Your Directors have great pleasure in presenting the 24th Annual Report together withAudited Statements of Accounts of the Company for the year ended March 31 2016.
The summarized financial results for the year ended March 31 2016 as compared to theprevious year are as follows:
| || ||(Rs. in Lakhs) |
| ||2015-2016 ||2014-2015 |
|Revenue from Operation ||38.98 ||3205.52 |
|Other Income ||1.63 ||4.06 |
|Profit before depreciation interest finance charges and tax (PBDIT) ||(847.18) ||(842.59) |
|Less: Interest and Finance Charges ||309.38 ||347.29 |
|Less: Depreciation ||346.61 ||343.59 |
|Profit/(Loss) before Tax (PBT) ||(1503.17) ||(1533.46) |
|Less : Tax Expense/Deferred Tax ||0 ||878.25 |
|Profit/(Loss) after Tax (PAT) ||(1503.17) ||(2411.71) |
FINANCIAL ANALYSIS AND PERFORMANCE REVIEW
During the financial year 2015-16 under review your company could not utilize itscapacities due to financial constraints/shortage of working capital and the unit of thecompany located at Kolhapur remained inoperative accordingly the revenue from operationsdecreased to Rs. 38.98 lakhs as compared to Rs. 3205.52 lakhs in the previous year.
Further over the period the company has eroded its net worth completely and it hasbeen declared as a Sick Company under Sick Industrial Companies (Special Provisions)Act'1985 by the Board for Industrial and Financial Restructuring (BIFR) vide its orderdated 18th July'2012.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Indias Textiles Sector is one of the oldest Industry in Indian economy datingback several centuries. Even today textiles sector is one of the largest contributor toIndias exports accounting for approximately 11% of total exports. The TextileIndustry is also labor intensive and is one of the largest employers. The industryrealised export earnings worth US$ 41.4 billion and a growth of 5.4 per cent.
The textile industry has two broad segments. First the unorganised sector consists ofhandloom handicrafts and sericulture which are operated on a small scale and throughtraditional tools and methods. The second is the organized sector consisting of SpinningApparel and Garment segment which apply modern machinery and technology.
Amit Spinning is producing only Cotton Yarn with a capacity of 30672 spindles. Howeverduring the period under review the operations of Amit Spinning were badly affected due toshortage of Working Capital and non approval of Rehabilitation Plan by BIFR.
Due to these constraints the Company operations have been suspended since 11th August2015 resulting in revenue from operations decreasing to Rs. 38.98 Lakhs as compared to Rs.32.05 Crores during 2014-15.
MANAGEMENT PERCEPTION ON OPPORTUNITIES RISKS CONCERN & OUTLOOK
The Low per-capita domestic consumption of textile indicates potential of growth in thetextile industry. The Indian government has come up with a number of export promotionpolicies for the textiles sector. A new National Textiles Policy is expected to beannounced soon Further the Government has proposed the establishment of Centres ofExcellence for training the workforce in the textile sector and also to establishinstitutes under the public-private partnership (PPP) model to encourage private sectorparticipation in the development of the industry.
Further with focus on Make in India the Indian Textile industry is expected to becomeresilient and robust through various support measures likely to be announced by thegovernment. The future outlook for the Indian Textile Industry looks promising buoyed byboth strong domestic consumption and increase in export turnover.
The major factors hindering progress of the textiles industry are Increase in the powercosts higher transaction costs high cost of labour and general increase in input coststhus the industry has to concentrate on cost reduction exercises and improvement inefficiency. With conscious and focused efforts and strategies built around optimum productmix operational efficiencies and customer satisfaction the management is confident of aturnaround of the company in near future.
With the awaited / impending approval of rehabilitation scheme of the company by BIFRand with the continued support and cooperation of companys bankers managementbelieves that your Company would again resume production optimally utilize capacitiesand generate increasing sales volumes margins in due course.
Amit Spinning Industries Ltd. (ASIL) being a cotton yarn manufacturer has only onebusiness segment. On the basis of geographical categorization of market ASIL identifiedtwo segments i.e. exports and domestic.
During the year under review Company has not manufactured yarn as against 1281.64 MTproduced by the company in the previous year.
SUBSIDIARY COMPANIES JOINT VENTURES AND ASSOCIATE COMPANIES
As there are no subsidiaries/associates/joint ventures of the Company the provisionscontained in Companies Act 2013/ SEBI (LODR) Regulations relating to subsidiaries are notapplicable.
During the year under review the Company has no distributable profits hence directorsregret their inability to recommend any dividend for financial period 2015-16.
TRANSFER TO RESERVES
During the year the Company has not transferred any amount to reserves.
The Company's Authorized Share Capital as on 31st March 2016 stands at Rs.250000000/-and issued & paid up capital as on 31st March 2016 stands at Rs.205848335/- divided into 41169667 fully paid up equity shares of Rs. 5/- each.During the year under review the Company has not issued any share(s). Further theCompany has not issued any shares with differential Voting Rights/Sweat Equityshares/under Stock Option Scheme (ESOS) earlier and during the year.
The Company has no scheme of provision of money for purchase of its own shares byemployees or by trustees for the benefit of employees. Hence the details under rule 16 (4)of Companies (Share Capital and Debentures) Rules 2014 are not required to be disclosed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
(a) Change in Directors and Key Managerial Personnel
Mr. Ranjan Mangtani Director of the Company retires by rotation in theforthcoming Annual General Meeting and being eligible offer himself for re-appointment.The Board recommended his re-appointment for the consideration of the members of thecompany at the ensuing Annual General Meeting.
Mrs. Shivani Gupta has been appointed as Independent Women Director on 30th June2016 in compliance with SEBI (LODR) Regulations 2015 regarding composition of the Board.Further Ms. Priya Lohani Women Director of the Company has resigned from the office ofdirector w.e.f 10.05.2016.
During the period under review Mr. Malpeddi Nagnath S Manager Accounts has beenentrusted with responsibility to discharge the functions of CFO (Chief Financial Officer)along with other functions of the Company w.e.f 8th February 2016 in place of Mr. ShreyasS Alatkar who was appointed as CFO on 13th February 2015.
Brief resume of the Directors proposed to be appointed/re-appointed nature of theirexpertise in specific functional areas and names of the companies in which they holddirectorship and membership/chairmanships of the Board or its Committees as stipulatedunder SEBI (LODR) Regulations entered by the Company with stock exchanges in India isprovided in the Report of Corporate Governance forming part of the Annual Report.
(b) Number of Meetings of the Board
Four meetings of the Board were held during the year. The detailed informationregarding meetings of the Board held during the year was mentioned in the CorporateGovernance Report which forms part to this report.
(c) Declaration by Independent Directors
All Independent Directors have given declarations that they met the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and SEBI (LODR)Regulations.
(d) Annual Evaluation by the Board
Pursuant to the provisions of the Companies Act 2013 and SEBI (LODR) Regulations theBoard has carried out an annual performance evaluation of its own performance thedirectors individually as well as its Committees. The manner in which the evaluation hasbeen carried out has been explained in the Corporate Governance Report.
(e) Remuneration Policy
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is enumerated in the Corporate Governance Report.During the year neither the Managing Director nor the Whole-time Directors of the Companyreceived any remuneration or commission from any of its subsidiaries.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 134(3)(c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that:
(a) in the preparation of the annual accounts for the financial year ended 31st March2016 the applicable accounting standards had been followed along with proper explanationrelating to material departures;
(b) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company as at March 31 2016 and of the profitand loss of the company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the company and for preventing and detecting fraud and otherirregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and
(e) the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
RELATED PARTY TRANSACTIONS
All transactions entered into with related parties as defined under the Companies Act2013 and SEBI (LODR) Regulations during the financial year were in the ordinary course ofbusiness and on an arm's length pricing basis. The Company has entered into a materialtransaction with one related party i.e. its holding Company M/s. Spentex IndustriesLimited according to the policy framed for the related party transactions and the same hasbeen disclosed in the note to financial statements. However there was no other materiallysignificant Related Party transaction entered into by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large.
Prior omnibus approval of the Audit Committee was obtained for Related PartyTransactions for a period upto 31st March 2016 The transactions entered into pursuant tothe omnibus approval so granted were audited and a statement giving details of all relatedparty transactions was placed before the Audit Committee for its review on a quarterlybasis.
The Company has framed a Related Party Transactions Policy for purpose ofidentification and monitoring of such transactions. The policy on Related PartyTransactions as approved by the Board has been uploaded on the Company's website.
None of the Directors has any pecuniary relationships or transactions vis-a-vis theCompany. All related party transactions entered into by the Company were in ordinarycourse of business and were on an arm's length basis however for the transaction enteredwith its holding company fall under material transaction and details of the same ismentioned in form AOC - 2 attached herewith as Annexure-1.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION BETWEEN THE DATE OFTHE BOARD REPORT AND END OF FINANCIAL YEAR
The Company has appointed Mrs. Shivani Gupta as an Independent Women Director w.e.f.30th June 2016 and Ms. Priya Lohani Company Secretary has resigned from the Companyw.e.f 22nd June 2016.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS.
There are no significant or material orders passed by the Regulators / Courts whichwould impact the going concern status of the Company and its future operations.
AUDITORS AND AUDITORS REPORT
(a) Statutory Auditors
At the 22nd Annual General Meeting held on 11.09.2014 M/s. Sunil Jain & Co.Chartered Accountants (Firm Registration No. 003855N) was appointed as Statutory Auditorsof the Company to hold office till the conclusion of the 26th Annual General Meeting to beheld in the Calendar Year 2018. In terms of the proviso to Section 139 of the CompaniesAct 2013 the appointment of the Auditors shall be placed for ratification at everyAnnual General Meeting. Therefore the appointment of M/s. Sunil Jain & Co. CharteredAccountants as statutory auditors of the Company is placed for ratification by theshareholders. The Company has received a confirmation from M/s. Sunil Jain & Co.Chartered Accountants to the effect that their appointment if made at the ensuing AGMwould be in terms of Sections 139 and 141 of the Companies Act 2013 and rules made thereunder and that they are not disqualified for re-appointment.
Further the Statutory Auditors have submitted Auditors' Report on the accounts of theCompany for the period ended 31st March 2016.
Directors' view on Auditor's Observations
Directors' response to the various observations of the auditors made in their reporthas been explained wherever necessary through appropriate notes to accounts howeverpertinent notes are reproduced hereunder in compliance with the relevant legalrequirements and wherever required further explanation is furnished.
Note No. 29 of the Financial Statement qualified by Auditors
The Other Non Current Assets of the Company include a sum of Rs. 15276144 being anamount receivable from MSEB. The Company is making effort to recover the same and expectsto reduce the outstanding dues significantly and the management is of the opinion thatultimately there would be no losses against these old balances and hence no provision isconsidered necessary at this stage.
Note No. 30 of the Financial Statement without qualifying Auditors have drawnattention:
"As on March 31 2016 the accumulated losses of the Company have far exceeded itsnet worth. In the opinion of the management the Company's operations are affected byglobal business downturn which has resulted in reduction in demand increase in inputcosts and shortage of working capital. The Company has also filed a reference with Boardfor Industrial and Financial Restructuring (BIFR) under Section 15 of Sick IndustrialCompanies (Special Provisions) Act 1985 for determination of sickness and measures to beadopted for rehabilitation. The BIFR vide its order dated 18.07.2012 declared theCompany as sick under section 3(1)(o) of SICA 1985 and appointed UCO Bank as OperatingAgency (OA) under section 17(3) to prepare Rehabilitation Scheme for the Company. Howeveron the strength of management's plan of revival including reorganization of businessthese financial statements are prepared on a going concern basis."
(b) Cost Auditor:
The company having been declared as a sick Company and having not produced any yarn inthe year 2015-16 the Cost Records and Audit Rules 2014 is not applicable to the Company.
(c) Secretarial Auditor & Audit Report:
Pursuant to provisions of Section 204 of the Companies Act 2013 the Company hasappointed M/s. Loveneet Handa & Associate Practicing Company Secretary (having CP No.10753 & Membership No. 25973) as Secretarial Auditor to carry out the secretarialaudit for the financial year 2015-16.
The Secretarial Audit Report for the financial year ended March 31 2016 is annexedherewith marked as Annexure 2 to this Report.
Secretarial Auditor have mentioned in his report towards delay/non payment of statutorydues and listing/custodian fee to concerned authorities because the Rehabilitation Schemefiled by the company with BIFR is yet to be considered and approved. The management has nooption but continue to keep the manufacturing unit situated at Kolhapur Maharashtrainoperative as before for the time being due to financial constraints andnon-availability of working capital.
(d) Internal Auditors
Pursuant to section 138 of the Companies Act 2013 read with The Companies (Accounts)Rules 2014 the Company has appointed Dr. Sunil Kumar Gupta as the Internal Auditor ofthe Company.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Company has established adequate internal control systems commensurate with itssize and nature of business and such systems are periodically audited verified andreviewed for their validity considering the changing business scenario from time to timethe Audit Committee of the Board of Directors reviews the adequacy and effectiveness ofinternal control systems and suggests improvement for strengthening them.
EXTRACT OF THE ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as Annexure-3 to this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.
Company has implemented energy conservation methods and such action has resulted intomajor savings in energy consumption as well as in cost control. The information asrequired to be disclosed under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is set out in the Annexure 4 tothis Report.
PARTICULARS OF EMPLOYEES
The statement containing particulars of employees as required under section 197(12) ofthe Act read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended shall be made available to any shareholderon a specific request made by him in writing on or before 27th September 2016.
The Company has not accepted or renewed any deposit during the year and there are nooutstanding and/or overdue deposits as at 31st March 2016.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of loans Guarantees and Investments covered under the provision of Section 186of the Companies Act 2013 are given in the notes to the Financial Statements.
A Risk Management Committee has been constituted to oversee the risk management processin the Company as required under the Companies Act 2013 and SEBI (LODR) Regulations. Thedetails of the Committee and its terms of reference are set out in the CorporateGovernance Report forming part of the Board's Report. The Risk Management Policy has alsobeen hosted on the website of the company
The Company has framed and implemented a vigil mechanism named as Whistle Blower Policyto deal with instances of fraud and mismanagement if any. The details of the WhistleBlower Policy are provided in the Corporate Governance Report and also hosted on thewebsite of the Company.
During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
HUMAN RESOURCES/INDUSTRIAL RELATIONS
A Fundamental concept embodied in the company's code of conduct is to provide workingenvironment that motivate employees to be productive and innovative and provideopportunities for employee training and development to maximize personal potential anddevelop careers within the Group. The Company values the involvement of its employees andkeep them informed on matters affecting them as employees and factors relevant to thecompany's performance and other employee related issues on a non discriminatory basis.
The Board of Directors place on record the active dedicated and valuable contributionmade by employees of the Company at all levels with regard to the affairs of the Company.The Industrial relations remained cordial within the Company.
During the year no fraud has been reported to the Audit Committee / Board.
Information Technology continues to be an integral part of your company's businessstrategy. The Company is working on SAP platform integrating its business processesfinancial parameters customer transactions and people effectively on real time basis.
CHANGE IN THE NATURE OF BUSINESS
There is no change in the nature of the business of the company.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As stipulated under SEBI (LODR) Regulations 2015 a report on Corporate Governance isattached separately as a part of the Annual Report and the Management Discussion andAnalysis (MD & A) is included in this report so that duplication and overlap betweenBoards' Report and a separate MD & A is avoided and the entire information is providedin a composite and comprehensive manner.
LISTING OF SHARES
Presently Company's shares are listed and traded at the BSE Limited Mumbai (BSE) andNational Stock Exchange of India Mumbai (NSE). Due to closure of operations ofmanufacturing unit and non approval of Rehabilitation Scheme by concerned authority thecompany has not paid the Annual Listing Fee for the financial year 2015-16 and 2016-17 toBSE & NSE and Company would be in a position to pay the same only after infusion offunds pursuant and subsequent to the approval of Rehabilitation Scheme.
Your company is presently going through challenging and difficult period due to marketand financial constraints. It has already been declared as a Sick Company under SickIndustrial Companies (Special Provisions) Act 1985 by BIFR vide its order dated 18thJuly'2012 and UCO Bank has been appointed as an Operating Agency to work out DRS for theCompany in consultation with lenders. It is however expected on Company receiving BIFRapproval for its DRS it would be in a better position to augment its production andsales by utilizing its capacities optimally. UCO Bank has assigned its debt to JMFinancial Asset Reconstruction Company Pvt. Ltd.
Your Directors place on record their sincere thanks to bankers financial institutionsbusiness associates consultants customers suppliers contractors and various GovernmentAuthorities for their continued support extended to your Company's activities during theyear under review. Your Directors also gratefully acknowledge the continuing support ofthe shareholders and the confidence reposed by them in the company
| ||On behalf of the BOARD OF DIRECTORS |
| ||Sd/- |
|Place New Delhi ||S P SETIA |
|Date : August 9 2016 ||CHAIRMAN |
Annexure - 1 to the Director's Report
FORM NO. AOC -2
(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) ofthe Companies (Accounts) Rules 2014)
Form for Disclosure of particulars of contracts/arrangements entered into by thecompany with related parties referred to in sub section (1) of section 188 of theCompanies Act 2013 including certain arms length transaction under third proviso thereto.
1. Details of contracts or arrangements or transactions not at Arm's lengthbasis N.A.
2. Details of material contracts or arrangements or transactions at Arm's lengthbasis.
|SL. No. ||Particulars ||Details |
|1 ||Name (s) of the related party & nature of relationship ||Spentex Industries Ltd. (Holding Company) |
|2 ||Nature of contracts/arrangements/transaction ||Sale/Purchase of godds/services |
|3 ||Duration of the contracts/arrangements/transaction ||01.04.2015 31.03.2016 |
|4 ||Salient terms of the contracts or arrangements or transaction including the value if any ||Ongoing transactions on normal business terms. Value of all transactions is Rs. 5071101/- |
|5 ||Date of approval by the Board ||25.05.2016 |
|6 ||Amount paid as advances if any ||- |