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GTN Textiles Ltd.

BSE: 532744 Sector: Industrials
NSE: GTNTEX ISIN Code: INE302H01017
BSE 00:00 | 19 Aug 12.01 0.05
(0.42%)
OPEN

12.51

HIGH

12.55

LOW

12.00

NSE 05:30 | 01 Jan GTN Textiles Ltd
OPEN 12.51
PREVIOUS CLOSE 11.96
VOLUME 9279
52-Week high 22.15
52-Week low 6.78
P/E
Mkt Cap.(Rs cr) 14
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 12.51
CLOSE 11.96
VOLUME 9279
52-Week high 22.15
52-Week low 6.78
P/E
Mkt Cap.(Rs cr) 14
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

GTN Textiles Ltd. (GTNTEX) - Director Report

Company director report

To the Members

Your Directors present the 16th (SIXTEENTH) Board'sReport together with the Audited Statement of Accounts (Standalone & Consolidated) forthe year ended 31st March 2021

1. FINANCIAL RESULTS

The financial highlights of your Company for the year ended 31stMarch 2021 are summarized as follows:

Amount 'Cr

STANDALONE CONSOLIDATED
FY 2020-21 FY 2019-20 FY 2020-21 FY 2019-20
Revenue from Operations / Other Income 46.51 131.40 46.51 131.40
EBITDA (8.54) 0.44 (8.54) 0.44
Finance cost 9.00 8.58 9.00 8.58
Depreciation 3.09 3.22 3.09 3.22
Exceptional items 2.99 0.27 2.99 0.27
Share of Profit /(Loss) of Associate - - - (1.36)
Profit / (Loss) / before Tax (23.62) (11.63) (23.62) (13.00)
Deferred tax charge / (credit) 12.39 2.90 12.39 2.90
Profit (loss) for the year (36.01) (8.73) (36.01) (10.10)
Other Comprehensive income (net of tax) (0.89) (0.37) (0.89) (0.37)
Total Comprehensive income / (loss) for the year (36.90) (9.10) (36.90) (10.47)

2. FINANCIAL PERFORMANCE

The sudden outbreak of COVID-19 Pandemic worldwide since January 2020and in India from March 2020 and the resultant nationwide lockdown announced by Governmentfrom 24th March 2020 has significantly affected normal working of your Company.Manufacturing operations was suspended since 24th March 2020 on account ofNation-wide lock down. Plant restarted in a phased manner from 27*h May2020.However due to State Govt regulation of COVID spread the operations at plant wasagain suspended from 10th July 2020 to 12th August 2020. Due tosuspension of operations for significant period on account of COVID-19 pandemic outbreakas aforesaid the business conditions have become adverse and there was an acute liquiditystress. As a result of acute liquidity constraints and lower demand situation operationswere suspended again from 14th August 2020. Finally the plant resumedoperations from 25th September 2020. The plant could operate only for 50 daysduring first half of FY 2020-21. This has severely impacted the performance and the cashflows of the company. The capacity utilisation was gradually ramped up from 3rdQuarter and presently the plant is operating at 50% capacity due to paucity of workingcapital and liquidity stress. There were Nil revenues during the period of suspension ofoperations as aforesaid. However your company had to meet various payment obligationstowards wages & salary Fixed overheads Statutory payments.

In view of the aforesaid Standalone Revenue from operations for thecurrent year was lower at Rs. 46.51 Cr against Rs. 131.40 Cr achieved in the previousyear. The Loss before Depreciation Interest and Taxation for the current year was Rs.8.54 Cr. as against EBITDA earnings of Rs. 0.44 Cr achieved in the previous year. Afterfinance cost of Rs. 9 crores (Rs. 8.58 crores for the previous year) Depreciation of Rs.3.09 crores (Rs. 3.22 crores for the previous year) and exceptional items (VRSexpenditure) of Rs. 2.99 crores (Rs. 0.27 Cr for the previous year) the loss before taxwas higher at Rs. 23.62 crores against the Loss of Rs. 11.63 crores incurred in theprevious year.

Deferred Tax Asset for the current financial year was not recognizedand the Deferred tax Asset recognized in earlier year(s) of Rs. 12.39 Cr was reversed inthe Financial Year 2020-21.

The net loss after reversal of deferred tax asset recognised in theearlier years of Rs. 12.39 crores was of Rs. 36.01 Cr as against Rs. 8.73 Cr in theprevious year. The total comprehensive loss for the year was at Rs. 36.90 crores asagainst Rs. 9.11 Cr for the previous year. There are no material changes or commitmentsaffecting the financial position of the Company which have occurred between the end of thefinancial year and the date of this Report other than the impact of COVID-19 on thebusiness operations of the Company detailed in this Report as well as in Notes to theFinancial Statements of the Company. There is no change in the nature of your Company'sbusiness during the year under review.

3. RESTRUCTURING PROPOSAL

To tide over the unprecedented business disruption caused by Covidpandemic and resultant acute Liquidity stress your Company has submitted ResolutionProposal to its bankers under RBI Circular dated 6th August 2020 to restructurethe outstanding debts of the company. Since desired rating could not be obtained the saidresolution proposal could not be processed by lenders.

In the meantime due to irregularity Lenders have classified theaccounts of your company as NPA as on 31.03.2021 and issued Notice under Section 13 (2) ofthe Securitisation and Reconstruction of Financial Assets and Enforcement of SecurityInterest (SARFAESI) Act 2002.

Your Company has submitted a proposal to its Lenders to sell itsnon-core assets (surplus land at its Kerala Plant) without affecting operations and hassought NOC for the sale. This will enable the company to regularize the account and obtainrequired working capital and continue normal operations.

Due to lockdown imposed by State Government on account of 2ndwave of Covid pandemic the movement of people has been severely affected and the wholeprocess of visits by prospective buyers and further steps relating to the same weredelayed. Meanwhile your company has requested to Lenders to withdraw the Notice issuedunder Section 13(2) of the SARFAESI Act 2002 not to initiate any recovery / legalmeasures and extend continued support in this challenging Covid Pandemic time.

4. REDEEMABLE PREFERENCE SHARES

Pursuant to shareholders' approval at the Annual General Meeting heldon 30*^ October 2020 the company has allotted on 26'h November 2020 and issued510000 6.50% Non- Cumulative Non-Convertible Non-Participating Redeemable PreferenceShares (NCRPS) of Rs. 100 each aggregating Rs. 5.10 Crores on a preferential / privateplacement basis to M/s Seajuli Developers and Finance Ltd. These shares have not beenlisted on stock exchanges and the proceeds had been used for the purposes as mentioned inthe AGM Notice dated 21.9.2020.

5. DIVIDEND

In view of the losses for the financial year ended 31st March2021 the Board of Directors regret their inability to recommend any dividend for the year2020-21.

6. CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements prepared in accordance with theapplicable Indian Accounting Standards issued by the Institute of Chartered Accountants ofIndia and Regulation 33 of the SEBI (LODR) Regulations 2015 together with AuditorsReport. The Auditors report on the consolidated financial statements also attached.

7. SUBSIDIARY JOINT VENTURE AND ASSOCIATE COMPANY

The Company did not have any Subsidiary or Joint Venture during thefinancial year. The Company has one Associate Company Patspin India Limited.

8. MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report on the operations of theCompany as required under the SEBI (LODR) Regulations 2015 (hereinafter referred to as"Listing Regulations") is provided in a separate section and forms an integralpart of this Report.

9. PUBLIC DEPOSITS

The Company does not have "Deposits" as contemplated underClause V of the Companies Act 2013. Further the company has not accepted any suchdeposits during the year ended 31st March 2021.

10. CORPORATE GOVERNANCE

The Company has taken the requisite steps to comply with therecommendations concerning Corporate Governance.

As per Regulation 34 (3) read with Schedule V of the SEBI (ListingRegulations and Disclosure Requirements) Regulations 2015 a separate statement onCorporate Governance practices followed by the Company together with a Certificate fromthe Practicing Company Secretary confirming compliance forms an integral part of thisReport.

11. DIRECTORS AND KEY MANAGERIAL PERSONS

Shri. Prem Malik Independent Director have resigned effective from12.07.2021 due to his personal reasons. He had confirmed that there is no other materialreason for his resignation other than those provided.

There is no change in the composition of the Board of Directors and theKey Managerial Personnel except as stated above.

12. KEY MANAGERIAL PERSONNEL

Shri B.K. Patodia Managing Director Shri. Arun S Mohan ChiefFinancial Officer and Shri E.K.Balakrishnan Company Secretary were the Key ManagerialPersonnel of your Company in accordance with the provisions of Section 203 of theCompanies Act 2013 during the year under review.

13. NUMBER OF MEETINGS OF THE BOARD

The Board of Directors met 8 (Eight) times during the financial year2020-21. The details of the meetings of the Board of Directors of the Company convened andattended by the Directors during the financial year 202021 are given in the CorporateGovernance Report which forms part of this Annual Report.

14. MEETING OF INDEPENDENT DIRECTORS

The Independent Directors met once during the Financial Year underreview. The Meeting was conducted without the presence of the Non-Independent Directorsand members of management.

15. DIRECTORS' RESPONSIBILITY STATEMENT

The Board of Directors acknowledge the responsibility for ensuingcompliances with the provisions of Section 134(3)(c) read with Section 134(5) of theCompanies Act 2013 in the preparation of annual accounts for the year ended on 31stMarch 2021 and state that:

1. in the preparation of the Annual Accounts the applicable IndianAccounting Standards have been followed and there are no material departures from the same

2. the Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of your company as at 31stMarch 2021 and of the profit or loss of the company for that period;

3. the Directors have taken proper and sufficient care 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;

4. the Directors have prepared the Annual Accounts on a going concernbasis;

5. the Directors have laid down internal financial controls to befollowed by the company and that such internal financial controls are adequate and areoperating effectively; and

6. the Directors have devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

16. BOARD EVALUATION

Pursuant to the provisions of Companies Act and Listing Regulationsannual evaluation of the Board the Directors individually as well as working of itsconstituted committees has been carried out from time to time.

17. FAMILIARISATION PROGRAMME FOR DIRECTORS

At the time of appointing a Director a formal letter of appointment isgiven which interalia explains the role function duties and responsibilities expectedas a Director of the Company. This is to provide insights into the Company to enable theIndependent Directors to understand its business in depth to familiarize them with theprocess business and functionaries of the Company and to assist them in performing theirrole as Independent Directors of the Company. The Director is also explained in detail theCompliance required 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 theDirectors to familiarize with the company's operations.

18. AUDITORS

M/s. L.U.Krishnan & Co. (Regn.No.001527S) Chartered AccountantsChennai were appointed as the Auditors of the Company at the 12th Annual General Meeting(AGM) held on 22nd September 2017 to hold office till the conclusion of the 17th AGM ofthe Company for a term of 5 years subject to ratification of the appointment by themembers at every Annual General Meeting. The requirement of seeking ratification of themembers for continuance of their appointment has been withdrawn consequent up on thechanges made by the Companies

(Amendment) Act 2017 with effect from May 07 2018. The StatutoryAuditors have given a confirmation to the effect that they are eligible to continue withtheir appointment and that they have not been disqualified in any manner from continuingas Statutory Auditors. Reports issued by the Statutory Auditors on the Standalone andConsolidated financial statements for the year ended 31st March 2021 are with unmodifiedopinion (unqualified).

19. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act 2013and rules made there under the Company has appointed Shri. MRL Narasimha (C.P No. 799)Practicing Company Secretary to undertake the Secretarial Audit of the Company.

Secretarial Audit Report issued by Shri. MRL Narasimha PracticingCompany Secretary in Form MR-3 forms part of this report as Annexure I. The said reportdoes not contain any observation or qualification requiring explanation or adverse remark

20. COST AUDITORS

Pursuant to Section 148 of the Act read with Rule 14 of the Companies(Cost Records and Audit) Amendment Rules 2014 the cost audit records of the Company arerequired to be audited. The Directors on the recommendation of the Audit Committeeappointed M/s. Hareesh K.N and Associates Cost Accountants (Firm Reg. No. 101974) CostAccountants to audit the cost accounts of the Company for the FY ending 31st March2022 on a remuneration as mentioned in the Notice convening the 16th Annual GeneralMeeting for conducting the audit of the cost records maintained by the company.

21. EXTRACT OF ANNUAL RETURN

Pursuant to provisions of Section 134(3)(a) and Section 92(3) of theCompanies Act 2013 read with Rule 12 of the Companies( Management and Administration)Rules 2014 the extract of the Annual Return of the company for the Financial Year 31stMarch 2021 is uploaded on the website of the company and can be accessed at thewww.gtntextiles.com

22. RELATED PARTY TRANSACTIONS

All transactions entered with related parties were on arm's lengthbasis and in the ordinary course of business.

There were no materially significant transactions with the relatedparties during the financial year and were not in conflict with the interest of thecompany. Thus a disclosure in Form AOC -2 in terms of Section 134 of the Companies Act2013 is not required. All related party transactions are placed before the Audit Committeeas also before the Board for approval.

The Board of Directors as recommended by the Audit Committee adopteda policy to regulate transactions between the Company and its Related Parties incompliance with the applicable provisions of the Companies Act 2013 the Rules thereunderand the Listing Regulations. This Policy has been uploaded on the website of the Company.

23. LOANS & INVESTMENTS

Details of loans guarantees and Investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the Notes to FinancialStatements forming part of this report.

24. CREDIT RATING

During the previous year Infomerics Valuation and Rating Pvt. Ltd.(Infomerics) has assigned - "IVR BB -" (IVR Double BB minus with stable outlook)credit rating for the long-term facilities and "IVR A4" (IVR A Four) creditrating for short term facilities of the company. Further during the year the company hadsubmitted a Resolution Proposal to its Bankers under RBI Circular dated 6th Aug2020 to restructure the outstanding debts of the company. However desired rating could notbe obtained and the said Resolution Proposal could not be processed by Lenders.

25. RISK MANAGEMENT

The company has laid down a well-defined risk management mechanismcovering the risk mapping and trend analysis risk exposure potential impact and riskmitigation process. A detailed exercise is being carried out to identify evaluate manageand monitor business risks. The Audit Committee and the Board periodically review therisks and suggest steps to be taken to manage/ mitigate the same through a properlydefined framework.

During the year a risk analysis and assessment was conducted and nomajor risks were noticed which may threaten the existence of the company.

26. VIGIL MECHANISM / WHISTE BLOWER POLICY

The company has a Vigil Mechanism / Whistle Blower Policy to reportgenuine concerns or grievances. The Vigil Mechanism (Whistle Blower Policy) has beenposted on the company's website (www.gtntextiles. com).

27. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Even though the provisions of Section 135 (5) of Companies Act 2013regarding Corporate Social Responsibility are not yet attracted the company has beenover the years pursuing as part of its corporate philosophy an unwritten CSR policyvoluntarily which goes much beyond mere philanthropic gestures and integrates interestwelfare and aspirations of the community with those of the Company itself in anenvironment of partnership for inclusive development.

28. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGEEARNINGS AND OUTGO

Information required under section 134 (3) (m) of the Companies Act2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is given in the Annexure IIforming part of this report.

29. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an effective internal control and risk mitigationsystem designed to effectively control the operations at its Head Office Plants andDepots. The internal control systems are designed to ensure that the financial and otherrecords are reliable for the preparation of financial statements and for maintainingassets. The Company has well designed Standard Operating Procedures. Independent InternalAuditors conduct audit covering a wide range of operational matters and ensure compliancewith specified standards. Planned periodic reviews are carried out by Internal Audit. Thefindings of Internal Audit are reviewed by the top management and by the Audit Committeeof the Board of Directors.

Based on the deliberations with Statutory Auditors to ascertain theirviews on the financial statements including the Financial Reporting System and Complianceto Accounting Policies and Procedures the Audit Committee was satisfied with the adequacyand effectiveness of the Internal Controls and Systems followed by the company.

30. NOMINATION & REMUNERATION POLICY

The Board of Directors has framed a policy which lays down a frameworkin relation to remuneration of Directors Key Managerial Personnel and Senior Managementof the Company. This policy also lays down criteria for selection and appointment of BoardMembers. More details on the same are given in the Corporate Governance Report.

31. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

In accordance with the applicable provisions of Companies Act 2013(hereinafter referred to as "the Act") read with Investor Education andProtection Fund (Accounting Audit Transfer and Refund) Rules 2016 (hereinafter referredto as the "IEPF Rules") all unclaimed dividends are required to be transferredby the Company to the IEPF after completion of seven (7) years. Further according to IEPFRules the shares on which dividend has not been claimed by the shareholders for seven (7)consecutive years or more shall be transferred to the demat account of the IEPF Authority.The details relating to shares on which dividends were unclaimed are provided in theGeneral Shareholders Information section of Corporate Governance report forming part ofthis Annual Report.

32. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013

The Company has in place an anti-sexual harassment policy in line withthe requirements of the sexual harassment of women at the workplace (Prevention

Prohibition and Redressal) Act 2013. Internal Compliance Committee(ICC) is already been functioned for redressing complaints received regarding sexualharassment. All employees (permanent contractual temporary trainees) are covered underthis policy.

The Company has not received any complaints under this policy duringthe year ended 31st March 2021.

33. PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 134 (3) (q) OF THECOMPANIES ACT 2013 READ WITH RULE 5 (1) OF THE COMPANIES (APPOINTMENT AND REMUENRATION OFMANAGERIAL PERSONNEL) RULES 2014

The information required pursuant to section 134 (3) (q) of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 in respect of employees of the company will be providedupon request. In terms of Section 136 of the Act the Report and Accounts are being sentto the Members and others entitled thereto excluding the information on employees'particulars 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.

34. PERSONNEL & INDUSTRIAL RELATIONS

Industrial Relations were cordial and satisfactory. There were noemployees whose particulars are to be given in terms of Section 134(3)(q) of the CompaniesAct2013 read with Rule 5(2) and 5(3) of the companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014.

35. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

There are no significant and material orders passed by the Regulatorsor Courts or Tribunals that would impact the going concern status of your Company and itsfuture operations.

36. GENERAL

a) There was no issue of equity shares with differential rights as todividend voting or otherwise: and;

b) There was no issue of shares (including sweat equity shares) to theemployees of the company under any scheme.

37. ACKNOWLEDGEMENT

Your Directors place on record their gratitude to Central Bank ofIndia State Bank of India 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: Mumbai (DIN:00003516)
Date: 14.8.2021 Chairman

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