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Western India Cottons Ltd.

BSE: 532026 Sector: Industrials
NSE: N.A. ISIN Code: INE078F01017
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Western India Cottons Ltd. (WICOTTONS) - Director Report

Company director report

DIRECTORS’ REPORT 2015-2016

Financial Summary

Your Directors have pleasure in presenting their report and audited accounts for thefinancial year 2015-2016.

(Rs. In lakhs)

2015-2016 2014-2015
Sales/Other Operating Income 388.12 388.94
Other Income 76.28 116.68
Gross Income 464.40 505.62
Profit before Tax 16.35 -18.51
Provision for Taxation / Deferred Tax 7.00 0.34
Profit/Loss for the year 6.05 -18.85
Add: Loss brought forward 2117.91 2099.06
Add Transfer to Capital Reserve \ Remission of Secured Loan -
Accumulated Loss as on 31st March 2111.86 2117.91

REVIEW OF OPERATIONS

Your Company could achieve a gross revenue of Rs. 464.39 lakhs (Note no.:14&15(505.02 lakhs) consisting of (i) Sales revenue of Rs. 388.11 lakhs (388.94 lakhs) (ii)Rental income of Rs. 72.72 lakhs (104.10 lakhs) and (iii) Miscellaneous income of Rs.3.55lakhs (12.57 lakhs). (Figures in brackets for the previous year). Your Company’soperational profit this year stands at Rs.16.36 lakhs against a loss of Rs.18.85 lakhs forthe previous year.

In regard to trading the problem of uncertainty of demand for our limited conventionalproducts is accelerated by availability of cheap and duplicate products flooding themarket more so during festival seasons. Our sales are also festival and season relatedwhich is evident from the following statement.

Period Sale value Average sale value per month
01-04-2015 to 30-09-2015 Rs. 220 Lakhs Rs. 36.6 Lakhs
01-10-2015 to 31-03-2016 Rs. 170 Lakhs Rs. 28 Lakhs

The trend is true in respect of the current year as well in that the sales in turnoverfor the last 5 months totals to Rs.187 lakhs with a monthly average of Rs.37.4 lakhs. Thisachievement is again related to festivals like Vishu Eid and coming Onam. If this trendcould be maintained during the rest of the months as well trading might prove to behighly supportive to earn an operational surplus to meet the heavy expenses of an ongoingCompany.

In the distinctly developed culture of preference for readymade items the merelybleached mull items bear lowest priority in demand and are used presently for exceptionaloccasions as traditional ware. Despite confronting such significant challenges emanatingfrom a deficient product profile and general decline in textile business your Company hasbeen able to achieve a sales turnover of Rs. 388lakhs compared to the same amount theprevious year.

In our continuous efforts to add some more products to the product profile yourCompany has recently introduced bed sheets as sourced items with a hope to increase thesales income.

In the past the Company had the benefit of some orders for special made up items bothinternal and export oriented demanding intricate specifications which were executedthrough the inbuilt technological competence of the Company. The demand for such itemsstands considerably reduced and during the year there was virtually no export of any madeup items. The income from internal special products sales during the year stands at Rs. 69Lakhs. The resultant adverse effect on earnings through trading is that the surplusgenerated during the initial months of the year is consumed by the losses occurred duringthe last months of the year.

Your Company continues its relentless efforts to maintain an average monthly sale ofabout Rs.40 lakhs which alone in the present circumstances allows a breakeven and acomfortable operational surplus.

In regard to renting of godown space in the Mill premises considering the presenttrend of lean trading activities the immediate alternative has been to generate someincome from godown renting of the large area in the Mill premises by carrying outessential repairs in the existing old buildings to suit modern godown facilities.Recordically the building appears to have been constructed about 80 years before with woodand tiled roofs which were maintained mainly from the point of view of preventing leakageand changing broken tiles and battens. Even this minimum maintenance was not done since2003 after suspension of manufacturing activities of the Mill which is being attended toduring the last three years.

The buildings being more than seven decades old demanding repair / replacemnent ofroofs and floors after dismantling the old heavy machines for preparing the buildings tosuit the minimum warehousing requirements logistics conveniences and protecting fromrains the expenditure incurred during the year 2015-16 was Rs.45.63 lakhs against arental income of Rs.72.72 lakhs. However with these major repairs undertaken mainlynormal general maintenance has to be ensured for upkeep of the building and protection ofthe stored goods.

Despite laying considerable emphasis the income from renting is declining. The rentalincome was Rs. 116.68 during the year 2014-15. However at the end of the previous year;the godown having an area of 23500 sq ft was vacated by the KSBC. Also owing tocentralised warehousing arrangements done by some Companies resulting in direct deliveryfrom the main storage area and general decline in business another about 20000 sq ft ofgodown area has since been vacated during the year. However all out efforts are being madeto find out new parties for renting the built up godown space.

The Company continues its honest efforts to maintain an average monthly sale of aboutRs.40 lakhs which alone in the present circumstances allows a breakeven and a comfortablesurplus in operation. Despite the limited trading activities the Company has to meet thehuge operational expenses including expenses related to an ongoing Company. Though incomefrom renting activities has been Rs. 72.72lakhs during the year repair and maintenance ofold buildings to suit the minimum warehousing requirement carved a major portion of theearning. Despite these factors your Company has been able to earn an operational profitof Rs.16.36 lakhs which is attributable to the strength of the Company derived throughits reputation and business acumen. Having discharged major liabilities its strength liesin its non-dependence on outside finance.

During 2015-16 your Company strived to improve its performance despite confrontingsignificant challenges emanating from circumstances explained above. The Companysurmounted these challenges through strategic initiative.

With the intended improvement in trading business and attempted increased incomethrough rent there is definite scope for improved profitability in future.

MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANYWHICH HAVE OCCURRED DURING THE END OF FINANCIAL YEAR AND THE DATE OF THE REPORT.

There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the financial year of the Company i.e. March31 2016 and the date of the Directors’ Report i.e. 18th August 2016.

PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY UPGRADATION AND FOREIGN EXCHANGEEARNINGS AND OUTGO.

The report required to be made pursuant to section 134(3) (m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is given in Annexure A tothis report.

DIRECTORS:

Your Company has six directors including the Managing Director and a WomanDirector.

As per the Companies Act 2013 and SEBI Guidelines the Company should appoint 2Independent Directors for a period of 5 years. Accordingly Shri.R.S.Nair andShri.A.Ramachandra Shetty were appointed as Independent Directors for a period of fiveyears with effect from 18.8.2014. The Woman Director is appointed with effect from31-03-2015.

All the Directors have filed Form MBP-1 regarding disclosure of concern or interest inany Company as required under Section 184(1} read with Rule 9(1) of the Companies Act2013.

RETIREMENT OF DIRECTORS

Shri.A.K.Shereif has to retire by rotation and is eligible for re-appointment.. TheBoard reviewed his performance and recommended his reappointment for consideration of theMembers

PERFORMANCE EVALUATION OF INDEPENDENT DIRECTORS BY THE BOARD

In terms of the provisions of Schedule IV (Para VII) and section 134(3) (p) of theCompanies Act 2013 performance evaluation of the Independent Directors shall be doneannually by the Board of Directors. An evaluation of the Independent Directors wasconducted by the Board in the absence of the concerned Directors. The Chairman of theReview Committee made a note of the result of such reviews which forms the basis forrecommending for retention / extension/ reappointment of the concerned Director.

PERFORMANCE REVIEW OF NON-INDEPENDENT DIRECTORS AND THE CHAIRMAN BY INDEPENDENTDIRECTORS.

In terms of the provisions of schedule IV (ParaVIII) of the Companies Act 2013Independent Directors shall hold an Annual Meeting without the attendance of Non-Independent Directors and members of the Management and review the performance ofNon-Independent Directors including the Chairman. Accordingly a review was held by theIndependent Directors and their opinion minuted and placed before the Board of Directors.

PERSONNEL:

There were no employees drawing remuneration in excess of the limits specified undersection 134 of the Companies Act 2013 read with Rules of the Companies (Appointment andRemuneration of Managerial Personnel) Rule 2014 during the year under report.

APPOINTMENT OF KMP

Shri Suneed Hashir is appointed as the Chief Financial Officer of the Company witheffect from 1.1.2015

CONTRACT WITH RELATED PARTIES.

There is no instance of any contract with related parties reportable during the yearunder review.

CORPORATE GOVERNANCE

Your Company is committed to adopting the best corporate governance practices. Itbelieves that proper corporate governance is not just a requirement for regulatorycompliance but also a facilitator for enhancement of stakeholders’ value. Thedetails of your Company’s corporate governance practices are given in this AnnualReport as a separate section under Report on Corporate Governance as Annexure‘B’.

Extract of the Annual Return

Extract of the Annual Return in Form MGT 9 forms part of this Report and is given atAnnexure ‘C’.

DIRECTORS RESPONSIBILITY STATEMENT:

Your Directors hereby confirm:

1. That in the preparation of Accounts for the period ended 31st March 2016;applicable accounting standards have been followed along with proper explanation relatingto material departures wherever necessary.

2. That the directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company for the financial yearended 31st March 2016 and of the profit/loss of the Company for that period.

3. That the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of The Companies Act 2013for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities

4. That the statements of Profit and Loss and Balance Sheet have been prepared on agoing concern basis.

5. The directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

6. The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

THE DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS.

The Company has an elaborate internal financial controls and processes policy in placewhich provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements. These controls and processes are applied strictlyand reviewed periodically. The Company has not revised any Financial Statements orBoard’s Report during the preceding three years.The Company has not maintained anycharges with the MCA.

COMPLIANCE CERTIFICATE - SECRETARIAL AUDIT

In terms of the provisions 204 of the Companies Act 2013 Secretarial Audit Reportobtained from Shri Murali Kanniyath Practicing Company Secretary Kannur for the yearended 31st March 2016 is given in Annexure ‘D’ and forms part of this report

AUDITORS:

M/S.T K Menon & Co. Chartered Accountants Calicut the Statutory Auditors wereappointed by the Shareholders until the completion of audit for the AGM of 2017 and wouldretire after the Annual General Meeting 2017. Your Directors recommend that theappointment be ratified in the Annual General Meeting of 2016.

INSURANCE:

The Company’s Assets have been adequately insured.

DIVIDEND:

Though your Company has earned small amounts of operational profits during the years2010-2011 onwards owing to accumulated losses of Rs.2111.86 lakhs as on 31st March 2016no dividend could be declared under the Companies Act.

Also as the Company has huge accumulated loss which is not set off in full againstthe current profits there is no amount to be carried to reserves.

CORPORATE SOCIAL RESPONSIBILITY

Though your Company is not covered by Corporate Social Responsibility as per theCompanies Act 2013 yet in its culture of being actively involved in socialresponsibilities emphasis will continue to be laid on this aspect.

Significant and material orders passed by the regulators or courts or tribunalsimpacting the going concern status and company’s operations in future:

During the year under review there has been no such significant and material orderspassed by the regulators or courts or tribunals impacting the going concern status andcompany’s operations in future.

Particulars of loans guarantees or investments under section 186:

During the year under review the Company has not advanced any loans/ given guarantees/made investments.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSEL) ACT 2013.

All employees of the Company having gone on voluntary retirement the small scaletrading activity is conducted with ten number of contract male employees. InternalComplaints Committee is constituted to redress complaints received regarding sexualharassment. The Company has not received any complaint of sexual harassment during theyear 2015-16.

ACKNOWLEDGEMENT

Your Directors place on record their thanks and appreciation to the employees of theCompany at all levels shareholders agents and other business associates for theirdedication and contribution to the Company’s operations.

Your Directors place on record their thanks to The ICICI Bank Ltd. The Federal BankLtd. The State Bank of India The Bank of India and The IDBI Bank for their valuableco-operation and support to the Company.

Place: Kannur On behalf of the Board
Date: 18.08.2016 Chairman