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AB Cotspin India Ltd.

BSE: 535425 Sector: Industrials
NSE: ABCOTS ISIN Code: INE08PH01015
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AB Cotspin India Ltd. (ABCOTS) - Director Report

Company director report

The Members

A B COTSPIN INDIA LIMITED

Your Directors are pleased to present their 24th Annual Report on thebusiness and operations of the Company together with the audited financial statements forthe financial year ended on 31st March 2021.

1. FINANCIAL RESULTS

The financial performance of the Company for the year ended 31st March 2021is summarized as under:

Financial Year Financial Year
PARTICULARS 2020-21 2019-20
(Amount in Rs.) (Amount in Rs.)
Revenue from operations (net) 1153649467 941143635
Add: Other Income 2028364 1667042
Total Income 1155677831 942810677
Profit/(Loss) before Depreciation & Amortisation Exceptional items & Tax expense 103076990 58337609
Less: Finance Cost (21232521) (18185354)
Less: Depreciation and Amortisation Expense (27078068) (28156518)
Profit before exceptional items & tax Expense 54766401 11995737
Less: Exceptional items - -
Profit/(Loss) before Tax Expense 54766401 11995737
Less: Taxation Expense (15978320) (3471286)
Profit/(Loss) for the year 38788081 8524450
Other Comprehensive Income/(Loss) 15259 (210745)
Total Comprehensive Income/(Loss) for the year 38803340 8313705
Earnings per Share (Rs.)
- Basic 5.24 1.15
- Diluted 5.24 1.15

2. STATE OF COMPANY'S AFFAIRS

The Revenue from its business and operations for the financial year ended 31stMarch 2021 is Rs. 1153649467/- as against Rs. 941143635/-in the previous financialyear.

The Company has earned other income during the financial year of Rs. 2028364/- asagainst Rs. 1667042/- in the previous financial year. The Company has earned profitafter tax of Rs. 38788081/-as compared to profit after tax of Rs. 8524450/- in theprevious financial year.

The management of the Company is contemplating various business plans and also makingstrategies to develop the business of the Company.

3. CHANGE IN NATURE OF BUSINESS

There is no change in the nature of the business of the Company during the financialyear 2020-21.

4. DIVIDEND

With a view to conserve the profits the Board of Directors decided not to recommendany dividend for the financial year 2020-21.

5. RESERVES

The Board of Directors of the Company has not proposed to transfer any amount to theReserves for the year under review.

6. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

No unpaid/unclaimed dividend or any other amount was required to be transferred to theInvestor Education and Protection Fund during the year under review.

7. SHARE CAPITAL OF THE COMPANY

During the period under review your Board of Directors after obtaining membersapproval in their extra ordinary general meeting held on 31st March 2021increased the Authorised Share Capital of the Company from 5 Crore to 11.40 Crore. Theauthorised share capital of the Company is divided into: Equity Share 11000000 (OneCrore Ten Lakh) of Rs. 10 each 110000000 (Rupees Eleven Crore)

Preference Share 400000 (Four Lakh only) of Rs. 10 Each 4000000 (Rupees forty lakhonly)

The issued Equity Share Capital of the Company is 28614000 /- (Rupees Two CroreEighty Six Lakh Fourteen Thousand Only). The paid up Equity Share Capital as on March 312021 was 24694000/- (Rupees Two Crore Forty Six Lakh Ninety Four Thousand Only) and inearlier years the Company has forfeited the 392000 (Three Lakh Ninety Two Thousand)Equity Shares of Rs. 5 /- which was not yet issued.

8. ANNUAL RETURN

Pursuant to sub-section 3(a) of section 134 and sub-section (3) of section 92 of theCompanies Act 2013 read with rule 12 of the Companies (Management and Administration)Rules 2014 as amended vide MCA notification dated August 28 2020 a copy of the AnnualReturn is available on the link https://abcotspin.com/investor/

9. NUMBERS AND DATES OF BOARD MEETINGS

During the year under review Thirteen (13) Board Meetings were held 05.05.202019.06.2020 01.08.2020 06.10.2020 10.10.2020 13.102020 19.11.2020 20.11.202007.12.2020 24.12.2020 31.12.2020 08.02.2021 and 09.03.2021.

The provisions of Companies Act 2013 were adhered while considering the time gapbetween two such meetings.

The details of composition of the Board and the attendance record of the Directors atthe Board Meetings and AGM held during the financial year ended on March 31 2021 is asunder:

Name Designation No. of meetings entitled to attend No. of meetings attended Last AGM attended
Mr. Deepak Garg1 Managing Director 13 13 Yes
Mr. Manohar Lal2 Whole-Time Director 13 13 Yes
Mr. Ramesh Kumar Non- Executive Director 13 13 Yes
Mr. Puneet Bhandari3 Independent Director - - -
Ms. Preet Kamal Kaur Bhatia4 Independent Director - - -

 

1 Mr. Deepak Garg who was acting as a director of the Company was appointed asManaging Director w.e.f 09.03.2021 2 Mr. Manohar Lal who was acting as adirector of the Company was appointed as Whole-Time Director w.e.f. 09.03.2021

 

3&4 Mr. Puneet Bhandari and Ms. Preet Kamal Kaur Bhatia were appointed asIndependent Director w.e.f. 09.03.2021

General Meetings

Type of Meeting Date of Meeting Number of Directors
Attended the Meeting
Extra Ordinary General Meeting 25th August 2020 3
Annual General Meeting 31st December 2020 3
Extra Ordinary General Meeting 31st March 2021 3

10.PARTICULARS OF LOANS GUARANTEE OR INVESTMENTS UNDER SECTION 186 OF

COMPANIES ACT 2013

There were no loans or guarantees or securities given by Company or investments made bythe Company under Section 186 of the Companies Act 2013 during the financial year underreview.

11.INDUSTRIAL RELATIONS

During the year under review the Company enjoyed cordial relations with workersemployees Bankers Shareholders and all stakeholders at all levels.

12. COMPLIANCE WITH SECRETARIAL STANDARDS

Pursuant to the provisions of Section 118 of the Companies Act 2013 the Company hascomplied with the applicable provisions of the Secretarial Standards issued by theInstitute of Companies Secretaries of India.

13. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTICULAR'S

The transactions during the financial year with related Particular's were in theordinary course of business and on an arm's length basis. Particulars of contracts orarrangements with related Particular's referred to in Section 188(1) of the Companies Act2013 in the prescribed form AOC-2 are appended as Annexure A to the Board's report.

There are no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large and hence there is noinformation to be provided as required under Section 134(3) (h) of the Companies Act 2013read with Rule 8(2) of the Companies (Accounts) Rules 2014.

14. RESERVATION AND QUALIFICATION ON AUDITOR'S REMARKS

The Auditors Report as provided by the auditors are self-explanatory and therefore donot call for any further clarification/comments. The Auditor's Report does not contain anyqualification reservation or adverse remark.

15. STATUTORY AUDITOR

M/s Shiv Jindal & Co. Chartered Accountants (FRN:011316N) were appointed asStatutory Auditors of the Company to hold office for a term of 5 years from the conclusionof 23rd Annual General Meeting (AGM) held on 31st December 2020until the conclusion of the 28th AGM of the Company.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITOR

There are no frauds reported for the period under review by the Auditor's under section143(12) of the Companies Act 2013 and hence the said disclosure requirements are notapplicable.

16. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIALSTATEMENTS RELATE AND THE DATE OF THE REPORT

There was no material changes and commitments affecting the financial position of theCompany which have occurred between the end of the financial year to which this financialstatements relate and the date of this report except the events mentioned below:

SME IPO

However your Company considered the proposal of Initial public offering on the SMEplatform (“SME IPO”) of its equity shares and in order to facilitate the sameyour Board of Directors of the Company obtained members approval in their extra ordinarygeneral meeting held on 26th April 2021 for raising of capital up to anaggregate of Rs. 28820000 through initial public offering of the Equity Shares subjectto the approval of relevant government statutory supervisory and/or regulatoryauthorities including the DPIIT the SEBI RBI and the Stock Exchange etc. The Companyafter obtaining the necessary approvals filed the draft red hearing prospectus with theStock Exchanges on 09th June 2021.

BONUS ALLOTMENT

Pursuant to members approval obtained in their extra ordinary general meeting held on26th April 2021 the Board of Directors of the Company in their meeting heldon 17th May 2021 alloted 4938800 (Forty Nine Lakh Thirty Eight ThousandEight Hundred) equity shares of 10/- (Rupees Ten) each as fully paid up bonus equityshares to the existing shareholders of the Company.

17. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION ADAPTATION

INNOVATION AND FOREIGN EXCHANGE EARNINGS & OUTGO

Pursuant to Section 134(3)(m) of the Act read with Rule 8(3) of the Companies(Accounts) Rules 2014 relevant disclosure are given below:

a. Conservation of Energy

The Company is taking all possible measures to conserve the energy. The Company haverecently set up a solar plant of 1 MW to reduce our dependency on conventional electricityenergy resources.

b. Technology Absorption and Research & Development

Your Company is conscious of implementation of latest technologies in key workingareas. Technology is ever- changing and employees of your Company are made aware of thelatest working techniques and technologies through workshops group e-mails anddiscussion sessions for optimum utilization of available resources and to improveoperational efficiency.

c. Foreign Exchange Earnings and Outgo

During the financial year the Company has not earned any Foreign Exchange. Howeverthe total Foreign Exchange outgo/earnings of the Company is as given below:

Particulars Current Year Previous Year
Foreign Exchange outgo Rs. 170660/- Rs. 188384/-
Foreign Exchange earnings NIL NIL

18. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

During the Financial year the Company does not have any Subsidiary Company/ JointVenture/ Associate Company.

19. RISK MANAGEMENT POLICY

The Board of the Directors is of the opinion that there is no such risk element whichmay threaten the existence of the Company.

20. COMMITTES

Your Company in order to facilitate SME IPO and as a matter of good corporategovernance and to ensure better accountability and to deal with specific areas/concernsthat need a closer view has constituted/reconstituted various board committees in termsof the provisions of the Companies Act and the Listing Regulations under formal approvalof the Board.

Your Company has constituted/reconstituted following Board committees on April 26 2021as detailed below:

a. Audit Committee

The Audit Committee (‘AC') of the Company had been constituted and functions inaccordance with provisions of Section 177 of the Act and Listing Regulations. The CompanySecretary is acting as the Secretary to the Audit Committee. All the recommendations madeby the Audit Committee were accepted by the Board of Directors of the Company. Some of thekey functions and responsibilities of the AC is enumerated as below:

Reviewing the procedures of financial reporting

Review and monitor the auditor's independence performance and effectiveness of auditprocess

Review the adequacy of internal audit function coverage and frequency of internalaudit appointment removal performance and terms of remuneration of the InternalAuditor. Discuss with the internal auditor and senior management significant internalaudit findings and follow-up thereon.

The details of composition of the Committee is as under:

Sr. No. Name of the Director Designation Type of the member
1. Puneet Bhandari Independent Director Chairman
2. Ramesh Kumar Non-Executive Director Member
3. Preet Kamal Kaur Bhatia Independent Director Member

b. Nomination and Remuneration Committee

The Nomination and Remuneration Committee (‘NRC') of the Company had beenconstituted and functions in accordance with provisions of Section 178 of the Act andListing Regulations. The Company Secretary is acting as the Secretary to the Nominationand Remuneration Committee. Some of the key functions and responsibilities of the NRC isenumerated as below:

Formulate criteria for determining qualifications positive attributes and independenceof a director and recommend to the Board a Policy relating to the remuneration for thedirectors key managerial personnel (KMPs) and other employees; Formulation of criteriafor evaluation of performance of independent directors and the board of directors;

Identifying persons who are qualified to become directors and who may be appointed insenior management in accordance with the criteria laid down and recommend to the Board ofDirectors their appointment and removal.

Recommending to the Board whether to extend or continue the term of appointment ofappointment of the independent director on the basis of report of performance evaluationof independent directors.

The details of composition of the Committee is as under:

Director Member
1. Ramesh Kumar Non-Executive Director Chairman
2. Deepak Garg Managing Director Member
3. Puneet Bhandari Independent Director Member

Company's policy relating to Directors appointment Payment of remuneration andDischarge of their duties:

The provisions of Section 178 of the Companies Act 2013 relating to the Nomination andRemuneration Committee are applicable to our Company and hence the NRC Committee of theCompany has devised policy relating to appointment of directors payment of managerialremuneration directors contribution positive attributes Independence of Directors andother related matters as provided under section 178(3) of Companies Act 2013. The Policymay be accessed on the Company's website at the Weblink: https://abcotspin.com/investor/

c) Stakeholders Relationship Committee

As Company is intending to propose initial public offer of its equity shares it wasnecessary to constitute Stakeholders Relationship Committee pursuant to the provisions ofsub section 5 of section 178 of Companies Act 2013 and rules made there underspecifically for the purposes of Stakeholder's Relationship Committee looking after thematter of handling and resolving shareholders/ investors grievances. The details ofcomposition of the Committee is as under:

Name of the Director Designation Type of the member
1. Ramesh Kumar Non-Executive Director Chairman
2. Deepak Garg Managing Director Member
3. Puneet Bhandari Independent Director Member

21. CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY:

The provisions of the Corporate Social Responsibility as contained under the CompaniesAct 2013 are not applicable on the Company for the financial year 2020-21.

22. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL (KMP) DIRECTORS: a) Compositionof Board of Directors

The Board of Directors of the Company is duly constituted and there were 05 directorson the Board of the Company as on March 31 2021.

S. No. DIN Name of Directors Date of Appointment
1. 00843929 Deepak Garg 26/08/2014
2. 02406686 Manohar Lal 01/08/2018
3. 07684009 Ramesh Kumar 02/03/2020
4 03625316 Puneet Bhandari 09/03/2021
5 07070977 Preet Kamal Kaur Bhatia 09/03/2021

b) Appointments/Resignations during the year:

Name of Director Appointment/ Resignation/ Change in Designation Designation Date of Appointment/ Resignation/ Change in Designation
1 Ramesh Kumar Change in Designation Director 30th December 2020
2 Deepak Garg Change in Designation Managing Director 09th March 2021
3 Manohar Lal Change in Designation Whole Time Director 09th March 2021
4 Puneet Bhandari Appointment Independent Director 09th March 2021
5 Preet Kamal Kaur Bahtia Appointment Independent Director 09th March 2021

c) Retire by Rotation: In accordance with the provisions of Section 152 of the Act andArticles of Association of the Company Mr. Manohar Lal (DIN: 02406686) Whole-TimeDirector of the Company retires by rotation at the conclusion of the forthcoming AnnualGeneral Meeting and being eligible offers himself for reappointment. The Board recommendshis appointment for the consideration of the members of the Company at the ensuing AnnualGeneral Meeting.

d) Declaration given by Independent Director: Your Company has received declarationsfrom all the Independent Directors of the Company confirming that they meet with thecriteria of independence provided in Section 149(6) of the Act and there has been nochange in the circumstances which may affect their status as Independent Director duringthe year under review.

The terms and conditions of appointment of Independent Directors are as per Schedule IVof the Act.

In terms of Section 150 of the Companies Act 2013 read with Rule 6 of the Companies(Appointment and Qualification of Directors) Rules 2014 Independent Directors of theCompany have confirmed that they have registered themselves with the databank maintainedby the Indian Institute of Corporate Affairs Manesar (‘IICA'). The IndependentDirectors are also required to undertake online proficiency self-assessment test conductedby the IICA within a period of 1 (one) year from the date of inclusion of their names inthe data bank unless they meet the criteria specified for exemption.

In the opinion of the Board the independent directors possess the requisite integrityexperience expertise and proficiency required under all applicable laws and the policiesof the Bank.

KEY MANAGERIAL PERSONNEL:

In compliance with provisions of Section 203 of the Companies Act 2013 following arethe KMPs of the Company as on March 31 2021:

S. No. Name Designation
1. Deepak Garg Managing Director
2. Manohar Lal Whole-Time Director
3. Niti Rajan Bansal* Chief Financial Officer
4. Pallavi Pathania# Company Secretary

 

*Mr. Niti Rajan Bansal has been appointed as Chief Financial Officer anddesignated as Key Managerial Personnel of the Company w.e.f. February 08 2021 pursuantto provision of Section 203 of the Act.

 

#Ms. Pallavi Pathania has been appointed as Company Secretary and ComplianceOfficer of the Company and designated as Key Managerial Personnel of the Company w.e.f.February 27 2021 pursuant to Section 203 of the Act she has resigned from the said postw.e.f. 17th April 2021.

Ms. Kannu Sharma has appointed as Company Secretary & Compliance Officer of theCompany w.e.f. 19th April 2021.

23. DEPOSITS

During the year under review the Company did not accept any deposits in terms ofSection73 and 74 of the Companies Act 2013 read together with the Companies (Acceptanceof Deposits) Rules 2014.The Company did not have outstanding deposits at the beginning/at the end of the year.

24.PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

As per the provisions of Rule 5(2) & (3) of the Companies (Appointment &Remuneration of Managerial Personnel) Rules 2014 Statement requiring the names of topten employees in terms of remuneration are marked Annexure B. It is also to be stated herethat there were no employee during the year who were in receipt of remuneration mention inRule 5 (2) (I) (II) and (III) of Companies (Appointment & Remuneration of ManagerialPersonnel) Rules 2014.

25.DISCLOSURES UNDER SEXUAL HARRASMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013

The Company has guidelines and requisite policy in place for prevention & redressalof complaints on sexual harassment of women at workplace in line with the requirements ofthe Sexual Harassment of Women at the workplace (Prevention Prohibition & Redressal)Act 2013. The Company has duly constituted the Internal Complaints Committee under theprovisions of the relevant statute.

During the financial year ended 31st March 2021 no case of sexualharassment and discriminatory employment complaints were reported.

26.DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to provision of Section 134(5) of the Companies Act 2013 your Directorsstate that:

(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating 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 and of the profit of the company for the year ended 31stMarch 2021;

(c) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) systems to ensure compliance with the provisions of all applicable laws were inplace adequate and operating effectively.

27.INTERNAL FINANCIAL CONTROLS

The Company has adequate internal control systems commensurate with its current sizeand business to ensure operational efficiency protection and conservation of resourcesaccuracy and promptness in financial reporting and compliance of laws and regulations.

28. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

OR TRIBUNALS

No such significant and material order has been passed by any regulators or courts ortribunals impacting the going concern status and Company's operations in future.

29.MAINTENANCE OF COST RECORDS

As per the provisions with the Rule 4(2) of the Companies (Cost Records and Audit)Rules 2014 as amended thereto textile companies shall get its Cost record audited inaccordance with these rules if the overall annual turnover of the company from all itsproducts and services during the immediately preceding financial year is `100 Crore ormore and the aggregate turnover of the individual product or products or service orservices for which cost record required to be maintained under Rule 3 is `35 Crore ormore. During the period under review your Company is exempt from the said requirement ofcost audit. Therefore Company has not appointed any Cost Auditor for auditing the costrecords of the Company. As per the provision of with the Rule 5(1) of the (Cost Recordsand Audit) Rules 2014 as amended thereto textiles companies are required to maintainthe cost records for each of its financial year irrespective of requirement of cost audit.Therefore the Company has maintain its cost records in Form CRA-1 for each financialyear.

30.VIGIL MECHANISM:

During the period under review your Directors would like to inform that provisions ofestablishment of Vigil Mechanism do not apply to the Company.

31.GENERAL

Your Directors state that no disclosure or reporting is required in the respect of thefollowing items as there were no transaction on these items during the year under review:

Disclosure regarding Issue of Equity Shares with Differential Rights Disclosureregarding issue of Employee Stock Options Disclosure regarding issue of Sweat EquityShares. Voluntary Revision of Financial Statements or Board's Report. The provisions ofSection 204 of the Companies Act 2013 and rules made there under.

32. ACKNOWLEDGMENT

Your Directors place on record their appreciation for the overwhelming co-operation andassistance received from customers employees vendors as well as regulatory andgovernment authorities.

Your Directors propose to drive the business endeavours with greater optimism andconfidence.

By order of the Board of Directors
For A B Cotspin India Limited
Sd/- Sd/-
Deepak Garg Manohar Lal
Managing Director Whole-time Director Date: 06thSeptember2021
DIN:00843929 DIN: 02406686 Place: Bathinda

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