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Pasupati Spinning & Weaving Mills Ltd.

BSE: 503092 Sector: Industrials
NSE: PASUPATSPG ISIN Code: INE909B01020
BSE LIVE 15:27 | 13 Dec 22.40 1.05
(4.92%)
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22.40

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NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 22.40
PREVIOUS CLOSE 21.35
VOLUME 2
52-Week high 23.00
52-Week low 14.00
P/E 70.00
Mkt Cap.(Rs cr) 21
Buy Price 0.00
Buy Qty 0.00
Sell Price 22.40
Sell Qty 358.00
OPEN 22.40
CLOSE 21.35
VOLUME 2
52-Week high 23.00
52-Week low 14.00
P/E 70.00
Mkt Cap.(Rs cr) 21
Buy Price 0.00
Buy Qty 0.00
Sell Price 22.40
Sell Qty 358.00

Pasupati Spinning & Weaving Mills Ltd. (PASUPATSPG) - Director Report

Company director report

The Directors are pleased to present the 37th Directors Report on the business andoperations of the Company together with the Audited Accounts for the financial year ended31st March 2017: -

1. FINANCIAL PERFORMANCE

2016-17 2015-16
Particulars Rs./Lacs Rs./Lacs
Sales and other Income 15292.66 18994.99
Profit before Finance Costs and Depreciation 1095.68 1076.75
Financial Charges 621.25 653.95
Depreciation 417.85 400.52
Profit before Taxes 56.58 22.28
Payment/Provision for Taxation (18.08) 10.14
Profit after Taxation 74.66 12.14

During the year under review although the turnover of the company has declined by24.21% the profit before taxes increased from Rs. 22.28 Lacs to Rs.56.58 lacs. Thedecline in turnover is mainly attributable to following reasons: -

• The company has been outsourcing job work activities from a third party wherebythe company was supplying raw materials (cotton) and packing material to the said partyand getting the cotton yarn manufactured on job work basis. In August 2016 the factorypremises of the said party was taken over and sealed by its lender resulting suddenstoppage of operations. Even our company's stock which was lying in the factory premiseshas also been sealed which in turn created pressure on working capital of the company.The company has already initiated legal action for release of its stocks.

• The company was also manufacturing cotton yarn at its spinning unit atDharuhera Haryana. Since cotton yarn operations became unviable the company stoppedmanufacturing cotton yarn. To utilize the manufacturing facilities at Dharuhera thecompany has started doing job work for outside party. Although sales turnover from thisunit discontinued the company earned job work income of Rs.383 Lacs during the year underreview. The job work activities are continuing in the current year as well.

II THE MANAGEMENT DISCUSSION & ANALYSIS

Spinning Unit at Dharuhera Haryana

As already stated above the cotton yarn manufacturing has been discontinued and thecompany is doing job work activities for outside party.

Knitting & Garment unit at Dharuhera Haryana

The production activities of the Fabric/Garment Division at Dharuhera are going onsmoothly. The company is supplying garments for well known brands i.e. Future GroupReliance Trend Pantloon Retail Spencer and Bharti Wallmart etc. Besides the company isalso exporting garments.

Sewing Thread Unit At Kala Amb Himachal Pradesh

During the year under review the capacity utilisation has improved as compared toprevious year. The company has achieved a turnover of Rs.98.11 Crore from this unit ascompared to Rs.87.48 Crore achieved during the immediate preceding year marking a rise ofabout 12%. Although the company has taken number of steps to improve capacity but problemof labour shortage still remains the area of concern.

Exports

As reported in the last report the company's exports had decline sharply from Rs.36.62Crore to Rs.10.76 Crore. However during the year under review exports have increased toRs.31.56 Crore showing significant growth of about 193%. The exports are expected toincrease further in next year.

III PARTICULARS OF INFORMATION FORMING PART OF THE BOARD'S REPORT PURSUANT TO SECTION134 OF THE COMPANIES ACT 2013 RULE 8 OF THE COMPANIES (ACCOUNTS RULE 2014 AND RULE 5 OFTHE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the annual return in form MGT-9 are annexedherewith as Annexure C.

NUMBER OF MEETING OF BOARD

During the year four (4) Board Meetings and four (4) Audit Committee Meetings wereconvened and held. The details are given in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the CompaniesAct 2013

DIRECTOR'S RESPONSIBILITY STATEMENT:

In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that:

i) In the preparation of the annual accounts the applicable accounting standards havebeen followed.

ii) The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit or loss of the Company for the year under review.

iii) The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.

iv) The directors have prepared the annual accounts on a going concern basis.

v) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.

The directors had devised proper system to ensure compliance with the provisions of allapplicable laws and that such system were adequate and operating effectively

STATEMENT ON DECLARATION BY THE 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 Listingregulations 2015.

NOMINATION & REMUNERATION POLICY

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a Policy for selection appointment and remuneration of Directors and KeyManagerial Personnel. More details of the same are given in the Corporate GovernanceReport.

EXPLANATION OR COMMENTS ON AUDITORS REPORT AND SECRETARIAL AUDIT REPORT

Auditors' observations relating to Note no. 33 as contained in the Main Report underthe para ‘Basis of Qualified Opinion' are explained hereunder: -

Although the company has made representation to the competent authority for payment ofcompensation at market rate in respect of part of company's factory land acquired byGovernment of Haryana the company feels that final decision in this regard may take avery long time and moreover there is uncertainty about the success of company'srepresentation. Hence it has been decided that its affect would be given in company'sbooks as and when actual compensation is received from Government of Haryana.

There is no qualification reservations or adverse remarks made by secretarial auditorin the Secretarial Audit Report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

During the year under review company has not given any loans Guarantee or made anyinvestments covered under the provisions of Section 186 of the Companies Act 2013.

RELATED PARTY TRANSACTIONS

Pursuant to Section 134 of the Companies Act 2013 read with Rule 8(2) of the Companies(Accounts) Rules 2014 the particulars of contracts or arrangements entered into by theCompany with Related Parties have been done at arm's length and are in the ordinary courseof business. Particulars of the same are being provided in Form AOC-2 which is annexedherewith as Annexure E.

STATE OF COMPANY'S AFFAIRS

Discussion on state of Company's affairs has been covered as part of the ManagementDiscussion and Analysis.

AMOUNTS PROPOSED TO BE CARRIED TO RESERVES

Board of Directors does not appropriate any amount to be transferred to GeneralReserves during the year under review.

DIVIDEND

In view of the requirement of fund for working capital of the company the Board ofDirectors is not in a position to recommend any dividend for the year under review.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANY

No material changes and commitments affecting the financial position of the Companyhave occurred between the end of the financial year of the Company and the date of signingof this Report.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as Annexure"B".

RISK MANAGEMENT POLICY

Pursuant to the requirement of listing regulations 2015 the Company has constituted aRisk Management Committee. The details of the Committee and its terms of reference are setout in the Corporate Governance Report forming part of the Board's Report. On therecommendation of the Risk Management Committee the Board has adopted Risk ManagementPolicy which outlines the program implemented by the Company to ensure appropriate riskmanagement within its system and culture. The Risk Management Policy is also posted on thewebsite of the Company. The Company's risk management program comprises of a series ofprocesses structures and guidelines which assist the Company to identify assess monitorand manage its business risks including any material changes to its risk profile. Toachieve this the Company has clearly defined the responsibility and authority of theCompany's Board of Directors and of the Risk Management Committee to oversee and managethe risk management program while conferring responsibility and authority on the Company'ssenior management to develop and maintain the risk management program in light of the dayto day needs of the Company. Regular communication and review of risk management practicesprovide the Company with important checks and balances to ensure the efficacy of its riskmanagement program.

CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES.

The relevant provisions of the companies act 2013 and Listing regulations are notapplicable to our company.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of theSEBI(LODR) Regulations 2015 the Board has carried out an annual performance evaluation ofits own performance the directors individually as well as the evaluation of the workingof its Audit Nomination & Remuneration and other Committees. The board's performancefor the current year was assessed on the basis of participation of directors quality ofinformation provided/available quality of discussion and contribution etc. A structuredquestionnaire was prepared after taking into consideration inputs received from theDirectors covering the aforesaid aspects of the Board's functioning. The overallperformance of the Board and Committee's of the Board was found satisfactory. The overallperformance of Chairman Executive Directors and the Non-executive Directors of theCompany is satisfactory. The review of performance was based on the criteria ofperformance knowledge analysis quality of decision making etc.

CHANGE IN THE NATURE OF BUSINESS

During the year under review there has been no change in the nature of business of theCompany.

DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mrs. Vrinda Jain retires by rotation and being eligible offers herself forre-appointment.

Directors appointed during the F.Y 2016-2017

Mr. Jitender Malik was appointed as an Whole Time Director of the Company with effectfrom 1st April 2016

Key Managerial Personnel (KMP) appointed and resigned during the F.Y 2016-2017

There was no change in the Key Managerial Personnel during the FY 2016-2017.

NAMES OF THE COMPANIES WHICH HAVE BECOME/ CEASED TO BE SUBSIDIARIES JOINT VENTURES ORASSOCIATE COMPANIES DURING THE YEAR

The Company did not have any subsidiaries associates or joint ventures during theyear.

DEPOSITS

The Company has not accepted deposits under Chapter V of the Companies Act 2013.

SIGNIFICANT ORDERS PASSED BY REGULATORS COURTS OR TRIBUNALS IMPACTING GOING CONCERNAND COMPANY'S OPERATIONS

To the best of our knowledge the Company has not received any such orders fromRegulators Courts or Tribunals during the year which may impact the going concern statusor the Company's operations in future.

INTERNAL CONTROL SYSTEMS

Your Company has evolved a system of internal controls to ensure that the assets aresafeguarded and transactions are authorised recorded and correctly reported. The internalcontrol system is supplemented by management reviews and independent periodical reviews bythe outside chartered accountancy firms which evaluate the functioning and quality ofinternal controls and provides assurance of its adequacy and effectiveness. The scope ofinternal audit covers a wide variety of operational methods and as a minimum ensurescompliance with specified standards with regard to availability and suitability ofpolicies and procedures extent of adherence reliability of management information systemand authorization procedures including steps for safeguarding of assets. The reports ofinternal audit are placed before Audit Committee of the Directors and Board. AuditCommittee and board reviews such audit findings and the adequacy of internal controlsystems. The Statutory Auditors and the Internal Auditors of the Company also interactwith the Audit Committee and Board to share their findings and the status of correctiveactions under implementation.

M/s. M.C. Jain & Co. Chartered Accountants New Delhi were appointed as InternalAuditors of the Company for the Financial Year 2016-17 and their reports for the year weresubmitted to the Audit Committee and to the Board.

INFORMATION FORMING PART OF THE DIRECTORS' REPORT PURSUANT TO RULE 5 OF THE COMPANIES(APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014

The provisions of Rule 5(2) & (3) of the Companies (Appointment & Remunerationof Managerial Personnel) Rules 2014 requiring particulars of the employees in receipt ofremuneration in excess of Rs.60 lacs per year to be disclosed in the Report of Board ofDirectors are not applicable to the Company as none of the employees was in receipt ofremuneration in excess of Rs.60 lacs during the financial year 2016-17. The information inaccordance with the provisions of Section 197 of the Companies Act 2013 read with rule 5of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isannexed as Annexure- D

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Board of Directors has adopted the Vigil Mechanism / Whistle Blower Policy. Thepolicy has provided a mechanism for Directors Employees and other persons dealing withthe Company to report to the Chairman of the Audit Committee any instance of unethicalbehavior actual or suspected fraud or violation of the Code of Conduct of the Company.The details of the policy has been uploaded at the website of the Company @ www.pasupatitextiles.com

COMPOSITION OF AUDIT COMMITTEE

The composition of the Audit Committee has been mentioned in the Corporate GovernanceReport annexed to this report.

AUDITORS

• STATUTORY AUDITORS

The Companies Act 2013 (‘the Act') was notified effective April 1 2014. Section139 of the Act lays down the criteria for appointment and mandatory rotation of statutoryauditors. Pursuant to Section 139 of the Act and the Rules made thereunder it ismandatory to rotate the statutory auditors on completion of two terms of five consecutiveyears. The Rules also lay down the transitional period that can be served by the existingauditors depending on the number of consecutive years for which an audit firm has beenfunctioning as auditor in the same company. The incumbent auditors B.K. Shroff & Co. Chartered Accountants (Firm registration number : 302166E) have served the Company forover 10 years before the Act was notified and will be completing the maximum number oftransitional period (three years) at the ensuing 37th AGM. The audit committee of theCompany has proposed and on May 30 2017 the Board of Directors of the Company hasrecommended the appointment of M/s Suresh Kumar & Mittal Chartered Accountants (FirmRegistration No.: 500063N)- as the statutory auditors of the Company. M/s Suresh Kumar& Mittal Chartered Accountants will hold office for a period of five consecutive yearsfrom the conclusion of the 37th Annual General Meeting of the Company scheduled to be heldon September 292017 till the conclusion of the 42ndAnnual General Meeting tobe held in the year 2022 subject to the approval of the shareholders of the Company. Thefirst year of audit will be of the financial statements for the year ending March 312018 which will include the audit of the quarterly financial statements for the year.

• COST AUDITORS

The Central Govt. has approved the appointment of M/s Avtar Singh & Co. as costauditors for conducting Cost Audit for the Financial Year 2016-17. The report of CostAuditors in respect of audit of the cost records of the Company for the year ended 31stMarch 2017 will be submitted to the Central Government in due course.

• SECRETARIAL AUDITORS

The Company has undertaken Secretarial Audit for the financial year 2016-17 whichinter alia includes audit of compliance with the Companies Act 2013 and the Rules madeunder the Act Listing Regulations and applicable Regulations prescribed by the Securitiesand Exchange Board of India and Foreign Exchange Management Act 1999 and SecretarialStandards issued by the Institute of the Company Secretaries of India. The SecretarialAudit Report forms part of this Annual Report. The Report of the Secretarial Audit assubmitted by sucheta gupta & associates is annexed herewith as Annexure-A.

CORPORATE GOVERNANCE

The Company confirms to the norms of Corporate Governance as envisaged in the ListingRegulations with the BSE Limited. Pursuant to Regulation 34(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 a Report on the CorporateGovernance and the Auditors Certificate on Corporate Governance are annexed to thisreport.

OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013

In order to prevent sexual harassment of women at work place a new act The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 hasbeen notified on 9th December 2013. Under the said Act every company is required to setup an Internal Complaints Committee to look into complaints relating to sexual harassmentat work place of any women employee.

Company has adopted a policy for prevention of Sexual Harassment of Women at workplaceand has set up Committee for implementation of said policy. During the year Company hasnot received any complaint of harassment.

APPRECIATION

The Board of Directors acknowledge with gratitude the co-operation and assistanceextended by all its stakeholders including its shareholders employees/workers bankerscustomers business associates and employees.

For & On Behalf of Board of Directors
Ramesh Kumar Jain
Chairman & Managing Director
Place : New Delhi
Dated : 30-5-2017