To the Members
Your Directors present the TWELTH Annual Report together with the AuditedStatement of Accounts for the year ended 31st March 2017
1. FINANCIAL RESULTS
| || |
(Rs. in lacs)
|Particulars ||Year ended |
| ||31.3.2017 ||31.3.2016 |
|REVENUE || || |
|Income from operations ||11363 ||15292 |
|Other income ||39 ||37 |
|Changes in Inventories ||(163) ||115 |
|Total ||11239 ||15444 |
|EXPENSES || || |
|a) Cost of materials ||6271 ||9261 |
|b) Employee benefits expense ||2027 ||2601 |
|c) Other expenses ||2270 ||3224 |
|Total ||10568 ||15086 |
|OPERATING PROFIT ||671 ||358 |
|Finance Costs ||989 ||931 |
|PROFIT/(LOSS) BEFORE DEPRECIATION AMORTISATION & TAX EXPENSES ||(318) ||(573) |
|Depreciation and Amortisation Expenses ||391 ||418 |
|PROFIT/(LOSS) BEFORE TAX AND BEFORE EXCEPTIONAL ITEM ||(709) ||(991) |
|EXCEPTIONAL ITEMS ||165 || |
|PROFIT/(LOSS) BEFORE TAX AFTER EXCEPTIONAL ITEM ||(874) ||(991) |
|Tax Expenses || || |
|a) Current Tax (MAT) || || |
|b) MAT credit entitlement || ||37 |
|c) Deferred Taxation ||(227) ||(294) |
|PROFIT/(LOSS) AFTER || || |
|TAX ||(647) ||(734) |
2. FINANCIAL PERFORMANCE
During the financial year under review the Spinning industry continued to operateunder stress. While international as well as domestic market showed sluggishness therewas competition from spinning mills recently established in certain States which hadoffered them unduly high incentives and concessions. As such your company's operatingmargins were under pressure. Further as reported in the previous year's Directors'Report your company was forced to declare lock out with effect from 2nd May2016 which lasted up to 3rd July 2016. This substantially affected performanceof your company with its overall capacity utilization for the year reduced to 72% asagainst 95% in the previous year. This has adversely affected production and sales. Incomefrom operations for the year under review was reduced to Rs. 113.63 crores as against Rs.152.92 crores of previous year. However various cost cutting measures taken by themanagement and efforts made to bring out product mix changes resulted in higher operatingprofit of Rs. 6.71 crores for the year as against Rs. 3.58 crores for the previous year.With burden of finance cost remaining the same as previous year there was a cash loss ofRs. 3.18 crores as against previous year's Rs. 5.73 crores. After charging depreciation ofRs. 3.91 crores VRS compensation (exceptional item) of Rs. 1.65 crores and DeferredTaxation Credit of Rs. 2.27 crores the net loss after tax was Rs. 6.47 crores for theyear as against Rs. 7.34 crores of previous year.
As already reported in previous year's Directors' Report the salaries and wages cost ofAluva Unit continues to be abnormally higher as compared to industry standards. The VRSscheme announced by the company and agreed by the workers would to some extent bring downthe overall wage bill marginally
Your company has incurred loss for the year and hence the Board is unable to recommenddividend for the financial year ended 31st March 2017.
4. MANAGEMENT DISCUSSION AND ANALYSIS
A separate report on the Management discussion and analysis forms an integral part ofthis report.
5. DEPOSIT FROM PUBLIC
During the year under review your Company has not accepted any deposits within themeaning of Section 73 and 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (including any statutory modification(s) or re-enactment(s)for the time being in force).
6. CORPORATE GOVERNANCE REPORT
As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Regulations andDisclosure Requirements) Regulations 2015 a separate section on Corporate Governancepractices followed by the Company together with a Certificate from the Company's Auditorsconfirming compliance forms an integral part of this Report.
In accordance with the provisions of the Companies Act 2013 and Company's Articles ofAssociation Shri Mahesh C Thakker Director retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offer himself for reappointment. The Board recommendsthe same for your approval.
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 Regulation16 (b) of SEBI (LODR) Regulations 2015. During the year under review there is no changein the Board of Directors of the company.
8. NUMBER OF MEETINGS OF THE BOARD
The details of the number of meetings of the Board held during the year ended 31stMarch 2017 forms part of the Corporate Governance Report.
9. KEY MANAGERIAL PERSONNEL
The following are the Key Managerial Personnel of the Company:
|(i) Shri. B.K. Patodia ||: Chairman & Managing Director |
|(ii) Shri. A.K. Warerkar ||: Chief Financial Officer |
|(iii) Shri. E.K. Balakrishnan ||: Company Secretary |
10. MEETING OF INDEPENDENT DIRECTORS
The Independent Directors met once during the Financial Year under review. The Meetingwas conducted without the presence of the Non-Independent Directors and members ofmanagement.
11. CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Companies Act 2013 (the Act) and Accounting Standard (AS) 21 on Consolidated Financial Statements read with AS -23 on Accounting forInvestments in Associates the audited consolidated financial statement is provided in theAnnual Report.
12. SUBSIDIARY JOINT VENTURE AND ASSOCIATE COMPANY
The Company did not have any Subsidiary or Joint Venture during the financial year. TheCompany has one Associate Company Patspin India Limited.
A Statement containing the salient features of the financial statement of the Associatecompany is given in Annexure A to the Consolidated financial statements.
The Audited financial statements including the Consolidated financial statements of thecompany and all other documents required to be attached thereto may be accessed on theCompany's website www. gtntextiles.com. These documents will also will be available forinspection during business hours at the Registered office of the company.
13. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 134 (5) of the Companies Act 2013 and based onthe representations received from the management your Directors confirm that:
(i) in the preparation of the Annual Accounts for the year ended 31stMarch2017 the applicable Accounting Standards have been followed and there are nomaterial departures;
(ii) selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of your company at the end of the financial year and of the profit &loss of the company for the financial year ended 31st March 2017.
(iii) taken proper and sufficient care to the best of knowledge and ability for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of your company and for preventing anddetecting fraud and other irregularities.
(iv) prepared the Annual Accounts on a going concern basis.
(v) had laid down internal financial controls to be followed by the company and thatsuch internal financial controls are adequate and were operating effectively;
(vi) devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.
14. BOARD EVALUATION
In compliance with the Companies Act 2013 and Regulation 17(10) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the performance evaluation ofthe Board was carried out during the year under review. A structured questionnaire wasprepared after taking into consideration of the various aspects of the Board'sfunctioning composition of the Board and its Committees culture execution andperformance of specific duties obligations and governance.
The performance evaluation of the Independent directors was completed. The performanceevaluation of the Chairman and the Non Independent Directors was carried out by theIndependent Directors. The Board of Directors expressed their satisfaction with theevaluation process.
15. FAMILIARISATION PROGRAMME FOR DIRECTORS
At the time of appointing a Director a formal letter of appointment is given to himwhich interalia explains the role function duties and responsibilities expected of himas a Director of the Company. The Director is also explained in detail the Compliancerequired from him under the Companies Act 2013 SEBI (LODR) Regulations 2015 and otherrelevant regulations and affirmation taken with respect to the same.
The Chairman and the Management has also one to one discussion with the Directors tofamiliarize with the company's operations.
Pursuant to the provisions of Section 139 of the Companies Act 2013 and rules madethereunder the term of Office of M/s. M.S. Jagannathan & Visvanathan CharteredAccountants Coimbatore as the Statutory Auditors of the Company will conclude from theclose of ensuing Annual General Meeting of the Company.
The Board of Directors places on record its appreciation to the services rendered byM/s. M.S. Jagannathan & Visvanathan Chartered Accountants as the Statutory Auditorsof the Company.
Subject to the approval of the members the Board of Directors of the Company hasrecommended the appointment of M/s. L.U.Krishnan & Co (Regn. No.001527S) CharteredAccountants Chennai as the Statutory Auditors of the Company pursuant to Section 139 ofthe Companies Act 2013
Accordingly the Board recommends the resolution in relation to appointment ofStatutory Auditors for the approval by the shareholders of the company.
There is no audit qualification for the year under review.
17. SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Company has appointed Shri. MRL Narasimha Practicing Company Secretary toundertake the Secretarial Audit of the Company. The same is attached as Annexure I andforms an integral part of this Report
The Secretarial Audit Report does not contain any qualification reservations oradverse remark.
18. COST AUDITORS
As recommended by the Audit Committee the Board of Directors has approved theappointment of M/s. Hareesh K.N and Associates Cost Accountants as the CostAuditors of the company for the year ended 31st March 2017.
19. EXTRACT OF ANNUAL RETURUN
The extract of Annual Return in Form MGT-9 as per Section 92 (3) of the Companies Act2013 and Rule 12 (1) of Companies (Management & Administration) Rules 2014 is annexedhereto as Annexure II and forms part of this report.
20. RELATED PARTY TRANSACTIONS
None of the transactions with related parties falls under the scope of Section 188(1)of the Act. Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts)Rules2014 are given in AnnexureIII in form AOC-2 and the same forms part of this report.
In order to ensure assured supply of quality cotton at competitive prices yourDirectors proposes to enhance the existing limits in the normal course of business and atarm's length. Pursuant to Regulation 23 (4) of SEBI (LODR) 2015 all "material"related party transactions shall require approval of the Shareholders and your Directorsrecommends the resolution for the approval by the shareholders of the company. Moredetails were given in the explanatory statement of the Notice calling Annual GeneralMeeting forming part of the Annual Report.
21. LOANS & INVESTMENTS
Details of loans guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the Notes to Financial Statements forming partof this report.
22. RISK MANAGEMENT
The company has laid down a well-defined risk management mechanism covering the riskmapping and trend analysis risk exposure potential impact and risk mitigation process. Adetailed exercise is being carried out to identify evaluate manage and monitor businessrisks. The Audit Committee and the Board periodically review the risks and suggest stepsto be taken to manage/mitigate the same through a properly defined framework.
During the year a risk analysis and assessment was conducted and no major risks werenoticed which may threaten the existence of the company.
23. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The company has a Vigil Mechanism / Whistle Blower Policy to report genuine concerns orgrievances. The Vigil Mechanism (Whistle Blower Policy) has been posted on the company'swebsite (www.patspin.com).
24. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Even though the provisions of Companies Act 2013 regarding Corporate SocialResponsibility are not attracted to the Company yet the company has been over the yearspursuing as part of its corporate philosophy an unwritten CSR policy voluntarily whichgoes much beyond mere philanthropic gestures and integrates interest welfare andaspirations of the community with those of the Company itself in an environment ofpartnership for inclusive development.
25. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under section 134 (3) (m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is given in the Annexure IV formingpart of this report.
26. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an effective internal control and risk mitigation system designed toeffectively control the operations at its Head Office Plants and Depots. The internalcontrol systems are designed to ensure that the financial and other records are reliablefor the preparation of financial statements and for maintaining assets. The Company haswell designed Standard Operating Procedures. Independent Internal Auditors conduct auditcovering a wide range of operational matters and ensure compliance with specifiedstandards. Planned periodic reviews are carried out by Internal Audit. The findings ofInternal Audit are reviewed by the top management and by the Audit Committee of the Boardof Directors.
Based on the deliberations with Statutory Auditors to ascertain their views on thefinancial statements including the Financial Reporting System and Compliance to AccountingPolicies and Procedures the Audit Committee was satisfied with the adequacy andeffectiveness of the Internal Controls and Systems followed by the company.
27. NOMINATION & REMUNERATION POLICY
The Board of Directors has framed a policy which lays down a frame work in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members. Moredetails on the same are given in the Corporate Governance Report.
28. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013.
The Company has in place an anti-sexual harassment policy in line with the requirementsof the sexual harassment of women at the workplace (Prevention Prohibition and Redressal)Act 2013. Internal Compliance Committee (ICC) is already been functioned for redressingcomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy. The Company has not received anycomplaints under this policy during the year ended 31st March 2017.
29. PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 134 (3) (q) OF THE COMPANIES ACT 2013READ WITH RULE 5 (1) OF THE COMPANIES (APPOINTMENT AND REMUNENRATION OF MANAGERIALPERSONNEL) RULES 2014
The information required pursuant to section 134 (3) (q) of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of the company will be provided uponrequest. In terms of Section 136 of the Act the Report and Accounts are being sent to theMembers and others entitled thereto excluding the information on employees' particularswhich is available for inspection by the Members at the Registered office of the companyduring business hours on working days of the company up to the date of the ensuing AnnualGeneral meeting. If any Member is interested in obtaining a copy thereof such member maywrite to the company in this regard.
30. PERSONNEL & INDUSTRIAL RELATIONS
Industrial Relations were cordial and satisfactory except the situation explained inthe review of financial performance. There were no employees whose particulars are to begiven in terms of Section 134(3)(q) of the companies Act 2013 read with Rule 5(2) and5(3) of the companies (Appointment and Remuneration of Managerial personnel) Rules 2014.
31. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant and material orders passed by the Regulators or Courts orTribunals that would impact the going concern status of your Company and its futureoperations.
a) Your company not issued equity shares with differential rights as to dividendvoting or otherwise: and
b) Your company does not have any ESOP scheme for its employees / Directors.
Your Directors place on record their gratitude to Central Bank of India State Bank ofIndia Export-Import Bank of India erstwhile State Bank of Travancore taken over by SBIBank of India and Axis Bank Limited and the concerned Departments of the State and CentralGovernment valuable customer Employees and Shareholders for their assistance supportand co-operation to the Company.
| ||For and on behalf of the Board of Directors |
| ||B.K PATODIA |
|Place : Kochi ||Chairman |
|Date : 10.08.2017 ||(DIN 00003516) |