To the Members
Of KATARE SPINNING MILLS LIMITED
Your Director's have pleaser in presenting their 38th Annual Report ofthe Company together with its Audited Statement of Profit & Loss for the year ended 31stMarch 2018 and the Balance Sheet as on that date.
1. Financial Highlights
(Rs. In lacs)
| ||2017-18 ||2016-17 |
|Turnover ||3292.36 ||3608.24 |
|Profit Before Interest & Depreciation ||48.31 ||48.20 |
|Less : Interest ||319.10 ||305.70 |
|Loss before depreciation ||-270.79 ||-257.50 |
|Less : Depreciation ||108.10 ||110.35 |
|Loss after depreciation & before taxation ||-378.89 ||-367.85 |
|Add : Excess provision in the last year ||0 ||0.76 |
|Less: Tax expenses relating to previous year ||0 ||9.52 |
|Add/Less: Deferred Tax Liability/Assets ||87.2 3 ||115.33 |
|Profit / loss for the period ||-291.66 ||-261.28 |
|Add : Balance carried from previous year ||-148.32 ||112.96 |
|Loss carried forward ||-439.98 ||-148.33 |
2. STATE OF AFFAIRS OF THE COMPANY/BUSINESS OVERVIEW SPINNING MILL INDUSTRY
In general the performance of the cotton yarn industry depends upon the swings ofdemand by the market forces which closely track the economic trend. The exception to thisrule is the demand for specialty cotton yarn which is consistent and growing. On bouncingof economic conditions the demand trend is expected to be more positive for the currentyear even for normal segment of cotton yarn and that would drive more demand for specialtycotton yarn.
SOLAR POWER PROJECT
The Company has already Commissioned Rooftop Solar Power Project at Hotel and hasgetting good benefit by way of reduction in monthly electricity bills of the Hotel asusual.
Considering the involvement of power part in the cost of finished goods the Companyhas set up 1 MW power project for captive consumption and accordingly pleased to informyou that the Company has successfully commissioned 1 MW Solar Power plant for captiveconsumption in the month of April 2015. This is the first net metering installation inthe Maharashtra. During the financial year total 1597460 electricity units have beengenerated and it helps the Company to save in electricity bill substantially.
3. ANNUAL RETURN
The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule12 of the Companies (Management and Administration) Rules 2014 is furnished in MGT-9 andis attached to this Report and also the said report is available on Company's Website-www. katarespinningmillslimited .com.
Since the Company has incurred the losses during the financial year under review thedirectors do not recommend any amount of dividend for the year.
5. BOARD MEETINGS
During the year under review 7 (Seven) Board Meetings were held and the interveninggap between the meetings did not exceed the period prescribed under the Act the detailsof which are given in the Corporate Governance Report.
6. BOARD EFFECTIVENESS
The Company has adopted the Governance guidelines which inter alia cover aspectsrelated to composition and role of the Board Chairman and Directors Board diversitydefinition of independence Director's term retirement age and Committees of the Board.It also covers aspects relating to nomination appointment induction and development ofDirectors Director's Remuneration Code of Conduct Board Effectiveness Review andmandates of Board Committees.
A. Board Evaluation
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors pursuant to the provisions of the Act and thecorporate governance requirement as prescribed by Securities Exchange Board of India(SEBI) (Listing Obligations and Disclosure Requirements) Regulations 2015.
The performance of the Board was evaluated by the Board after seeking inputs from theDirectors on the basis of the criteria such as the Board Composition and structureseffectiveness of board processes information and functioning etc. The performance of thecommittees was evaluated by the Board after seeking inputs from the committee members onthe basis of the criteria such as the composition of committees effectiveness ofcommittee meetings etc.
The Board and the Nomination and Remuneration Committee (NRC) reviewed the performanceof the individual Directors on the basis of the criteria such as the contribution of theindividual Director to the Board and Committee meetings like preparedness on the issues tobe discussed meaningful and constructive contribution and inputs in meetings etc. Inaddition the Chairman was also evaluated on the key aspect of his role.
B. Appointment of Directors and Criteria for determining Qualifications positiveattributes independence of a Director
The NRC is responsible for developing competency requirements for the Board based onthe industry and strategy of the Company. The NRC reviews and meets potential candidatesprior to recommending their nomination to the Board. At the time of appointment specificrequirements for the position including expert knowledge expected is communicated to theappointee.
The NRC has formulated the criteria for determining qualifications positive attributesand independence of Directors in terms of provisions of Section 178 (3) of the Act andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015:
Independence: A Director will be considered as an Independent Director' if he/she meets with the criteria for Independence' as laid down in the Act (SEBI)(Listing Obligations and Disclosure Requirements) Regulations 2015.
Competency: A transparent Board nomination process is in place that encouragesdiversity of thought experience knowledge perspective age and gender. It is ensuredthat the Board has a mix of members with different educational qualifications knowledgeand with adequate experience in banking and finance accounting and taxation legal andregulatory matters hospitality sector and other disciplines related to the Company'sbusinesses.
Additional Positive Attributes:
> The Directors should not have any other pecuniary relationship with the Companyand the Company's promoters except as provided under law.
> The Directors should maintain an arm's length relationship between themselves andthe employees of the Company as also with the Directors and promoters stakeholders forwhom the relationship with these entities is material.
> The Directors should not be the subject of proved allegations of illegal orunethical behavior in their private or professional lives.
> The Directors should have the ability to devote sufficient time to the affairs ofthe Company.
C. Remuneration Policy
The Company had adopted a Remuneration Policy for the Directors KMP and otheremployees pursuant to the provisions of the Act and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015.
The key principles governing the Company's Remuneration Policy are as follows:
> Independent Directors (ID) may be paid sitting fees for attending the meetings ofthe Board and of Committees of which they may be members and receive commission withinregulatory limits as recommended by the NRC and approved by the Board.
> Overall remuneration should be reasonable and sufficient to attract retain andmotivate Directors aligned to the requirements of the Company; taking into considerationthe challenges faced by the Company and its future growth imperatives.
> Remuneration paid should be reflective of the size of the Company complexity ofthe sector/ industry/Company's operations and the Company's capacity to pay theremuneration and be consistent with recognized best practices.
Remuneration for Managing Director (MD)/ Executive Directors (ED)/ rest of theEmployees
The extent of overall remuneration should be sufficient to attract and retain talentedand qualified individuals suitable for every role. Hence remuneration should be marketcompetitive driven by the role played by the individual reflective of the size of theCompany complexity of the sector/ industry/ Company's operations and the Company'scapacity to pay consistent with recognized best practices and aligned to any regulatoryrequirements.
Basic/ fixed salary is provided to all employees to ensure that there is a steadyincome in line with their skills and experience. In addition the Company providesemployees with certain perquisites allowances and benefits to enable a certain level oflifestyle and to offer scope for savings.
In addition to the basic / fixed salary benefits perquisites and allowances asprovided above the Company provides MD/ EDs such remuneration by way of commissioncalculated with reference to the net profits of the Company in a particular financialyear as may be determined by the Board subject to the overall ceilings stipulated inSection 197 of the Act. The specific amount payable to the MD/ EDs would be based onperformance as evaluated by the NRC and approved by the Board.
It is affirmed that the remuneration paid to Directors and all other employees is asper the Remuneration Policy of the Company.
7. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the Financial year under review no significant material orders were passed bythe regulators or courts or tribunals impacting the going concern status and the Company'soperations.
8. AUDIT COMMITTEE
Details pertaining to the composition of Audit Committee are included in the CorporateGovernance Report which forms part of the Annual Report.
9. DIRECTORS AND KMP
As per the provisions of Section 152 of the Companies Act 2013 Mr. Subhash T. Katare(DIN 00685066) who retires by rotation at this meeting and being eligible offered himselffor re-appointment the matter is placed before member of the Company for approval.
Also as per the provisions of Sections 196 197 and 203 read with Schedule V and otherapplicable provisions if any of the Companies Act 2013 consent of shareholder isrequire for re-appointment of Mr. Kishore T. Katare (DIN 00645013) as a Chairman andManaging Director of the Company for the period of 5 years starting from 01stJuly 2018 to 30th June 2023 without remuneration and the matter is placedbefore member of the for approval.
The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed both under the Act and SEBI(Listing Obligations and Disclosure requirements) regulations 2015.
There was no transfer of any amount to Reserve account of the Company as the Companywas having the losses during year. The Company is trying for betterment of future for it.
11. CORPORATE GOVERNANCE
The members may please note that the provisions relating to Corporate Governance i.e.Regulation 27 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015are not applicable to the Company and accordingly the Company is not required to submitthe Corporate Governance Report with this Annual Report. However keeping in view theobjective of encouraging the use of better practices through voluntary adoption theCompany has decided to adopt and disseminate voluntary disclosure of Corporate Governancewhich not only serve as a benchmark for the corporate sector but also help the Company inachieving the highest standard of corporate governance. Accordingly a voluntarydisclosure i.e. the report on Corporate Governance as stipulated under regulation 34(3)read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is annexed herewith and forms a part of this report.
As such the Members may note that any omission of any corporate governance provisionsshall not be construed as non-compliance of the above mentioned regulations.
12. AUDITORS & THEIR REPORTS
Pursuant to the provisions of section 139 142 and other applicable provisions if anyof Companies Act 2013 read with Rule 6 of Companies (Audit and Auditors) Rules 2014 andpursuant to the recommendation of the Audit Committee M/s N. R. Waghchaure &Associates Chartered Accountants (Firm Registration Number 114999W) was appointed as aStatutory Auditors of the Company and the appointment of the Statutory Auditors of theCompany along with a confirmation that their appointment made by the members in thelast year was within the limits prescribed under the Companies Act 2013. The board ofdirectors hereby recommends the ratification of appointment of Statutory Auditor in theensuring Annual General Meeting of the Company.
The report of the Statutory Auditors along with the notes to Schedules is enclosed tothis report and also the report contains qualification reservation or adverse remark ordisclaimer for the financial year under review.
13. RESPONSE TO AUDITORS QUALIFICATION
The board of the Company has discussed the points as mentioned in the Auditors reportfor period under review in respect to this management is taking the necessary stepstowards it.
The Company has incurred losses in the past years and charging of deferred interest toprofit & Loss account would further increase the loss. Therefore the Company istrying for betterment of future of it and also anticipates good results in ensuring yearin which situation the entire amount is proposed to be written off.
14. SECRETARIAL AUDIT
Pursuant to the provisions of the Section 204 of the Companies Act 2013 and TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed M/S. NIKHIL SAWANT & CO. Company Secretaries Pune as SecretarialAuditor to undertake the Secretarial Audit of the Company for the financial year 2017-18.The Report is Self-explanatory annexed herewith however; the Company has initiatednecessary steps to comply with queries and/or non-compliances mentioned under theSecretarial Audit Report as per the provisions of the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
15. INTERNAL FINANCIAL CONTROL
The Company has in place internal financial control systems commensurate with the sizeand complexity of its operations to ensure proper recording of financial and operationalinformation and compliance of various internal controls and other regulatory and statutorycompliances. The internal auditor monitors and evaluates the efficacy and adequacy ofinternal control systems in the Company. Based on the report of the internal auditorrespective departments undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observations and corrective actions there onare presented to the Audit Committee of the Board.
16. ENERGY CONSERVATION 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 readwith Rule 8(3) of The Companies (Accounts) Rules 2014 is annexed herewith separately.
The Company has not accepted or renewed any deposits from the public during the yearunder review in terms of the Companies (acceptance of deposits) Rule 2014.
18. RELATED PARTY TRANSACTIONS
All Related Party Transactions (RPTs) that were entered into during the financial yearwere on an arm's length basis and in the ordinary course of business. Accordinglydetailed information given in form AOC-2 which is annexed herewith separately.
There were no materially significant RPTs entered into by the Company during the year.
19. RISK MANAGEMENT
The Company has adopted a Risk Management Policy pursuant to the provisions of Section134 of the Act which has a robust Risk Management framework to identify and evaluatebusiness risks and opportunities. This framework seeks to create transparency minimizeadverse impact on business objectives and enhance the Company's competitive advantage.
The risk framework defines the risk management approach across the enterprise atvarious levels including documentation and reporting.
The framework enables risks to be appropriately rated and graded in accordance withtheir potential impact and likelihood. The two key components of risks are the probability(likelihood) of occurrence and the impact (consequence) of occurrence if the risk occurs.Risk is analyzed by combining estimates of probability and impact in the context ofexisting control measures.
20. LOANS GUARANTEES AND INVESTMENTS
The Company has not made any investments or given any loans or guarantees or providedany security in connection with a loan to any person or body corporate covered underSection 186 of the Companies Act 2013.
21. CORPORATE SOCIAL RESPONSIBILITY INITIATIVE
As the net worth of the Company is less than Rs. Five hundred crores further theturnover of the Company is less than Rs. One thousand crores and net profit of the Companydoes not exceed Rs. Five crore or more at any point during the financial year thereforethe Company is not obliged to form Corporate Social Responsibility committee as per termsof section 135 (1) of the Companies Act 2013.
22. PARTICULARS OF EMPLOYEES
There are no employee drawing remuneration exceeding the limits prescribed underSection 134(3) (q) read with Rule 5 of Rules 2014 and hence no details are required to beannexed to this report.
23. VIGIL MECHANISMS/WHISTLE BLOWER POLICY
The Company has established a vigil mechanism named as Whistle Blower Policy'within the Company in compliance with the provisions of Section 177(10) of the CompaniesAct 2013 and Regulation 4(2)(d)(iv) of the Listing Regulations 2015.
The policy of such mechanism has been circulated to all employees within the Companywhich provides a framework to the employees for guided & proper utilization of themechanism.
24. SEPARATE MEETING OF INDEPENDENT DIRECTORS
The Independent Directors were fully kept informed of the Company's activities in allits spheres. During the year under review a separate meeting of Independent Directors washeld on 21st April 2017 and the Independent Directors reviewed the performanceof (i) non-Independent directors and (ii) the board as whole.
They also assessed the quality quantity and timelines of flow of information betweenthe Company's Management and the Board that are necessary for the Board to effectively andreasonably perform their duties. All the Independent Directors were present at themeeting.
25. SAFETY MEASURES
Your Company continued to cover all assets mainly; plant & machinery buildingmaterials stock furniture & fixtures against possible risks like fire floodterrorism and earthquake.
ii. INDUSTRIAL RELATIONS-
The industrial relations at the plants of the Company during the year under reviewcontinued to be cordial throughout the year.
26. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 read with Schedule V to the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations') is presented in a separate section forming part of the Annual Report.
27. DISQUALIFICATION OF DIRECTORS
All Directors on the Board of the Company have not incurred any disqualification onaccount of non-compliance with any of the provisions of the Companies Act 2013.
28. DIRECTOR'S RESPOSIBILITY STATEMENT
The Board of Directors acknowledge the responsibility for ensuring compliance with theprovisions of Section 134(3)(c) read with Section 134(5) of the Companies Act 2013 in thepreparation of annual accounts for the year ended on 31st March 2018 and statethat:
1. In the preparation of the annual accounts the applicable accounting standard hadbeen followed along with proper explanation relating to material departures;
2. The directors had selected such accounting policies and applied them consistentlyand made judgment and estimates that are 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 coveredunder this report and of the profit and loss of the Company for that period.
3. 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.
4. The Directors had prepared the annual accounts on a going concern basis.
5. The Directors had laid down internal financial control to be followed by the Companyand that such internal financial control are adequate and were operating effectively: and
6. The Directors had devised proper systems to ensure compliance with the provision ofall applicable laws and that such systems were adequate and operative effectively.
29. DETAILS OF SUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES
The Company does not having any subsidiaries or joint ventures within the meaning ofthis clause and hence no details are required to be given.
30. DISCLOSURES AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has zero tolerance for sexual harassment at its workplace and has adopted aPolicy on prevention prohibition and redresses of sexual harassment at the workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redresses) Act 2013 and the Rules thereunder for prevention and redressesof complaints of sexual harassment at workplace.
Your Directors would like to place on record their appreciation for the co-operationand assistance received from the banks for the utmost confidence reposed in themanagement by the shareholders and customers during the year under review. Your Directorswish to thank for the services of the executive staff and workers of the Company at alllevels for their dedication devotion determination and discipline. The Directors expresstheir profound thanks to the shareholders for their continued support and goodwill andthey look forward to the future with confidence.
| ||By Order of the Board of Directors |
| ||KATARE SPINNING MILLS LIMITED |
| ||SD/- |
| ||KISHORE KATARE |
|Place: Solapur ||Managing Director |
|Date: 14th August 2018 ||(DIN No.-00645013) |
ANNEXURE TO DIRECTOR'S REPORT
Information as required under rule 8(3) of the companies (accounts) Rule 2014
A) Energy Conservation taken:
Switching off unwanted lights.
Use of natural lights as far as possible.
Humidification plants not operated during favorable climatic conditions.
Control over slippage.
The company has replaced HDP Ring Tubes and introduced light weight ABS Tubesfor Ring frame. Because of this the Company is getting more Yarn contents and about 1.5%power saving in the power consumption.
B) Additional investment and proposal if any being implemented for reduction ofconsumption of energy. The management is actively considering different areas viz.
Solar power panel.
Change in Humidification plant (Cell Type Air Washer) with the help of ATIRAwhere power can be saved.
Installation of appropriated energy saving devices.
Impact of measures at (a) and (b) above for reduction of energy consumption andconsequent impact on the cost of production.
The above measures will save energy and to that extent the cost of goods produced willbe reduced.