To the Members
Your Directors present the TWENTY FIFTH Annual Report together with the AuditedStatement of Accounts for the year ended 31st March 2016
1. FINANCIAL RESULTS
(Rs. in lacs)
|Particulars ||Year ended |
| ||31.3.2016 ||31.3.2015 |
|REVENUE || || |
|Income from operations ||49630 ||55442 |
|Other income ||123 ||118 |
|Changes in Inventories ||478 ||(303) |
|Total ||50231 ||55257 |
|EXPENSES || || |
|a) Cost of materials ||30130 ||41004 |
|b) Employee benefits expense ||3136 ||2940 |
|c) Other expenses ||12012 ||7809 |
|Total ||45278 ||51753 |
|OPERATING PROFIT ||4953 ||3504 |
|Finance Costs ||3677 ||3083 |
|PROFIT/(LOSS) BEFORE || || |
|DEPRECIATION || || |
|AMORTISATION & TAX ||1276 ||421 |
|EXPENSES || || |
|Depreciation and Amortisation ||1219 ||1243 |
|Expenses || || |
|PROFIT/(LOSS) BEFORE TAX ||57 ||(822) |
|Tax Expenses || || |
|a) Current Tax (MAT) ||-- ||-- |
|b) MAT credit entitlement ||-- ||-- |
|c) Deferred Taxation ||21 ||174 |
|PROFIT/(LOSS) AFTER TAX ||78 ||(648) |
2. FINANCIAL PERFORMANCE
It was mentioned in the previous years Directors Report that the Industrysituation had worsened from 3rd quarter of F.Y. 2014-15 and many companies incurred lossesdue to high volatility in cotton prices which led to crash in yarn prices specially infine and superfine counts. Further substantial reduction in cotton yarn exports to Chinaalso had adverse impact on the yarn prices affecting sales realisation of the mills.
From 2nd quarter of FY 2015-16 there is distinct improvement in the market situation.This has resulted in reduction of high yarn inventories built up across the industry onaccount of new activities set up in several cotton growing States like GujaratMaharashtra Telengana Madhya Pradesh etc. added by unduly high incentives andconcessions offered by these States.
Under the circumstances while your company could increase exports of manufacturedgoods in the year under review overall income from operations was lower on account ofreduced exports of traded goods and lower sales realization. The total revenue for theyear was at Rs.496.30 crores as compared to Rs.554.42 crores in the previous year. Theoperating profit was higher at Rs.49.53 crores as against Rs.35.04 crores in the previousyear and after charging depreciation and finance cost the PBT was at Rs.0.57 croresagainst a loss of Rs. 8.22 crores in the previous year.
As referred in the previous years directors report about the liquidityconstraints the company has been facing we are exploring various options in consultationwith the term lenders. In the meantime in order to ease the cash fl ow the company hasentered into a Memorandum of Understanding (MOU) with a prospective buyer for sale of theWind Mill undertaking and the matter is being actively pursued.
In the current year as a result of intensive marketing drive the product mix iscompletely revamped with greater emphasis on specialized long staple and extra long staplecotton grown overseas. Many of these products are branded and result in betterrealization. As a result we hope that the performance will be better.
In view of accumulated losses and also inadequacy of profit your Directors regrettheir inability to recommend dividend for the financial year ended 31st March 2016.
4. POTENTIALLY SICK COMPANY
Your company continued to be classified as a "potentially sick company" underthe provisions of Sick Industrial Companies (Special Provisions) Act 1985 as at the closeof 31st March 2016.
Your Directors have taken effective steps and are striving hard to come out from theabove provisions and hope that the Company achieves better results in the coming years.
5. MANAGEMENT DISCUSSION AND ANALYSIS
A separate report on the Management discussion and analysis forms an integral part ofthis report.
6. 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) orre-enactment(s) for the time being in force).
7. CORPORATE GOVERNANCE REPORT
In compliance with Regulation 34 of the Listing Regulations a separate report onCorporate Governance along with a Certificate from the Auditors on its compliance formsan integral part of this report.
In accordance with the provisions of the Companies Act 2013 and CompanysArticles of Association Shri B.K. Patodia retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offer himself for reappointment. The Board recommendsthe same for your approval.
Kerala State Industrial Development Corporation (KSIDC) Trivandrum has withdrawn theirNominee Shri. V. Viswanathan from the Board effective from 29.9.2015 and in his placeShri. B. Jyothikumar their Executive Director was appointed on the same date. The Boardplaced on record its profound appreciation to Shri. V. Viswanathan for his significant andvaluable contributions to the company during his tenure.
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 (1) (b) of SEBI (LODR) Regulations 2015.
9. NUMBER OF MEETINGS OF THE BOARD
The details of the number of meetings of the Board held during the year ended 31stMarch 2016 forms part of the Corporate Governance Report.
10. KEY MANAGERIAL PERSONNEL
The following are the Key Managerial Personnel of the Company :
(i) Shri. Umang Patodia : Managing Director (ii) Shri. T. Ravindran : Chief FinancialOfficer (iii) Shri. Dipu George : Assistant Company Secretary Shri. N.N.Venkitasubramanian Chief Financial Officer has retired from services of the company onattaining superannuation and in his place Shri. T. Ravindran General Manager (Finance& Accounts) has been appointed as Chief Financial Officer and Key Managerial Personnelof the Company with effect from 30.5.2016. The Board of Directors placed on record theirappreciation for the services rendered by Shri N.N. Venkitasubramanian during his longtenure.
11. MEETING OF INDEPENDENT DIRECTORS
The Independent Directors met once during the Financial Year under review. The Meetingwas conducted in an informal manner without the presence of the Non-Independent Directorsand members of management.
12. 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: a) in thepreparation of the Annual Accounts for the year ended 31st March 2016 the applicableAccounting Standards have been followed and there are no material departures; b) selectedsuch accounting policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof your company at the end of the financial year and of the profit & loss of thecompany for the financial year ended 31st March 2016. c) taken proper and sufficient careto the best of knowledge and ability for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofyour company and for preventing and detecting fraud and other irregularities. d) preparedthe Annual Accounts on a going concern basis. e) had laid down internal financial controlsto be followed by the company and that such internal financial controls are adequate andwere operating effectively; f) devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
13. 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 Boardsfunctioning 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.
14. 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 and SEBI (LODR) Regulations 2015 andother relevant 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 companys operations.
Pursuant to the provisions of Section 139 of the Companies Act 2013 and the rulesframed thereunder M/s. M S Jagannathan & Visvanathan Chartered AccountantsCoimbatore were appointed as Statutory Auditors of the Company from the conclusion of the23rd Annual General Meeting (AGM) of the Company held on 19th September 2014 till theconclusion of the 26th Annual General Meeting to be held in the year 2017 subject toratification of their appointment at every AGM. Your company seeks ratification of theappointment of Statutory Auditors at the ensuing Annual General Meeting.
The Auditors Report for the financial year ended 31st March 2016 does notcontain any qualification reservation or adverse remark.
16. 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 Audit Report is attached as AnnexureI and forms an integral part of this Report.
The Secretarial Audit Report does not contain any qualification reservations oradverse remark.
17. COST AUDITORS
As recommended by the Audit Committee the Board of Directors has approved theappointment of M/s. K.N Hareesh and Associates Cost Accountants as the Cost Auditors ofthe company for the year ended 31st March 2016.
18. EXTRACT OF ANNUAL RETURN
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 annexed hereto as AnnexureII and forms part of this report.
19. 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) Rules 2014 are given in AnnexureIII in
Form AOC-2 and the same forms part of this report.
20. 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.
21. 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 monitornon-business risks. The Audit Committee and the Board periodically review the risks andsuggest steps to be taken to manage/ mitigate the same through a properly definedframework.
During the year a risk analysis and assessment was conducted and no major risks werenoticed which may threaten the existence of the company.
22. VIGIL MECHANISM / WHISTE 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 thecompanys website (www.patspin.com).
23. 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.
24. 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
25. 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.
26. 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.
27. 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 2016.
28. PARTICULARS OF EMPLOYEES 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
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 employeesparticulars which is available for inspection by the Members at the Registered office ofthe company during business hours on working days of the company up to the date of theensuing Annual General meeting. If any Member is interested in obtaining a copy thereofsuch member may write to the company in this regard.
29. PERSONNEL & INDUSTRIAL RELATIONS
Industrial Relations were cordial and satisfactory. There were no employees whoseparticulars are to be given in terms of Section 134(3)(q) of the companies Act 2013 readwith Rule 5(2) and 5(3) of the companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.
30. 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.
31. GENERAL a) Your company has not issued equity shares with differential rightsas to dividend voting or otherwise: and b) Your company does not have any ESOP scheme forits employees / Directors
Your Directors place on record their gratitude to Central Bank of India State Bank ofIndia Export-Import Bank of India State Bank of Travancore The Karur Vysya BankLimited IDBI Bank Limited Oriental Bank of Commerce Bank of Maharashtra and Canara Bankand the concerned Departments of the State and Central Government valuable customerEmployees and Shareholders for their assistance support and cooperation to the Company.
| ||For and on behalf of the Board of Directors |
| ||B K PATODIA |
|Place: Kochi ||(DIN:00003516) |
|Date: 01.08.2016 ||Chairman |