The Directors of your Company are pleased to present their 41st AnnualReport on the business of the Company together with the Audited Accounts of the Companyfor the year ended on 31st March 2017.
1. FINANCIAL RESULTS
The Company's financial performance for the year under review along with previous yearsare given hereunder:
| || ||(Rs Lacs) |
|Particulars ||2016-17 ||2015-16 |
|Total Revenues ||2432.23 ||3616.55 |
|Profit/(loss) before interest & depreciation ||(3898.08) ||(2118.24) |
|Less :Financial Expenses ||2.13 ||13.29 |
|Profit/(loss) before depreciation ||(3900.21) ||(2131.53) |
|Less: Depreciation ||180.21 ||202.67 |
|Profit after depreciation and interest ||(4080.42) ||(2334.20) |
|Exceptional income ||1121.66 ||- |
|Net profit/(loss) after tax ||(2958.76) ||(2334.20) |
|Amount transferred to General Reserve ||- ||- |
|Earning per Share (Basic) ||(41.16) ||(33.28) |
|Earning per Share (Diluted) ||(12.69) ||(13.40) |
2. YEAR IN RETROSPECT
M/s Malwa Cotton Spinning Mills Ltd (MCSML) based on its audited balance sheet as at31st March2013 had filed a reference under Sick Industrial Companies (Special provisions)Act 1985 and the reference was registered on 24th May 2013 with Board for Industrial& Financial Reconstruction (BIFR) and the BIFR has since been dissolved.
The Company has recorded net loss before depreciation interest & tax of Rs 3898.08lac as compared to previous year loss before depreciation interest & tax of Rs.2118.24 lac.
The performance of the Company affected badly due to recession demonetization duringthe year. The only machhiwara unit was working partially at very low capacity and closeddown during the year due to high cost of labour tight working capital cycle and nonrecovery of fixed cost and cash losses. Poor recovery of debtors and cash losses resultedin poor performance of the company. The company has approached lender for One timesettlement with the lenders and negotiations are under process to settle the companyliabilities.
During the year your Company has recorded gross sales of Rs 2206.80 lac against Rs.3602.86 lac in the previous year.
3. SHARE CAPITAL
The paid up Equity Share Capital as on 31st March2017 was Rs 790.29 lacsand Preference Share Capital was Rs.2724.61 lacs. During the year under review theCompany has not:
a) bought back any of its securities.
b) issued any Sweat Equity Shares.
c) issued any Bonus Shares to the existing shareholders of the Company.
d) issued any Equity Shares under the Employees Stock Option Plan during the year underreview.
No Dividend was declared for the current financial year due to loss incurred by theCompany and outstanding accumulated losses.
5. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND
The provisions of Section 125(2) of the Companies Act 2013 do not apply as there wasno dividend declared and paid last year.
The Company has not accepted any deposits from the public during the year under reviewand as such there are no outstanding deposits in terms of the Companies (Acceptance ofDeposits) rules 2014.
a) Mr. Rahul Oswal retire at the ensuing Annual General Meeting and is eligible forre-appointment as Director subject to retirement by rotation. He offer himself for there-appointment.
Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the ListingAgreement the Board has carried out an annual evaluation of its performance thedirectors individually as well as the evaluation of the working of its Committees. At themeeting of the Board all the relevant factors that are material for evaluating theperformance of the individual Directors the Board and its various committees werediscussed in detail.
A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence of judgment safeguarding the interest of theCompany and its minority shareholders etc. The performance evaluation of the Chairman andnon-independent directors was also carried out by the independent Directors at theirseparate meeting. The Directors expressed their satisfaction with the evaluation process.
During the year four Board Meetings were convened and held. The details thereof aregiven in the Corporate Governance Report. The intervening gap between the meetings waswithin the period prescribed under the Companies Act 2013.
8. KEY MANAGEMENT PERSONNEL
The information required pursuant to Section 197 read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is appended as anAnnexure -I and forms an integral part of this report.
9. REMUNERATION POLICY
The Board on the recommendation of the Nomination and Remuneration Committee shallreview and approve the remuneration payable to the Directors Key Managerial Personnel andSenior Management. The key provisions of Nomination and Remuneration policy are appendedas an Annexure-II to the Board's report.
10. STATUTORY AUDITORS
M/s. S.C.VASUDEVA & Co. (Firm Registration Number: 000235) Statutory Auditors ofthe Company will retire in of the ensuing Annual General Meeting and M/s K.C Khanna &Co (Chartered Accountants) will be appointed as statutory Auditors of the company in theensuing Annual General Meeting. As required under the provision of Section 139 of theCompanies Act 2013 the Company has obtained a written confirmation from M/s K.C Khanna& Co and received a certificate from the above Auditors to the effect that theirappointment if made would be in conformity within the limits specified in the saidsection.
11. AUDITORS' REPORT
The Auditors' Report on the Accounts is self-explanatory and required no commentsexcept i) The Company has not been able to redeem 9% cumulative redeemable preferenceshare capital-Due to cash losses in the company and negative net worth the company couldnot redeem cumulative redeemable Preference Share capital as per schedule. (ii) EmployeeBenefits in respect of non provision for liability of gratuity leave encashment and othercompensated absences in accordance with provision of said accounting standard.(AS-15) The company has not made provision for gratuity and leaves withwages/salaries for year 2016-17 on actuarial basis due to number of employees leaving thecompany which may result in reversal of provision already made. (iii) Non-disclosure ofsegment results separately in respect of sewing thread segment in accordance withAccounting Standard (AS)-17. Results of the operations of the sewing thread segment iscompiled to the extent it could be computed
from the books of account however results of the textile segment (yarn & sewingthread ) is disclosed as per Accounting Standard (AS-17) (iv) Due to recession there isdelay in realization of debtors and the Company is settling with parties for its recoveryand confident of recovery of debtors in respect of which balances were not confirmed andhowever the company has made a provision for doubtful debts and advances for Rs.2944.55lac in respect of these debtors and advances during the year and provision for decline ininvestment will be made in due course. (v) The company has not provided interest onborrowing as the accounts with lenders has been classified as NPA. (vi) The company haswritten back loan of Rs 1121.66 lac as the company got approval from ARCIL for OTS subjectto sanction by all the lenders and approval of all lenders for OTS is expected to bereceived in 2017-18 and dealt accordingly.
12. COST AUDIT
Cost audit for the financial year 2016-17 is not applicable to the Company as perNotification No.G.S.R.425 [E] dated 30th June2014 issued by the Ministry OfCorporate Affairs hence no cost auditor was appointed for cost audit purpose.
13. SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s Rajeev Bhambri & Associates a firm of Company Secretaries in practice(C.P.No 9491) to undertake the Secretarial Audit of the Company. The Secretarial auditreport for the financial year ended 31st March 2017 is annexed herewith asAnnexure-III to this report. The Secretarial Audit report under review for the period theCompany has complied with the provisions of the Act Rules Regulations GuidelinesStandards etc. mentioned above subject to the following observations:
a. Company has not paid Listing Fees to BSE National Stock Exchange of India LimitedNSDL CDSL and to RTA of Company for the Audit Period- - Due to cash losses the companycould not pay the listing fee to stock exchanges however will make arrangement for paymentin a short period.
b. Company has not filed with Stock Exchanges the Corporate Governance Report for theQuarter Ended 30.06.2017 Quarterly Financial Results for the quarter ended 31.03.2017Annual Financial Results along with the Part B report of Qualification for the year ending31.03.2017 Shareholding Pattern for the Quarter ended 30.06.2017 Half yearly ComplianceReport as per Sec 7(3) and 40(10) Share Capital Audit for the Quarter ended 31.03.2017and 30.06.2017. -Due to cash losses and regular staff problem the compliance was delayed;however the same will be complied shortly.
c. Half of the Board was not Independent as on 31.03.2017- The Company will be complywith in due course.
d. Chairperson of Audit and Nomination & Remuneration Committee were notindependent as on 30.9.2016 -The Company will comply in due course.
e. Evoting facility was not provided to the shareholders during Annual General Meetingin 2016- Due to non payment to depositories the same could not be complied with. Howeverthe same will be complied with in future.
f. Website of the company has not disseminated information as required under Regulation46(2)(b) to (i) of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 - Will be complied shortly
g. Secretarial Standards 1 and 2 issued by The Institute of Company Secretaries ofIndia have not been followed.-Will be complied shortly
h. The company has not redeemed its 9% Cumulative Redeemable Preference Shares ofRs.2725 lacs.- Due to cash losses in the company and negative net worth the company couldnot redeem cumulative redeemable Preference Share capital as per schedule
i. AS-15 regarding "Employee Benefits" in respect of non provision forliability of gratuity leave encashment and other compensated absences has not beencomplied with. -The company has not made provision for gratuity and leaves withwages/salaries for year 201617 on actuarial basis due to number of employees leaving thecompany which may result in reversal of provision already made
j. AS-17 regarding "Segment Reporting" in respect of results of sewingthread segment has not been disclosed. - Results of the operations of the sewing threadsegment is compiled to the extent it could be computed from the books of account howeverresults of the textile segment (yarn & sewing thread ) is disclosed as per AccountingStandard (AS-17)
k. The company has defaulted/delayed in payment of statutory dues including ProvidentFund Employees' State Insurance Labour Welfare fund Income Tax and VAT/CST. - Thecompany could not pay the dues of Provident Fund Employees' State Insurance LabourWelfare fund Income Tax and VAT/CST on account of cash losses and tight cash flow.However the company is paying the statutory dues pending slowly
l. The company has defaulted in payment/repayment of interest/principal on Cashcredit/Term loans to IFCI Limited IDBI Bank Limited SIDBI PNB SBI Vijaya Bank andJ&K Bank. The Company has also not provided interest on borrowing in the books. -Thecompany has not provided interest on borrowing as the accounts with lenders has beenclassified as NPA.
m. The company has not arranged to make available the confirmations and/orreconciliations to verify the balances of parties. Since the parties have not been dealingwith the company and majority of the parties are doubtful for recover and hence provisionfor doubtful debt is made
n. The company has not made provision in respect of balances which are doubtful innature amounting to Rs.3666.86 lacs. The company has a provision for doubtful debts andadvances for Rs.2944.55 lac in respect of these debtors and advances during the year.
14. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THECOMPANIES ACT 2013
There were no loans guarantees or investments made by the Company under Section 186 ofthe Companies Act 2013 during the year under review and hence the said provision is notapplicable.
15. DIRECTORS' RESPONSIBILITY STATEMENT
The Board Of Directors acknowledge the responsibility for ensuring compliance with theprovisions of Section 134(3) read with Section 134(5) of the Companies Act 2013 in thepreparation of annual accounts for the year ended on 31st March2017 and state :
a) That in preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures.
b) That the Directors had selected such Accounting Policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of theFinancial Year and of the Profit or Loss of the Company for that period.
c) That the Directors had taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.
d) That the Directors have prepared the Annual Accounts on a going concern basis.
e) That the Directors had laid down internal financial controls to be followed by thecompany and such internal financial controls are adequate and operating effectively. Thatthe Directors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
16. CORPORATE GOVERNANCE
As per SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 aseparate Report on Corporate Governance together with Management Discussion and Analysisand certificate from Company's Auditors is annexed and forms part of the report.
17. AUDIT COMMITTEE & RISK MANAGEMENT
The company has duly constituted Audit Committee the scope of which is quitecomprehensive and is in conformity with the provisions of the Companies Act 2013 and SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015. The composition of theAudit Committee is given in Corporate Governance Report.
All the recommendations of the Audit Committee were accepted by the Board.
The Audit Committee has also been assigned the responsibility for monitoring andreviewing risk management. The Committee identifies review and mitigate all elements ofrisks which the Company may be exposed to. The Board also reviews the risk managementassessment and minimization procedures.
18. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has adopted Whistle Blower Policy/vigil mechanism for directors andemployees to report
concerns about unethical behavior actual or suspected fraud or violation of theCompany's Code of Conduct and Ethics.
19. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIALRESPONSIBILITY INITIATIVES
The Company has not developed and implemented any Corporate Social Responsibilityinitiatives as the said provisions are not applicable.
20. RELATED PARTY TRANSACTIONS
There was no contract or arrangement made with related parties as defined under Section188 of the Companies Act 2013 during the year under review.
21. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There are no significant orders passed by the Regulators/Courts which would impact thegoing concern status of the Company and its future operations.
22. DECLARATION BY INDEPENDENT DIRECTORS
Necessary declarations have been obtained from the Independent Directors under Section149(7) of the Companies Act 2013.
23. INTERNAL FINANCIAL CONTROL SYSTEM
The Company has in place internal financial control system 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 thereon arepresented to the Audit Committee of the Board.
24. SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiary Joint venture or Associate Company.
25. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption Foreignexchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished inAnnexure-IV.
26. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTSRELATE AND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which these financial statements relateand the date of this report.
27. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of Annual Return in form MGT-9 is annexedherewith as Annexure- -V
The Board of Directors place on record its appreciation for the valuable assistancesupport and guidance extended to the Company by the various Government Departments BanksOrganizations and Agencies. The Company also acknowledges the support and co-operationreceived from dealers agents and other business partners for their support received fromthem. The Board also wishes to express its deep gratitude for the continued support fromits shareholders and the employees and appreciate the co-operation and continuous supportextended to the Company.
|Place : Ludhiana ||For and on behalf of Board |
|Date : 30.05.2017 ||JANGI LAL OSWAL |
| ||Chairman-cum-Managing Director |