Your Directors have great pleasure in presenting the 25th Annual Report together withAudited Statements of Accounts of the Company for the year ended March 31 2017.
The summarized financial results for the year ended March 31 2017 as compared to theprevious year are as follows:
|Particulars ||2016-2017 ||2015-2016 |
|Revenue from Operation ||15.85 ||38.98 |
|Other Income ||0.76 ||1.63 |
|Profit before depreciation interest finance charges and tax (PBDIT) ||(1023.75) ||(847.18) |
|Less: Interest and Finance Charges ||1.86 ||309.38 |
|Less: Depreciation ||296.82 ||346.61 |
|Profit/(Loss) before Tax (PBT) ||(1322.43) ||(1503.17) |
|Less : Tax Expense/Deferred Tax ||0 ||0 |
|Profit/(Loss) after Tax (PAT) ||(1322.43) ||(1503.17) |
FINANCIAL ANALYSIS AND PERFORMANCE REVIEW
During the financial year 2016-17 under review due to financial constraints andshortage of working capital the Company operations have remained suspended since 11thAugust 2015 resulting in revenue from operations decreased in the current financial yearended 31st March 2017 to Rs. 15.85 Lakhs as compared to Rs. 38.98 Lakhs during previousyear ended 31st March 2016.
Further the manufacturing unit situated at Kolhapur Maharashtra stand closed witheffect from 1st July 2017 in accordance with applicable legal provisions.
The Company was declared as a Sick Company under Section 3(1)(o) of SICA 1985. SICAhas been repealed w.e.f. 1st December 2016 and such companies were allowed to approach(NCLT) within 180 days. Accordingly the Company has filed its petition before NCLT forresolution of default of payments to banks and other creditors and approval of ResolutionPlan and NCLT has pronounced the commencement of a corporate insolvency resolutionprocess effective August 1 2017 and Mr. Parveen Bansal has been appointed as InterimResolution Professional in accordance with applicable regulations under Insolvency andBankruptcy Code 2016.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Indian textiles industry is one of the oldest industries in India having evolvedimpressively from a domestic small scale industry to becoming a major employment and GDPcontributor with a massive manufacturing base. It is also one of the largest and mostimportant sectors of the Indian economy in terms of output foreign exchange earnings thuscontributing greatly to the exchequer. The Textile sector occupies a unique position as aself-reliant industry with substantial value- addition at each stage of processing. Ithas vast potential for creation of employment opportunities in the agriculturalindustrial organized & decentralized sectors and 5.8 million cotton farmers 40 to 50million people engaged in textile related activities in rural and urban areasparticularly for un-educated women & unskilled labour. Thus the growth and all rounddevelopment of this sector has a direct bearing on the development of the economy.
Amit Spinning has capacity to produce Cotton Yarn with 30672 spindles. During theperiod under review the operations of Amit Spinning were badly affected due to shortageof Working Capital. Due to the financial constraints the Company operations have beensuspended since 11th August 2015 resulting in revenue from operations decreased in thecurrent financial year ended 31st March 2017 to Rs. 15.85 Lakhs as compared to Rs. 38.98Lakhs during previous year ended 31st March 2016.
As members of Amit Spinning are aware that the Company was declared as a Sick Companyunder Section 3(1)(o) of SICA 1985 from 1st December 2016 SICA has been repealed andsuch companies were allowed to approach National Company Law Tribunal (NCLT) within 180days. Accordingly the Company has filed its petition before NCLT for resolution of itsdebts and approval of resolution plan
In addition to the above the manufacturing unit situated at Kolhapur Maharashtrastand closed with effect from 1st July 2017 in accordance with applicable legalprovisions due to shortage of working capital and closing of unit is a major jolt to theCompany.
However with due strategic focus on Company by the management towards arrangement offunds through various options Amit Spinning is confident to re-start its manufacturingunit in near future.
MANAGEMENT PERCEPTION ON OPPORTUNITIES RISKS CONCERN & OUTLOOK
The Indian government has come up with the Revised Restructured Technology Up gradationFund Scheme (RRTUFS) 10% capital subsidy to the specified technical textile machineryallowing 100% FDI in the Indian textiles sector under the automatic route may increase theprofits in the coming years the future of the Indian textile industry looks promising
buoyed by both strong domestic consumption as well as export demand. With consumerismand disposable income on the rise the retail sector has experienced a rapid growth in thepast decade with the entry of several international players. Further the Textile Ministryhas also introduced a new textile policy to promote value additions which sets a target ofdoubling textile exports in next 10 years.
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. Another key challenge presently is the Fiber/Raw Material cost which isincreasing abruptly and increase is not fully absorbed in the yarn prices and accordinglyyarn spinners are hit the most in the entire textile chain.
Due to fluctuating prices and uncertainties in the foreign exchange market increase inpower cost introduction of GST and lack of adequate working capital the EBITA levels mayremain stagnant during the year.
Further to overcome the losses promptly in this challenging scenario the Managementis keeping a close watch on various threats/risks facing the company and taking allappropriate steps to restart of manufacturing unit.
With much awaited / impending approval of rehabilitation scheme of the Company by NCLTand with the continued support and co-operation of company's bankers management believesthat your Company would again resume production optimally utilize capacities andgenerate increasing sales volumes margins in due course and the management is confidentof a turnaround of the company in near future.
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 notmanufactured yarn due to suspension of operations of manufacturing unit.
SUBSIDIARY COMPANIES JOINT VENTURES AND ASSOCIATE COMPANIES
As there are no subsidiaries/ associates / joint ventures of the Company theprovisions contained in Companies Act 2013/SEBI (LODR) Regulations relating tosubsidiaries are not applicable.
During the year under review the Company has no distributable profits hence directorsregret their inability to recommend any dividend for financial period 2016-17.
TRANSFER OF RESERVES
During the year the Company has not transferred any amount to reserves.
The Company's Authorized Share Capital as on 31st March 2017 stands at Rs.250000000/- and issued & paid up capital as on 31st March 2017 stands at Rs.205848335/- divided into 41169667 fully paid up equity shares of Rs.5/- each. Duringthe year under review the Company has not issued any share(s). Further the Company hasnot issued any share with differential Voting Rights/Sweat Equity shares/under StockOption 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. Vijay Bhan Singh has been appointed as an Additional Non-Executive Director onthe Board of the Company with effect from 27th March 2017.
Mr. Ranjan Mangtani Non-Executive Director has tendered his resignation w.e.f. closinghours of 10th November 2016. During the year the term of I.B. Maner as Managing Directorhas expired on closing hours of 31st August 2016 and has resigned from directorshipw.e.f. 10th November 2016 keeping in view of financial difficulties of the Companymembers of the Company have appointed Mr. I D Desai as Manager for a period of 3 yearsw.e.f. 1st September 2016. Further during the year under review Ms. Priya LohaniCompany Secretary has resigned w.e.f. 22nd June 2016 and Company has appointed Mr.Deepanshu Arora as Compliance Officer to the Company w.e.f 9th August 2016 he has alsotendered his resignation and subsequently Mr. Bharat Kapoor has been appointed asCompliance Officer of the Company w.e.f 31st December 2016 in place of Mr. DeepanshuArora.
Mr. K. Sankaramani Non Executive Director and Mr. Malpeddi Nagnath S CFO haveresigned w.e.f. 1st August 2017. Brief resume of the Director(s) proposed to beappointed/re-appointed nature of their expertise in specific functional areas and namesof the companies in which they hold directorship and membership/chairmanships of the Boardor its Committees as stipulated under SEBI (LODR) Regulations entered into by the Companywith stock exchanges in India is provided in the Report of Corporate Governance formingpart of the Annual Report.
(b) Number of Meetings of the Board
Five meetings of the Board were held during the year. The detailed informationregarding meetings of the Board held
during the year is mentioned in the Corporate Governance Report which forms part tothis report.
(c) Declaration by Independent Directors
All Independent Directors have given declarations that they meet 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 March2017 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 2017 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
None of the transactions with related parties falls under the scope of section 188(1)of the Act. All related party transactions that were entered into during the financialyear were on an arm's length basis and were in the ordinary course of business. There wereno materially significant related parties transactions entered into by the Company withHolding Company/ Promoters Directors Key Managerial Personnel or other designatedpersons which may have a potential conflict with the interest of the Company at large.
Prior omnibus approval of the Audit Committee was obtained for Related PartyTransactions for the year ended 31st March 2017 and for transactions proposed to beentered into with related parties for the financial year 2017-18 were placed before thesaid committee and consent of the said committee was obtained.
The policy on Related Party Transactions as approved by the Board has been uploaded onthe Company's website www.spentex.net. None of the Directors has any pecuniaryrelationships or transactions vis-a-vis the Company. Since all related party transactionsentered into by the Company were in ordinary course of business and were on an arm'slength basis form AOC - 2 is not applicable to the Company.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION BETWEEN THE DATE OFTHE BOARD REPORT AND END OF FINANCIAL YEAR
The operations of manufacturing unit situated at Kolhapur Maharashtra remains closedwith effect from 1st July 2017 after completion of applicable legal formalities.
As the Company was declared as a Sick Company under Section 3(1)(o) of SICA 1985 andSICA has been repealed w.e.f 1st December 2016 accordingly the Company had filed itspetition before NCLT under Insolvency and Bankruptcy Code 2016 and NCLT has pronouncedthe order admitting the petition of the Company and appointing Mr. Parveen Bansal as anInterim Resolution Professional in accordance with applicable regulations under Insolvencyand Bankruptcy Code 2016. With this corporate insolvency resolution process against theCompany Commences w.e.f 1st August 2017.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS.
NCLT has vide its order dated 1st August 2017 admitted Company's petition underInsolvency and Bankruptcy Code 2016 and has appointed Interim Resolution Professional andwith that Corporate Insolvency Resolution Process in respect of the Company under IBC2016 commences.
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 Auditorof 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 StatutoryAuditors have submitted Auditors' Report on the accounts of the Company for the periodended 31st March 2017.
Directors' view on Auditor's Observations
Directors' response to the various observations of the auditors made in their reporthave 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. 30 of the Financial Statement qualified by Auditors
The Company has not charged interest amounting to Rs.69832251. Further the companyhas not charged penal interest and other charges if any in respect of delay in repaymentof borrowings from banks to the statement of profit and loss account from the date ofdeclaration of account as Non Performing Assets.
The management is of the opinion that since the lenders have categorized theiroutstanding debts from the Company and stopped charging interest on their debt themanagement has decided not to provide interest on such loans for the current year and alsoreversed interest provided earlier years from the date of NPA.
Note No. 28 of the Financial Statement without qualifying Auditors have drawnattention:
The outstanding balances of parties under the head trade payables and loans &advances and Banks and other deposite are subject to confirmation reconciliation andconsequential adjustments arising there from if any. The management however does notexpect any material variations.
Note No. 29 of the Financial Statement without qualifying Auditors have drawnattention:
As on March 31 2017 the accumulated losses of the Company have far exceeded its networth. In the opinion of the management the Company's operations were in the earlieryears affected by global business downturn which has resulted in reduction in demandincrease in input costs and shortage of working capital. Due to these factors the Companyhad filed a reference with Board for Industrial and Financial Restructuring (BIFR) undersection 15 of Sick Industrial Companies (Special Provisions) Act 1985 for determinationof sickness and measures to be adopted for rehabilitation. The BIFR vide its order dated18.07.2012 declared the Company as sick under section 3(1)(o) of SICA 1985 and appointedUCO Bank as Operating Agency (OA) under section 17(3) to prepare Rehabilitation Scheme forthe Company. The Company's accounts have become Non Performing Assets (NPA) with all thedealing banks and the company is also in receipt of NPA cum recall notice. Pendingapproval of DRS by OA/ BIFR SICA has been repealed w.e.f 1/12/2016 and 6 months windowhas been provided to the Company to approach to National Company Law Tribunal (NCLT) asper section 4(b) of the SICA repeal act read with Sec. 252 of the Insolvency andBankruptcy Code 2016 to initiate Corporate Resolution Process under the code. Companyis in the process of moving NCLT for resolution of its liabilities. In the meanwhileAxis Bank has initiated recovery proceedings before DRT against the Company however thesame is being contested by the company. The company has submitted restructuring proposalproposing various alternative to the banks which is currently under discussion. Withstrong management focus on strategic initiatives on cost rationalization optimum productmix and efficient plant operations the management believes that accumulated losses wouldreasonably be paired in due course. Thus on the strength of management's plan of revivalincluding reorganization of business these financial statements are prepared on a goingconcern basis.
As per management the company has filed its petition before NCLT for resolution of itsdebts and approval of rehabilitation scheme and NCLT has pronounced the commencement of acorporate insolvency resolution process against the Company w.e.f 1st August 2017 inaccordance with applicable regulations under Insolvency and Bankruptcy Code 2016.
Note No. 31 of the Financial Statement without qualifying Auditors have drawnattention:
The company has advanced an amount of Rs.277723608/- as Inter Corporate Deposit andCapital Advances without any repayment schedule and interest free. The management ishowever hopefull of recovering the same in full. Auditors have relied upon the assertionsgiven by the management as to the recoverability of the said amounts.
(b) Cost Auditor:
The Company having been declared as a sick company under repealed SICA and having notproduced any yarn in the year 2016-17 the Companies (Cost Records and Audit Rules) 2014is 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. F-9055) as Secretarial Auditor
to carry out the secretarial audit for the financial year 2016-17. The SecretarialAudit Report for the financial year ended March 312017 in Form MR-3 is annexed herewithas Annexure I to this Report in compliance with the provisions of Section 204 of theCompanies Act 2013.
The qualifications/observations/remarks made by the Secretarial Auditors andmanagement's view thereon are given in their Report attached hereto.
(d) Internal Auditors
During the year Dr. Sunil Kumar Gupta is Internal Auditor of the Company pursuant tosection 138 of the Companies Act 2013 read with The Companies (Accounts) Rules 2014.However he has tendered his resignation w.e.f. 25th July 2017.
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-2 to this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO.
As there is no operation/production during the year under review 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 not applicable.
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 25th September 2017. DEPOSITS
The Company has not accepted or renewed any deposit during the year and there are nooutstanding and/or overdue deposits as at 31st March 2017.
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 Company. The Company values the involvement of its employeesand keep 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 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 betweenDirectors' Report and a separate MD & A is avoided and the entire information isprovided in 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 the manufacturing unitsituated at Kolhapur and non approval of Rehabilitation Scheme by concerned authority thecompany has not paid the Annual Listing Fee for the last three financial year to BSE &NSE and company would be in a position to pay the same only after infusion of fundspursuant and subsequent to approval of Rehabilitation Scheme.
Your company is presently going through challenging and difficult period due to marketand financial constraints. NCLT has pronounced to initiate the commencement of a corporateinsolvency resolution process w.e.f 1 st August 2017 pursuant to an application filed bythe Company for resolution of its debts and approval of rehabilitation scheme and Mr.Parveen Bansal has been appointed as Interim Resolution Professional who shall beexercising management powers of the Company in accordance with applicable regulationsunder Insolvency and Bankruptcy Code 2016. It is however expected that on approval ofrehabilitation scheme by NCLT It would be in a better position to augment its productionand sales by utilizing its capacities optimally.
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 Companies activities during theyear under review. Your Directors also acknowledge gratefully the shareholders for theirsupport and confidence reposed on the Company.
|For & on behalf of the Board |