof for the time being in force) Shri L Vasudev (DIN : 07237448), who was appointed as anAdditional Director pursuant to the provisions of Section 161 of the Companies Act, 2013 and theArticles of Association of the Company and who hold office up to the date of this Annual GeneralMeeting and in respect of whom the Company has received a notice in writing under Section 160of the Companies Act, 2013 from a member proposing his candidature for the office of Director, beand is hereby appointed as ‘Independent Director’ of the Company to hold office for five consecutiveyears with effect from 26th September 2015 to 25th September 2020, not liable to retire by rotation.”

7. To consider and, if thought fit, to pass, with or without modification, the following resolution asan ordinary resolution:

“RESOLVED THAT pursuant to Section 148 of the Companies Act, 2013 and Companies (Audit andAuditors) Rules, 2014, the remuneration of Rs.65,000/- (Rupees sixty five thousand only) plusapplicable service tax to Shri M Nagarajan, Cost Accountant, for the conduct of the cost audit of theCompany for the year 2015-16, be and is hereby ratified and confirmed.”

8. To consider and if thought fit, to pass, with or without modification, the following resolution asan ordinary resolution

“RESOLVED THAT pursuant to section 188 and other applicable provisions of the Companies Act,2013 and the Rules made thereunder and any amendment thereto as are made from time to timeand subject to such other approvals, consents, permissions and sanctions of any authorities asmay be necessary, consent of the Company be and is hereby accorded to the Board of Directorsto enter into a contract(s)/transactions for a period of 3 years with Sri Kannapiran Mills Limited, arelated party, within the meaning of the aforesaid law, on such terms and conditions as may bemutually agreed upon, to purchase or sell or supply of any material/capital goods, the value ofwhich all taken together may exceed ten per cent of the turnover of the Company, however, to thatthe value of transactions aforesaid during any financial year shall not exceed in aggregate Rs. 20crores AND availing of / rendering of services like conversion of cotton / fibre into yarn or provisionof any services, the value of which all taken together may exceed ten per cent of the turnover of theCompany, however, to that the value of transactions aforesaid during any financial year shall notexceed in aggregate Rs. 50 crores,

RESOLVED FURTHER THAT the Board of Directors of the Company be and is hereby authorized tosign and execute necessary documents and papers on an ongoing basis and to do and performall acts, deeds and things as may be necessary in this regard.”

By Order of the BoardCoimbatore KG Baalakrishnan10.08.2015 Chairman

(DIN No.00002174)

NOTES:

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINTA PROXY TO ATTEND AND TO VOTE ON HIS / HER BEHALF AND SUCH A PROXY NEEDNOT BE A MEMBER OF THE COMPANY.

A person can act as proxy on behalf of members not exceeding Fifty (50) and holding in theaggregate not more than 10% of the total share capital of the Company. In case a proxy isproposed to be appointed by a member holding more than 10% of the total share capital ofthe Company carrying voting rights, then such proxy shall not act as a proxy for any otherperson or member.

The Instrument of Proxy in order to be effective, should be deposited at the Registered Officeof the Company, duly completed and signed, not less than 48 hours before the commencementof the meeting. A Proxy form is sent herewith. Proxies submitted on behalf of the Companies,Societies etc., must be supported by an appropriate resolution / authority, as applicable.

2. Members are requested to notify any change in their address to Company’s Registered Officeimmediately.

3. The Register of Members and Share Transfer Books of the Company will remain closed fromWednesday, the 16th September 2015 to Saturday, the 26th September, 2015 (both daysinclusive).

4. As per green initiative taken by the Ministry of Corporate Affairs, the shareholders are advisedto register their e-mail address with the Company to enable service of documents such asNotice, Annual Report etc., in electronic form.

5. VOTING THROUGH ELECTRONIC MEANS

In compliance with provisions of Section 108 of the Companies Act, 2013 and Rule 20 of theCompanies (Management and Administration) Rules, 2014, the Company is pleased to provideits members facility to exercise their right to vote at the 21st Annual General Meeting (AGM)on the items mentioned in the notice by electronic means through e-voting Services providedby CDSL.

a) As the Company, being a Unlisted Public Company and having more than 1000 Shareholders,is compulsorily required to provide e-voting facility to its members in terms of Section 108of the Companies Act, 2013 read with the Rules made there under with effect from01.01.2015. The Company has engaged the service of Central Depositary Service Limited(CSDL), as the authorised agency to provide the remote e-voting facilities. The instructionsfor remote e-voting is provided below.

b) The remote e-voting period commences on 23.09.2015 (0830 hours) and ends on 25.09.2015(1730 hours). During this period shareholders’ of the Company as on the cut-off date(record date) of 15.09.2015, may cast their vote electronically. The e-voting module shallbe disabled by CDSL for voting thereafter. Once the vote on a resolution is cast by theshareholder, the shareholder shall not be allowed to change it subsequently.

c) Members who have not voted remote voting and present at the AGM in person or proxy,can vote through the ballot conducted at the AGM. Kindly note that members can opt foronly one mode of voting i.e., either by remote voting or by ballot at the AGM. A memberpresent at the AGM and voted by remote voting will not be permitted to vote at the AGMby ballot.

d) The voting rights of shareholders shall be in proportion to their shares of the paid up equityshare capital of the Company as on the cut-off date (record date) of 15.09.2015.

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e) Shri M.R.L.Narasimha FCS, Practising Company Secretary, has been appointed as the

Scrutinizer to scrutinize the e-voting process in a fair and transparent manner.

f) The Scrutinizer shall within a period not exceeding three (3) working days from theconclusion of the e-voting period unblock the votes in the presence of at least two (2)witnesses not in the employment of the Company and make a Scrutinizer’s Report of thevotes cast in favour or against, if any, forthwith to the Chairman of the Company.

g) The Results shall be declared on or after the AGM of the Company. The Results declaredalong with the Scrutinizer’s Report

The instructions for shareholders voting electronically are as under:-

i. Log on to the e-voting website www.evotingindia.com

ii. Click on “Shareholders” tab.

iii. Now, select the “KG FABRIKS LIMITED” from the drop down menu and click on “SUBMIT”

iv. Now Enter your User ID (Folio Number registered with the Company) and then enter the

Captcha code as displayed and Click on Login.

v. Now, fill up the following details in the appropriate boxes

vi. After entering these details appropriately, click on “SUBMIT” tab.

vii. Members will then reach directly the Company selection screen and the details can be

used only for e-voting on the resolutions contained in this Notice.

viii. Click on “KG FABRIKS LIMITED” on which you choose to vote.

ix. On the voting page, you will see Resolution Description and against the same the option

“YES/NO” for voting. Select the option YES or NO as desired. The option YES implies that

you assent to the Resolution and option NO implies that you dissent to the Resolution.

x. Click on the “Resolutions File Link” if you wish to view the entire Resolutions.

xi. After selecting the resolution you have decided to vote on, click on “SUBMIT”. A confirmation

box will be displayed. If you wish to confirm your vote, click on “OK”, else to change your

vote, click on “CANCEL” and accordingly modify your vote.

PAN Enter your 10 digit alpha-numeric PAN issued by Income Tax Department.

For Members who have not updated their PAN with the Company, the first

two letters of their name followed by the eight digits Serial Number printed

on the address slip shall be entered in the PAN field. Eg. If your name

is Ramesh Kumar with folio number 100 then enter RA00000100 in the

PAN field.

DOB Enter the Date of Birth in the Company records for the said folio in dd/

mm/yyyy format.

Bank Details Please enter the Folio number if DOB or Bank details have not been

registered with the Company.

ITEM No.4

Shri A Velusamy is professionally qualified as B.Sc., B.L. He is 59 years old. He is a Director of

the Company from 14.03.1998. The Board of Directors in their meeting held on May 27, 2015 had

appointed Shri A Velusamy, as “Whole-time Director” of the Company for a period of 3 years from

27.5.2015 subject to approval by the share holders of the Company under Schedule V of the

Companies Act, 2013.

The remuneration as approved by the Nomination and Remuneration Committee on 27.05.2015 and

also by the Board on the same date is subject to the approval of Central Government as specified

in Section II, Part II of Schedule V.

None of the Directors or Key Managerial Personnel of the Company or their relatives is concerned

or interested, financially or otherwise, in the said resolution, except Shri A Velusamy the proposed

appointee. The Explanation together with accompanying notice may be treated as an abstract of

the Terms of Appointment of Shri A Velusamy as Director pursuant to the provisions of Section 190

of the Companies Act, 2013.

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xii. Once you “CONFIRM” your vote on the resolution, you will not be allowed to modify your

vote.

xiii. You can also take out print of the voting done by you by clicking on “Click here to print”

option on the Voting page.

xiv. Institutional shareholders (i.e. other than Individuals, HUF, NRI etc.) are required to log on

to https://www.evotingindia.co.in and register themselves as Corporates. After receiving the

login details they have to link the account(s) which they wish to vote on and then cast

their vote. They should upload a scanned copy of the Board Resolution and Power of

Attorney (POA) which they have issued in favour of the Custodian, if any, in PDF format

in the system for the scrutinizer to verify the same.

xv. The voting period begins on 23.09.2015 (0830 hours) and ends on 25.09.2015m(1730

hours). During this period shareholders’ of the Company, holding shares either in physical

form, as on the cut-off date (record date) of 15.09.2015, may cast their vote electronically.

The e-voting module shall be disabled by CDSL for voting thereafter.

xvi. In case you have any queries or issues regarding e-voting, you may refer the Frequently

Asked Questions (“FAQs”) and e-voting manual available at www.evotingindia.co.in under

help section or write an email to helpdesk.evoting@cdslindia.com.

By Order of the Board

Coimbatore KG Baalakrishnan

10.08.2015 Chairman(DIN No.00002174)

STATEMENT SETTING OUT MATERIAL FACTS UNDER SECTION 102

OF THE COMPANIES ACT, 2013.

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INFORMATION REQUIRED TO BE DISCLOSED IN TERMS OF SCHEDULE V

TO THE COMPANIES ACT, 2013

I. GENERAL INFORMATION

1. Nature of Industry Textiles-weaving and processing of denim and industrial fabrics

2. Date of commencement of 29.03.2006

commercial production

3. In case of new companies,

expected date of

commencement of activities as

per project approved by financial

institutions in the prospectus Not applicable

4. Financial performance based The details of financial performance of the Company for

on given indicators the years 2013-14 and 2014-15 are provided in the Annual

Report 2015 which accompanies this Notice

5. Foreign investments or Nil

collaborations, if any

II. INFORMATION ABOUT THE APPOINTEE

Background details: Shri A Velusamy is a Graduate in Science and Law and has

been in the textile industry for nearly three decades spanning

over trading, spinning, weaving, processing, garmenting and

retailing operations. He has been closely associated with

planning, implementation and follow up on new, expansion

and diversification projects with detailed exposure to various

functional areas viz., production, human resource,

administration, commercial, legal, banking, financial and

liaison with trade and governmental agencies. He is a Director

in Sri Kannapiran Mills Limited, K G Denim Limited, Trigger

Apparels Limited, Sri Balamurugan Textile Processing Limited,

K G B Securities and Investments P Ltd., Trigger Apparels

Limited, Anandhi Power Limited, Trigger Marketing Limited

and Eximer Communications P Ltd.,

Past remuneration: Not applicable as this is fresh appointment

Job profile and his suitability Shri A Velusamy is a graduate in Applied Science and Law

and has nearly 3 decades of practical experience in the

setting up and management of textile units. He was Whole-

time Director of KG Denim Limited for 10 years.

Remuneration proposed Details of proposed remuneration are presented in the

resolution and also in the Statement under Section 102 of

the Companies Act, 2013

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Comparative remuneration profile The remuneration offered to Shri A Velusamy is at par

with respect to industry, size of with the industry norms considering the nature of the

company, profile of the position industry, size of the company, profile and position of the

and person (in case of expatriates person.

the relevant details would be with

respect to the country of his origin)

Pecuniary relationship directly or Besides the remuneration he does not have any other

indirectly with the company or pecuniary relationship with the Company.

relationship with the managerial

personnel if any

III. OTHER INFORMATION

Reasons of loss or inadequate Lesser production due to stoppage of plant for 10 days,

profits lower average realization due to higher proportion of third

grade fabrics due to machine maintenance issues, increase

in input cost which could not fully be passed on by

commensurate increase in sale price, lack of adequate

working capital finance

Steps taken or proposed to be A new leadership team is in place focusing in machine

taken for improvement maintenance to increase first grade production. Product

mix has been oriented towards lower weights and high

contribution products. These will ensure overall improvements.

Bankers have been requested to sanction additional working

capital finance

Expected increase in productivity The aforesaid steps being taken up by the Company are

and profits in measurable terms expected to improve company’s performance and profitability

in the future

The Board commends the Special Resolution set out at Item No.4 of the Notice for approval by

the shareholders

ITEM No.5

Shri R Selvakumar, (DIN No.00051608) was appointed as an Additional Director w.e.f. March 20,

2015. Pursuant to Section 161 of the Companies Act, 2013 the above director holds office up to

the date of the ensuing Annual General Meeting. In this regard the Company has received request

in writing from a member of the company proposing his candidature for appointment as Director

of the Company in accordance with the provisions of Section 160 and all other applicable provisions

of the Companies Act, 2013. The Board feels that presence of Shri R Selvakumar on the Board

is desirable and would be beneficial to the company and hence recommend resolution No. 5 for

adoption.

None of the Directors, except Shri R Selvakumar and Key Managerial Personnel of the Company

or their relatives are in any way concerned or interested, financially or otherwise, in the said

resolution.

The Board recommends resolutions under Item No. 5 to be passed as an ordinary resolution.

ITEM No.6

Shri L Vasudev, was appointed as an Additional Director of the Company by the Board of Directors

in its meeting held on 10.08.2015. Pursuant to Section 161 of the Companies Act, 2013 the above

director holds office up to the date of the ensuing Annual General Meeting. In this regard the

Company has received request in writing from a member of the company proposing his candidature

for appointment as Director of the Company in accordance with the provisions of Section 160 and

all other applicable provisions of the Companies Act, 2013.

Further pursuant to the provisions of Sections 149, 150, 152 and any other applicable provisions

of the Companies Act, 2013 and the Rules made thereunder (including any statutory modification(s)

or re-enactment thereof for the time being in force) read with Schedule IV to the Companies Act,

2013 and subject to the approval of shareholders of the Company, Shri L Vasudev, be appointed

as an Independent Director of the Company in this Annual General Meeting, to hold the office for

five consecutive years upto 26th September 2020.

Shri L Vasudev, B.E (Mechanical), M.S. (Industrial Engineering & Operational Research) is aged

70 years and is an Independent Management Consultant since Sep 1993. He had served Madras

Fertiilizers Limited for 20 years in several capacities and was its CMD during 1988-1992. He was

also the CMD of Indian Airlines Corporation during 1992-93. He had held directorships in GMR

Power Corporation P Ltd, Air India, Fertilizer Association of India and Institute of Financial

Management & Research.

In the opinion of the Board, Shri L Vasudev fulfils the conditions specified in the Companies Act,

2013 and rules made there under for his appointment as an Independent Director of the Company

and is independent of the management. Copy of the draft letter for appointment of Shri L Vasudev

as an Independent Director setting out the terms and conditions would be available for inspection

without any fee by the members at the Registered Office of the Company during normal business

hours on any working day.

The Board considers that his continued association would be of immense benefit to the Company

and it is desirable to continue to avail services of Shri L Vasudev as an Independent Director.

Accordingly, the Board recommends the resolution in relation to appointment of Shri L Vasudev as

an Independent Director, for the approval by the shareholders of the Company.

Except Shri L Vasudev, being an appointee, none of the Directors and Key Managerial Personnel

of the Company is concerned or interested, financial or otherwise, in the resolution set out at Item

No. 6.

ITEM No.7

In pursuance of Section 148 of the Companies Act, 2013 and Rule 14 of the Companies (Audit

and Auditors) Rules, 2014, the Board shall appoint an individual who is a Cost Accountant in

practice on the recommendations of the Audit Committee, which shall also recommend remuneration

for such cost auditor. The remuneration recommended by Audit Committee shall be considered and

approved by the Board of Directors and ratified by the shareholders.

On recommendation of Audit Committee at its meeting held on May 27, 2015, the Board has

considered and approved appointment of Shri M Nagarajan, Cost Accountant, for the conduct of

the Cost Audit at a remuneration of Rs. 65,000/- (Rupees Sixty five thousand only) plus service

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tax as applicable and reimbursement of actual travel and out of pocket expenses for the Financial

Year ending March 31, 2016.

The Resolution at item no.6 of the Notice is set out as an Ordinary Resolution for approval and

ratification by the members in terms of Section 148 of the Companies Act, 2013.

None of the Directors and/or Key Managerial Personnel of the Company and their relatives is

concerned or interested financial or otherwise in the resolution set out at item no.6

Item No. 8

The Companies Act, 2013, under Section 188, inter alia, provides that no contract or arrangement

or transactions for sale, purchase or supply of any goods or materials exceeding ten per cent of

the turnover of the Company or Rs.100 crores whichever is lower, availing/rendering of any services

exceeding ten per cent of the turnover of the Company or Rs. 50 crores whichever is lower shall

be entered into by the company except with the prior approval of the shareholders by an ordinary

resolutions.

It is proposed to continue the pre existing arrangement by afresh entering into contracts/transactions

for a period of 3 years from the date of Annual General Meeting (AGM) to purchase/sell/supply

materials, goods in the ordinary course of business and availing and/or rendering services like

conversion of cotton/fibre into yarn, with Sri Kannapiran Mills Limited a related party within the

definition under the Companies Act, 2013.

The aggregate value of the contracts/transactions for purchase or supply of goods or rendering or

availing of services is likely to exceed the limits under Section 188 read with Rules made thereunder.

Even though the related party transactions are on arm’s length basis, it is proposed to obtain

permission of the members to enter into such transactions with related parties under Section 188

of the Companies Act, 2013 by way of an ordinary resolution.

Sri Kannapiran Mills Limited is engaged in spinning of ring spun and open end yarn at its 4

spinning units located in and around Coimbatore. Company has been converting its cotton into

yarn using the manufacturing facilities of Sri Kannapiran Mills Limited as they are specialized in

spinning of yarn suited for denim fabrics. It has been doing the same conversion of cotton into yarn

since 2005 i.e., for the last 10 years.

The Company and Sri Kannapiran Mills Limited have entered into a contract from 01.04.2012 for

a period of four years.

1. Name of the related party:

Sri Kannapiran Mills Limited

2. Name of the director or Key managerial Person who is related

Mr KG Baalakrishnan and Mr A Velusamy.

3. Nature of relationship :

Related party as per Section 2(76)(v) – director’s / their relatives shareholding in Sri Kannapiran

Mills Limited exceeds 2% of paid up capital

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4. Monetary value :

Purchase of Materials/ Capital Goods Rs.10 Crores

Sale of Materials / Capital Goods Rs.10 Crores

————————

Total Rs.20 Crores

————————

Availing/rendering of services like

Cloth/fibre into yarn, yarn into Rs.50 Crores

Fabrics, processing of yarn and

Other services

5. Nature, material terms and particulars of arrangement:

i) Conversion of cotton / fibre into yarn, yarn into fabrics processing of yarn covered under

Section 188(1)(d) and purchase / Sale of Cotton / Fibre, Waste, yarn and sale of capital

goods covered under Section 188(1)(a) of Companies Act, 2013.

ii) The Conversion charges are being arrived based on Cost Plus method of Sri Kannapiran

Mills Limited.

iii) Purchase/Sale of Cotton/Fibre, waste and yarn and capital goods at market prices.

Period of contract : 3 years from 26.09.2015. By passing of this resolution the existing agreement

terminates on the 26.09.2015.

The memorandum of terms and conditions of the transactions to be entered into with Sri Kannapiran

Mills Limited is available for inspection on all working days at the Registered Office of the company

except on Saturday and Sunday.

The related parties have experssed their interest in the resolution. None of the other Directors or

their relatives are in any way concerned or interested in the resolution.

By Order of the Board

Coimbatore KG Baalakrishnan

10.08.2015 Chairman(DIN No.00002174)

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