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Katare Spinning Mills Ltd.

BSE: 502933 Sector: Industrials
NSE: N.A. ISIN Code: INE498G01015
BSE 14:08 | 18 Oct 21.55 1.00
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NSE 05:30 | 01 Jan Katare Spinning Mills Ltd
OPEN 21.55
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Buy Price 0.00
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Sell Price 21.55
Sell Qty 235.00
OPEN 21.55
CLOSE 20.55
VOLUME 2000
52-Week high 21.55
52-Week low 13.26
P/E
Mkt Cap.(Rs cr) 6
Buy Price 0.00
Buy Qty 0.00
Sell Price 21.55
Sell Qty 235.00

Katare Spinning Mills Ltd. (KATARESPINNING) - Director Report

Company director report

To the Members

KATARE SPINNING MILLS LIMITED

INITIATION OF CORPORATE INSOLVENCY RESOLUTION PROCESS (CIRP)

Pursuant to the orders of Hon'ble National Company Law Tribunal (NCLT) MumbaiCorporate Insolvency Resolution Process (CIRP) has been initiated in respect of KATARESPINNING MILLS LIMITED ("the Company") under the provisions of the Insolvencyand Bankruptcy Code 2016 ("the Code") with effect from 17th July2020.

Further "the Company has preferred appeal against the decision of Hon'ble NCLTMumbai to NCLAT Delhi (Company Appeal no. 693 of 2020) and is now scheduled for hearingon 4th September 2020."

In this connection Mr. Vithal Madhukar Dahake has been appointed as ResolutionProfessional (RP) to carry out the activities relating to CIRP as per the rulesregulations and guidelines prescribed by the Code.

Since the Company is under Corporate Insolvency Resolution Process (CIRP) as perSection 17 of the Insolvency & Bankruptcy Code from the date of appointment of theResolution Professional -

(a) the management of the affairs of the company shall vest in the ResolutionProfessional.

(b) the powers of the Board of Directors of the company shall stand suspended and beexercised by the Resolution Professional.

(c) the officers and managers of the company shall report to the resolutionprofessional and provide access to such documents and records of the company as may berequired by the Resolution Professional.

d) the financial institutions maintaining accounts of the company shall act on theinstructions of the Resolution Professional in relating to such accounts furnish allinformation relating to the company available with them to the Interim ResolutionProfessional.

1. Financial Highlights:

Certain key aspects of your Company's performance during the Financial Year ended 31stMarch 2020 as compared to the previous Financial Year are summarized below:

2019-20 2018-19
Turnover 3153.24 3653.94
Profit Before Interest & Depreciation -70.12 424.03
Less : Interest 63.79 323.82
Loss before depreciation -133.91 100.21
Less : Depreciation 88.75 86.59
Loss after depreciation & before taxation -222.66 13.62
Add : Excess provision in the last year 0 0
Less: Tax expenses relating to previous 0 3.77
year
Add/Less: Deferred Tax Liability/Assets 0 0
Profit / loss for the period
Profit/ Loss for the period -222.66 9.85
Add : Balance carried from previous
year -430.13 -439.98
Profit/Loss carried forward -652.79 -430.13

2. OVERVIEW OF OPERATIONS

During the year under review your Company recorded a total income of Rs. 3153.24 (inLakhs) as compared to last year's income of Rs. 3653.94 (in Lakhs) and net loss of Rs.222.66 (in Lakhs) as compared to last year's net profit of Rs. 9.85 (in Lakhs). Forfurther information kindly refer to Management Discussion and Analysis Report forming apart of this Annual Report.

The Bank of India filed an application before Hon'ble NCLT Mumbai under Section 7 ofInsolvency and Bankruptcy Code 2016 ("IBC 2016") for initiating CorporateInsolvency Resolution Process ("CIRP") of KATARE SPINNING MILLS LIMITED. Theapplication was admitted vide Hon'ble NCLT Mumbai Order dated 17.07.2020 and Mr. VithalMadhukar Dahake Insolvency Professional having (IP Registration No.: IBBI/IPA-003/IP-N-000117/2017-18/11296) was appointed as Resolution Professional ("RP").

As per the Insolvency and Bankruptcy Code 2016 public announcement were made invitingthe claims from the creditors and during the Corporate Insolvency Resolution Process("CIRP") Expression of Interest ("EOI") were invited for submittingthe Resolution Plan for KATARE SPINNING MILLS LIMITED.

3. DIVIDEND AND RESERVE

Your Directors do not recommend any dividend for the year under review. The details ofreserves and surplus are provided in Note No. 15 of the notes to the standalone financialstatement.

Unclaimed Dividend Amount

The Company has declared dividend in the year of 2013 out of that total dividendcorpus dividend of Rs. 206853/- was unclaimed from the shareholders till the date in theseparate bank account maintained by the Company. Further the Company wishes to inform tothe shareholders that as per the regulations of Investor Education and Protection fund(IEPF) such unpaid dividend amount will be transferred to IEPF account after conclusionof the ensuring AGM.

4. 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

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 1322312 electricity units have beengenerated and it helps the Company to save in electricity bill substantially.

5. ANNUAL RETURN

Pursuant to the provisions of Sections 134(3)(a) and 92(3) of the Companies Act 2013("the Act") read with Rule 12(1) of the Companies (Management andAdministration) Rules 2014 an extract of the Annual Return as on March 31 2020 inprescribed Form No. MGT-9 is given to this Report.

6. BOARD MEETINGS

Six meetings of the Board of Directors were held during the financial year 2019-20 andthe gap between two consecutive board meetings was within the statutory limit. The detailsof the number of meetings held and attended by each Director are provided in the CorporateGovernance Report which forms part of this Report.

7. 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 SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 ["SEBI (LODR) 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 (LODR) 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 and SEBI(LODR) 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 (LODR) 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.

8. 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.

Further The Bank of India filed an application before Hon'ble NCLT Mumbai underSection 7 of Insolvency and Bankruptcy Code 2016 ("IBC 2016") for initiatingCorporate Insolvency Resolution Process ("CIRP") of KATARE SPINNING MILLSLIMITED. The application was admitted vide Hon'ble NCLT Mumbai Order dated 17.07.2020 andMr. Vithal Madhukar Dahake Insolvency Professional having (IP Registration No.:IBBI/IPA-003/ IP-N-000117/2017-

18/11296) was appointed as Resolution Professional ("IRP").

As per the Insolvency and Bankruptcy Code 2016 public announcement were made invitingthe claims from the creditors and during the Corporate Insolvency Resolution Process("CIRP") Expression of Interest ("EOI") were invited for submittingthe Resolution Plan for KATARE SPINNING MILLS LIMITED.

9. AUDIT COMMITTEE

Details pertaining to the composition of Audit Committee are included in the CorporateGovernance Report which forms part of the Annual Report.

10. DIRECTORS AND KMP

As per the provisions of Section 152 of the Act Mrs. Vidyavati K. Katare (DIN01443784) who retires by rotation at this meeting and being eligible offered herself forre-appointment the matter is placed before member of the Company for approval.

Also the Board of Directors of the Company has appointed new Two Independent Directorsin the Company on 11th April 2019 i.e. Mr. Prakash Venkappa Joti (DIN08419933) and Mr. Vilas Ramakant Shendge (DIN 08419934. The Board of directors hadappointed them as an additional directors of the Company with the recommendation ofnomination and Remuneration committee of the Company and also the resolutions forconfirming them as a directors (Non-Executive and independent Directors) was placed beforethe Members for their approval and got approved.

Also the Existing independent Directors of the Company i.e. Mr. Suresh Bapuji Inamdarand Mr. Yadgiri Narayan Konda have completed their tenure in the Company and resigned fromthe Company from 11th April 2019.

The Company has also appointed Key managerial personnel i.e. Mr. Kamal Katare as aChief Financial Officer and Mrs. Arati Bandi as a Company Secretary cum Compliance officeras respectively in the Company from 11th April 2019.

The Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed both under Section 149 (6) ofthe Act and SEBI (LODR) 2015.

11. CORPORATE GOVERNANCE

The members may please note that the provisions relating to Corporate Governance i.e.Regulation 27 of SEBI (LODR) 2015 are not applicable to the Company and accordingly theCompany is not required to submit the Corporate Governance Report with this Annual Report.However keeping in view the objective of encouraging the use of better practices throughvoluntary adoption the Company has decided to adopt and disseminate voluntary disclosureof Corporate Governance which not only serve as a benchmark for the corporate sector butalso help the Company in achieving the highest standard of corporate governance.

Accordingly a voluntary disclosure i.e. the report on Corporate Governance asstipulated under regulation 34(3) read with Schedule V of the SEBI (LODR) 2015 is annexedherewith 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 the Act read with Rule 6 of Companies (Audit and Auditors) Rules 2014 and pursuant tothe recommendation of the Audit Committee M/s N. R. Waghchaure & AssociatesChartered Accountants (Firm Registration Number 114999W) was appointed as a StatutoryAuditors of the Company and the appointment of the Statutory Auditors of the Company alongwith a confirmation that their appointment made by the members in the year 2018 waswithin the limits prescribed under the Act.

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 Act and The Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Company has appointed M/S.Nikhil Sawant & Co. Company Secretaries Pune as Secretarial Auditor to undertake theSecretarial Audit of the Company for the financial year 2019-20. The Report isSelf-explanatory annexed herewith however; the Company has initiated necessary steps tocomply with queries and/or noncompliances mentioned under the Secretarial Audit Report asper the provisions of the Act and the SEBI (LODR) 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 Act read with Rule 8(3) ofThe Companies (Accounts) Rules 2014 is annexed herewith separately.

17. DEPOSITS

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

During the Year the Company has not made any investments or given any loans orguarantees or provided any security in connection with a loan to any person or bodycorporate covered under Section 186 of the Act.

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 Act.

22. PARTICULARS OF EMPLOYEES

There are no employee drawing remuneration exceeding the limits prescribed underSection 134(3) (q) of the Act read with Rule 5 of Rules 2014 and hence no details arerequired to be annexed 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 Act andRegulation 22 of the SEBI (LODR) 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. DECLARATION BY AND SEPARATE MEETING OF INDEPENDENT DIRECTORS

The Independent Directors of the Company have submitted the declaration of Independenceas required under Section 149(7) of the Act confirming that they meet the criteria ofindependence under Section 149(6) of the Act and Regulation 16 (1) (b) of the SEBI (LODR)2015.

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 14th November 2019 and the Independent Directors reviewed theperformance of (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

i. Insurance-

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 SEBI (LODR) 2015 is presented in aseparate 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 Act.

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 Act in the preparation ofannual accounts for the year ended on 31st March 2020 and state that:

1. In the preparation of the annual accounts for Financial Year ended 31st March 2020the applicable accounting standards have been followed along with proper explanationrelating to material departures;

2. The Directors have 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 of the Company at 31st March 2020 and of the profit ofthe Company for that period.

3. The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors have prepared the annual accounts for Financial Year ended 31st March2020 on a ‘going concern' basis.

5. The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and have been operatingefficiently and

6. The Directors have devised proper systems to ensure compliance with provisions ofall applicable laws and that such systems were adequate and operating 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 redressal of sexual harassment at the workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules thereunder for prevention and redressalof complaints of sexual harassment at workplace.

31. APPRECIATION

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/- SD/-
KISHORE KATARE VITHAL DAHAKE
Managing Director Resolution Professional
(DIN- 00645013) Reg. IBBI/IPA-003/IP-N-00017/ 2017-18/11296
Place: Solapur Date: 31st August 2020

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