Modern Threads (I) Ltd.
|BSE: 500282||Sector: Industrials|
|NSE: MODTHREAD||ISIN Code: INE794W01014|
|BSE 05:30 | 01 Jan||Modern Threads (I) Ltd|
|NSE 05:30 | 01 Jan||Modern Threads (I) Ltd|
|BSE: 500282||Sector: Industrials|
|NSE: MODTHREAD||ISIN Code: INE794W01014|
|BSE 05:30 | 01 Jan||Modern Threads (I) Ltd|
|NSE 05:30 | 01 Jan||Modern Threads (I) Ltd|
To the members of Modern Threads (India) Limited
Your Directors are pleased to present the 39th Annual Report on the businessand operations of the Company together with Audited Financial Statements for the financialyear ended 31st March 2020.
The Standalone financial statements for the financial year ended March 31 2020forming part of this Annual Report have been prepared in accordance with the IndianAccounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs vide itsnotification in the official Gazette dated 16th February 2015.
Key highlights of financial performance of your Company for the financial year 2019-20are provided below:
(` in Crores)
STATE OF COMPANY S AFFAIRS
The performance of the Woollen division of the Company has been satisfactory over pastfew years in spite of stiff competitions in the domestic and International markets. Duringthe year under review the turnover of the Woollen Division of the Company is Rs. 143Crores as against Rs.172 Crores in the previous year. During the year under review theturnover of the Yarn Division of the Company is Rs. 57.12 Crores as against Rs. 56.47Crores in the previous year. Your company has been able to generate the profit of Rs.25.36 Crores during the year under review as against Rs. 10.77 Crores in previous year.
There is no change in the nature of business of the Company during the financial yearunder review.
In the last month of FY 2020 the COVID-19 pandemic developed rapidly into a globalcrisis forcing governments to enforce lock-downs of all economic activity. The companyhas resumed its business activities in line with guidelines issued by Govt. authoritiesand taken all appropriate steps to smoothen operations and strengthen liquidity position.The Company has assessed the impact of this pandemic on its business operations and hasconsidered all relevant internal and external information available to determine theimpact on the Company s revenue from operations for foreseeable future and therecoverability and carrying value of certain assets such as property plant and equipmentinvestments inventories trade receivables etc.
The impact of COVID-19 pandemic on the overall economic environment being uncertain mayaffect the underlying assumptions and estimates used to prepare Company s financialstatements which may differ from that considered as at the date of approval of thefinancial statements. However the Company does not anticipate any challenges in itsability to continue as going concern or meeting its financial obligations. As thesituation is unprecedented while the lockdown is gradually lifting the Company isclosely monitoring the situation as it evolves in the future.
The authorized Share Capital of the Company stood at ` 1850000000 crores. During theyear under review there was no change in the authorized share capital of the Company. Thepaid up Equity Share Capital as at March 31 2020 stood at ` 347751600. During thefinancial year under review company has redeemed 100000 16% cumulative redeemablepreference shares (CRPF) series II of the face value of
` 100/- each and 200000 16% cumulative redeemable preference shares (CRPF) series IIof the face value of ` 100/- each issued and allotted to GIC Housing Finance Limited andLIC Housing Finance Limited respectively as one time settlement (OTS) of the said CRPS.
During the year under review the Company has not issued shares with differentialvoting rights nor has granted any stock options or sweat equity or warrants. As on March31 2020 none of the Directors of the Company hold instruments convertible into equityshares of the Company.
TRANSFER TO RESERVES
The Company has not transferred any amount to reserves during the year under review.
In view of accumulated losses your directors are unable to declare any dividend forthe year under review.
The company is one of the largest exporter of worsted and blended woollen yarn from
India. During the year under review the export turnover of the company was of ` 96Crores as against ` 127 Crores in the previous year. Consistent efforts are being made bythe Company to ensure sustainable leadership for its products in global market. Woollendivision has also initiated efforts to retain existing customers base and exploring newcustomers in overseas market with different product range in worsted yarn so as to achieveimproved performance and profitability in the ensuing period.
The textile and apparel industry can be broadly divided into three categoriesFormalwear. Casual wear & Sportswear. According to the end use of product the cultureof moving towards casual wear is growing where cotton & synthetic blended rawmaterials are being used. India being one of the largest producer of cotton fiber andexporter of cotton yarn the demand is more or less better baring some geo-politicalconstraints but formalwear outlook is full of challenges ahead. The two main reasons arechoice of Young population & COVID 19 pandemic .
Specifically to the Worsted industry the business volume normally gets generated bythe different government tenders & some fashion wear. The Worsted Yarn market revenuewas 2858 Million USD in 2019 and will reach 4025 Million USD in 2025 a CAGR of 5.8%during 2020-2025. Worsted yarns are made from high-quality of wool. These yarns differfrom other woolen yarn with regards to their weight type and quality. The fabrics madefrom worsted woolen yarn are stronger smoother and finer than that of the normal wool.Despite +ve forecast FY 19-20 crumbled in last quarter & FY 20-21 is going to beworse due to Covid.
The Directorate General of Foreign Trade (DGFT) has revised rates for incentives underthe Merchandise Exports from India Scheme (MEIS) for two subsectors of TextilesIndustry-Readymade garments and Made ups. Based on WTO agreement it has to be eitherabolished or reduced drastically in terms of Govt assistance. RoDTEP (Remission of Dutiesof Taxes on Export Products) has been introduced in order to make incentive scheme morerelevant against duty compensation.
Near future cost competitiveness & quality product is going to be the key forGrowth & sustainability. In Regional Analysis the Worsted Yarn market is alsocategorized into North America Europe Chine Japan the middle East. India. SouthAmerica Others. North America Europe is expected to account for a distinguished sharein terms of price and extent of the Worsted yarn market throughout the forecast length.The Worsted Yarn market within the Asia Pacific is projected to extend throughout theforecast period. Evolving markets that include China and Asian country are expected toplay a significant position within the boom in producing the surrounding area.
Your Company has getting registered under MSME vide UDYAM Registration NumberUDYAM-RJ-07-0000022.
FINANCE AND ACCOUNTS
As mandated by the Ministry of Corporate Affairs the financial statements for the yearended on March 31 2020 has been prepared in accordance with the Indian AccountingStandards (Ind AS) notified under Section 133 of the Companies Act 2013 (hereinafterreferred to as The Act ) read with the Companies (Accounts) Rules 2014 as amended fromtime to time. The estimates and judgments relating to the Financial Statements are made ona prudent basis so as to reflect in a true and fair manner the form and substance oftransactions and reasonably present the Company s state of affairs profits and cash flowsfor the year ended March 31 2020. The Notes to the Financial Statements form an integralpart of this Report.
The Company has neither accepted nor renewed any fixed deposits during the year underreview within the meaning of Section 73 of the Companies Act 2013 and the Companies(Acceptance of Deposits) Rules 2014.
DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors
During the year under review Shri Brij Mohan Taparia (DIN : 07538954) Shri NareshDevpura (DIN : 07526062) Shri Manish Kumar Jain (DIN : 08465203) and Shri Deepak Jain(DIN : 08585428) have resigned from the Directorship of the Company with effect from01/06/2019 14/08/2019 14/10/2019 & 28/02/2020 respectively.
The Board places on record its sincere thanks and gratitude for the valuablecontribution made by the above directors towards the growth and development of the Companyduring their tenure as Director of the Company.
Shri Jagdishnarayan Sharam (DIN : 07552825) has resigned from the Directorship of theCompany with effect from 14/08/2019. However the Board of Directors on the recommendationof the Nomination and Remuneration Committee held on 29th February 2020 hasagain appointed Shri Jagdishnarayan Sharma as an Additional Director (Independent) uptothe ensuing Annual General Meeting of the Company.
The Board of Directors on the recommendations of the Nomination and RemunerationCommittee in its meeting held on 14th August 2019 has appointed Shri RohitSingh (DIN: 08469801) as an Additional Director (Independent) up to the ensuing AnnualGeneral Meeting of the Company.
In accordance with the provisions of section 152 of the Companies Act 2013 ShriLaleet Kumar (DIN : 08465100) Director of the Company retires by rotation and beingeligible offers himself for re-appointment.
Appropriate resolutions for the appointment /reappointment of the aforesaid directorsare being moved at the ensuing Annual General Meeting of the company which the boardrecommends for your approval.
Key Managerial Personnel
During the year Shri Kapil Kumar Kumawat resigned from the post of Company Secretary& Compliance Officer of the Company with effect from 08/12/2019 and Shri Sita RamSharma was appointed as Company Secretary & Compliance Officer of the Company witheffect from 23/12/2019. Shri Sita Ram Sharma has also resigned from the post of CompanySecretary & Compliance Officer of the Company with effect from 27/05/2020 and ShriBanwari Lal Saini was appointed as Company Secretary & Compliance Officer of theCompany with effect from 28/05/2020. The Board of Directors on the recommendation ofNomination and Remuneration Committee has revised the terms and conditions of remunerationof Shri Prabodh Kumar Nahar Chief Financial Officer of the Company with effect from01/06/2020.
In terms of the provisions of Sections 2(51) and 203 of the Act read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 Shri RajeshRanka Chairman & Managing Director Shri Prabodh Kumar Nahar Chief Financial Officerand Shri Banwari Lal Saini Company Secretary are the Key Managerial Personnel (KMP) ofthe Company. The appointment and remuneration of Directors and KMPs are as per policy ofthe Company.
ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD ITS COMMITTEES AND INDIVIDUALDIRECTORS
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulation 2015 the Board has carried out an annualperformance evaluation of its own performance the Directors individually as well as theevaluation of the working of its Audit Committee Nomination & Remuneration CommitteeStakeholders Relationship Committee and Corporate Social Responsibility Committee.Standard parameters were prepared after taking into consideration various aspects of theBoard functioning such as adequacy of the composition of the Board and its CommitteesBoard culture execution and performance of specific duties obligations and governance.
The Board and the Nomination and Remuneration Committee reviewed the performance ofindividual directors on the basis of criteria such as the contribution of the individualdirector to the board and committee meetings like preparedness on the issues to bediscussed meaningful and constructive contribution and inputs in meetings etc. Aseparate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Company 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 IndependentDirectors was carried out by the entire Board and the performance evaluation of theChairman and the Non-Independent Directors of the Company was carried out by theIndependent Directors in a separate meeting who have expressed their satisfaction with theevaluation process.
NUMBER OF BOARD MEETINGS
The Board meets regular intervals to discuss and decide on business strategies andpolicies and review the financial performance of the Company. The notice and detailedagenda along with other material information are sent in advance separately to eachDirectors.
In the Financial Year 2019-20 the Board met nine times. The Meetings were held on 24thMay 2019 30th May 2019 14th August 2019 17thSeptember 2019 15th October 2019 14th November 2019 23rdDecember 2019 7th January 2020 and 29th February 2020. Theintervening gap between the meetings was within the period prescribed under section 173 ofthe Companies Act 2013 and regulation 17(2) of SEBI (Listing Obligation and DisclosureRequirements) Regulations 2015. The attendance of directors in board meetings held duringthe financial year ending 31st March 2020 is given in corporate governancereport attached as Annexure H to the Board s report. There was no circular resolutionpassed by company in the financial year 2019-20.
COMMITTEES OF THE BOARD AUDIT COMMITTEE
Audit Committee of the Board of Directors is entrusted with the responsibility tosupervise the Company s internal controls and financial reporting process. Thecomposition quorum powers role and scope are in accordance with Section 177 of theCompanies Act 2013 rules made thereunder and the provisions of Regulation 18 of theListing Regulations. All members of the Audit Committee are financially literate and bringin expertise in the fields of Finance Taxation Account and Economics etc. Theconstitution of the committee as on 31st March 2020 is as follows:
[Shri Ram Rai Kabra was appointed as Chairman of Audit Committee instead of Shri B.M.Taparia w.e.f. 24/05/2019. Shri B.M.Taparia Shri Naresh Devpura and Shri J.N. Sharma haveresigned as member of Audit Committee w.e.f. 01/06/201914/08/2019 & 14/08/2019respectively] All the recommendations made by the Audit Committee during the year wereaccepted by the board of directors of the Company. Further details relating to the AuditCommittee are provided in the Corporate Governance Report attached as Annexure - H to theBoard s report.
NOMINATION AND REMUNERATION COMMITTEE
As per the provisions of section 178 of the Companies Act 2013 and the rules madethereunder and as per the criteria laid down under regulation 19 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the company has in place aNomination and Remuneration Committee and constitution of the Committee as on 31stMarch 2020 is as follows:
[Shri Ram Rai Kabra was appointed as Chairman of Audit Committee instead of Shri B.M.Taparia w.e.f. 24/05/2019. Shri B.M.Taparia Shri Naresh Devpura and Shri J.N. Sharma haveresigned as member of Nomination and Remuneration Committee w.e.f. 01/06/201914/08/2019& 14/08/2019 respectively] The Nomination and Remuneration Committee shall identifypersons who are qualified to become directors and who may be appointed in seniormanagement in accordance with the criteria laid down and recommend to the Board theirappointment and removal and shall specify the manner for effective evaluationof performance of Board its committees and individual directors to be carried outeither by the Board or by the Nomination and Remuneration Committee.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed and adopted a policy i.e. Nomination & remuneration Policy for selection andappointment of Directors Senior managerial personnel and their remuneration. Salientfeatures of the Nomination & remuneration Policy are as below:
POLICY FOR DIRECTORS KMP AND OTHER EMPLOYEES Appointment Criteria and Qualifications
1. The Committee shall identify and ascertain the integrity qualification expertiseand experience of the person for appointment as Director KMP or other employees andrecommend to the Board for his/her appointment.
2. A person should possess adequate qualification expertise and experience for theposition he/she is considered for appointment. The Committee has discretion to decidewhether qualification expertise and experience possessed by a person issufficient/satisfactory for the concerned position.
(a) Managing Director/Whole-time Director:
The Company shall appoint or re-appoint any person as its Executive Chairman ManagingDirector or Executive Director for a term not exceeding five years at a time. Nore-appointment shall be made earlier than one year before the expiry of the term.
(b) Independent Director:
An Independent Director shall hold office for a term up to five consecutive years onthe Board of the Company and will be eligible for re-appointment on passing of a specialresolution by the Company and disclosure of such appointment in the Board s report.
No Independent Director shall hold office for more than two consecutive terms of 5years but such Independent Director shall be eligible for appointment after expiry ofthree years of ceasing to become an Independent Director. Provided that an IndependentDirector shall not during the said period of three years be appointed in or beassociated with the Company in any other capacity either directly or indirectly.
a) Remuneration to Managing Director/Whole Time Director/KMP and other Employees :Remuneration/ Compensation/Commission etc. to be paid to Director/ Managing Director etc.shall be governed as per provisions of the Companies Act 2013 and rules made there underor any other enactment for the time being in force.
(b) Remuneration to Non-Executive/Independent Director: Non-Executive IndependentDirector may receive remuneration/compensation/ commission as per the provisions ofCompanies Act 2013. The amount of sitting fees shall be subject to ceiling/limits asprovided under Companies Act 2013 and rules made there under or any other enactment forthe time being in force.
The Committee shall carry out evaluation of performance of every Director KMP andOther employees at regular interval.
Due to reasons for any disqualification mentioned in the Act or under any otherapplicable Act rules and regulations there under the Committee may recommend to theBoard with reasons recorded in writing removal of a Director KMP or Other employeessubject to the provisions and compliance of the said Act rules and regulations.
The Director KMP and Other employees shall retire as per the applicable provisions ofthe Act and the prevailing policy of the Company. The Board will have the discretion toretain the Director KMP and other employees in the same position/remuneration orotherwise even after attaining the retirement age for the benefit of the Company. Thispolicy is available on the website of the company https://www.modern woollens.com. In caseof appointment of Independent Directors the Committee shall satisfy itself with regard tothe independent nature of the Directors and also ensure that the candidate identified forappointment as an Independent Director is not disqualified for appointment under Section149 and 164 of the Companies Act 2013.
Further details relating to the Nomination and Remuneration Committee and policy areprovided in the Corporate Governance Report attached as Annexure H to the Board s report.
STAKEHOLDERS RELATIONSHIP COMMITTEE
As per the requirement of section 178 of the Companies Act 2013 and the rules madethereunder and also as per the criteria laid down under SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the company has in place the StakeholdersRelationship Committee and constitution of the Committee as on 31st March 2020is as follows:
[Shri Ram Rai Kabra was appointed as Chairman of Audit Committee instead of Shri B.M.Taparia w.e.f. 24/05/2019. Shri B.M.Taparia Shri Naresh Devpura and Shri J.N. Sharma haveresigned as member of Stakeholders Relationship Committee w.e.f. 01/ 06/201914/08/2019& 14/08/2019 respectively] Further details relating to the Stakeholders RelationshipCommittee are provided in the Corporate Governance Report attached as Annexure H to theBoard s report
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
As per the provisions of section 135(1) of the Companies Act 2013 and the rules madethereunder the Company has constituted the Corporate Social Responsibility Committee. Theconstitution of the Committee as on 31st March 2020 is as follows:
[Shri B.M.Taparia and Shri Naresh Devpura have resigned as a member of Corporate SocialResponsibility Committee w.e.f. 01/06/2019 and 14/08/2019] A meeting of the CSR Committeewas held on 29thFebruary 2020 with all three directors as mentioned above werepresent.
The Board has on the recommendation of the Corporate Social Responsibility Committeeframed and adopted a policy for CSR available on the Company s websitehttps://www.modernwoollens.com. The disclosures as per rule 9 of Companies (CorporateSocial Responsibility Policy) Rules 2014 are disclosed in Annexure- C as a part of Boards Report.
INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
Your Company has complied with the provisions relating to the constitution of InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and constituted Internal Complaints Committee asper the provisions of The Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013. The Company has also adopted a policy on Sexual Harassment ofWomen at Workplace and framework for employees to report sexual harassment cases atworkplace and its process ensures complete anonymity and confidentiality of information.
Details of complaints received/disposed during the financial year 2019-20 is providedon page 18 of this Annual Report.
DIRECTOR S RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act 2013 your directors would like tostate and confirm that:
(a) In the preparation of the annual accounts the applicable accounting standards havebeen 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 were 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 and ofthe profit and loss of the Company for that period;
(c) The directors have 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 have prepared the annual accounts on a going concern basis;
(e) The directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively;
(f) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such system were adequate and operating effectively.
AUDITORS AND AUDITORS REPORT Statutory Auditors
Goyal D. Kumar & Co. Chartered Accountants Bhilwara (ICAI Firm Registration No.007817C) were appointed as a Statutory Auditors of the Company in the 36thAnnual General Meeting held on 28th September 2017 for a period of 5 (five)years form the conclusion of 36th Annual General Meeting upto the conclusionof 41st Annual General Meeting of the company.
The observations made in the Auditors Report read together with relevant notes thereonare self-explanatory and hence do not call for any further comments under Section 134 ofthe Companies Act 2013.
The Statutory Auditors of the Company have not reported any fraud as specified undersection 143(12) of the Companies Act 2013 in the year under review.
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 R.K. Jain & Associates Company Secretaries Bhilwara to undertake theSecretarial Audit of the Company for the financial year ended 31st March 2020. TheCompany has also undergone an audit for the FY 2019-20 pursuant to SEBI Circular No.CIR/CFD/CMO/I/27/2019 dated 08th February 2019 for all applicable compliancesas per the Securities and Exchange Board of India Regulations and Circular/guidelinesissued thereunder. The Report (Annual Secretarial Compliance Report) has been submitted tothe stock exchanges within the prescribed time limit of the end of the financial yearended 31st March 2020.
The Secretarial Audit report is annexed as Annexure -A to the Board s report. Theobservations in Secretarial Audit Report which pertains mainly to listing regulationsrequirements Stock Exchange compliances etc. Since company had been a sick industrialcompany for a long time and draft rehabilitation scheme pending for examination andapproval of BIFR but pursuant to Sick Industrial Companies (Special Provision) Repeal Act2003 (SICA Repeal Act) the proceedings pending before BIFR stands abated with effect from01/12/2016 and the company had been in the process of making reference to NCLT underbankruptcy and insolvency code 2016. However the company has made application to NSE andBSE for revocation of suspension of trading of securities. The other observations made inthe Secretarial Audit Report are self-explanatory and hence do not call for any furthercomments under Section 134 of the Companies Act 2013.
Pursuant to Section 148(1) of the Companies Act 2013 your Company is required tomaintain Cost Records as specified by the Central Government and accordingly such accountsand records are made and maintained.
Pursuant to the provisions of Section 148(2) of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Amendment Rules 2014 your company is required to getits cost accounting records audited by cost auditors. Accordingly the Board at itsmeeting held on 28th May 2020 has on the recommendation of the AuditCommittee re-appointed M. Goyal & Co. Cost Accountants Jaipur (Firm RegistrationNo. 000051) to conduct the audit of the cost accounting records of the Company for FY2020-21 on a remuneration of Rs. 50000/- plus applicable taxes and reimbursement ofactual travel and out-of-pocket expenses upto Rs. 25000/-. The remuneration is subject tothe ratification of the Members in terms of Section and a resolution seeking membersapproval for the remuneration payable to the Cost Auditors forms part of the Noticeconvening Annual General Meeting for their Ratification.
The Company has a strong Internal Audit department reporting to the Audit Committeecomprising majority of Independent Directors who are experts in their field.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The company has not given any loans or guarantees and made investments covered underthe provisions of section 186 of the Companies Act 2013.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an effective internal control and risk-mitigation system which areconstantly assessed and strengthened with new/revised standard operating procedures. TheCompany s internal control system is commensurate with its size scale and complexities ofits operations. The main thrust of internal audit is to test and review controlsappraisal of risks and business processes besides benchmarking controls with bestpractices in the industry. The Audit Committee of the Board of Directors actively reviewsthe adequacy and effectiveness of the internal control systems and suggests improvementsto strengthen the same.
The Company is also initiating action for strengthening the systems and procedures toensure effective Internal Financial Controls in accordance with Section 134(5) (e) of theCompanies Act 2013. An Internal Audit process is in place under the overall supervisionof the Audit Committee of the Board Qualified and experienced professionals are engagedto ensure effective and independent evaluation of the Internal Financial Controls. TheAudit Committee of the Board of Directors Statutory Auditors and the Business Heads areperiodically apprised of the internal audit findings and corrective actions are beingtaken.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption Foreign exchangeearnings and outgo as required under Section 134 (3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed as Annexure-B to the Boards Report.
Pursuant to the provision of Section 177(9) and (10) of the Companies Act 2013 readwith Securities and Exchange Board of India (Listing Obligations and DisclosureRequirement) Regulations 2015 the Company has formulated and implemented the WhistleBlower Policy/Vigil Mechanism. This has provided a mechanism for Directors and employeesof the Company and other persons dealing with the Company to report genuine concerns aboutunethical behavior actual or suspected fraud and violation of the Company s code ofconduct and ethics. The Company has also provided adequate safeguards againstvictimization of employees and Directors who express their concerns. This policy isavailable on the website of the company at https:// www.modernwoollens.com.
ENVIRONMENT HEALTH AND SAFTY
The Company is conscious of the importance of environmentally clean and safe operationsto ensure about health and safety of all concerned compliances of environmentalregulations and prevention of natural resources.
The Company has zero tolerance towards sexual harassment at the workplace and has aproper management system to prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules made thereunder. Duringthe financial year 2019-20 the Company has not received any complaints of sexualharassment.
EXTRACT OF ANNUAL RETURN
In accordance with Section 134 (3)(a) of the Companies Act 2013 and the rules madethereuner an extract of the annual return in the prescribed format (MGT-9) is annexed asAnnexure - D to the Board s Report and same is also is available on the website of thecompany at https://www.modernwoollens.com.
CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES
In line with the provisions of the Companies Act 2013 and the Listing Regulations theBoard has approved a policy on related party transactions. A policy on related partytransactions has been placed on the Company s website https://www.modern woollens.com.
In accordance with the provisions of section 188 of the Companies Act 2013 and rulesmade thereunder all related party transactions that were entered into during thefinancial year were on arm s length basis and were in the ordinary course of business thedetails of which are included in the notes forming part of the financial statements. Therewere no materially significant related party transactions which may have a potentialconflict with the interests of the Company at large. Accordingly information in formAOC-2 is provided as Annexure-E to the Board s Report.
SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiary Joint venture or Associate Company as on 31stMarch 2020.
CODE OF CONDUCT
In compliance of SEBI (Listing Obligation and Disclosure Requirements) Regulations2015 and the Companies Act 2013 the Company has framed and adopted a Code of Conduct andEthics. The code is applicable to the Board of Directors Key Managerial Personnel and allother employees in the course of day to day business operations of the Company. The Codelays down the standard procedure of business conduct which is expected to be followed bythe Directors Key Managerial Personnel and all other designated employees of the Companyin their business dealings and in particular on matters relating to integrity in the workplace in business practices and in dealing with stakeholders. This code is available onthe website of the company at https:// www.modernwoollens.com.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent Directors of the Companythat they meet the criteria of independence as laid down under section 149(6) of theCompanies Act 2013 and Regulation 25 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. In the Opinion of the Board the Independent Directorsfulfill the conditions specified in the Companies Act and Listing regulations and alsoindependent of the Management etc.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS
The company believe that the board be continuously empowered with the knowledge of thelatest developments in the company s business and the external environment affecting theindustry as a whole. Familiarization Program for Independent Directors has been adopted bythe Company pursuant to the provisions of Schedule IV of the Companies Act 2013 andRegulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 and is available on the website of the company at https://www.modernwoollens.com. Thedetails of the familiarization program are provided on page 19 of this Annual Report.
BUSINESS RISK MANAGEMENT
In compliance of SEBI (Listing Obligation and Disclosure Requirements) Regulations2015 and the Companies Act 2013 the Board of Directors of the Company formally adopted aRisk Management Policy for framing implementing and monitoring the risk management planfor the Company. The main objective of this policy is to ensure sustainable businessgrowth with stability and to promote a pro-active approach in reporting evaluating andresolving risks associated with the business. The policy establishes a structured anddisciplined approach to Risk Management. In the challenging and competitive environmentstrategies for mitigating inherent risks in accomplishing the growth plans of the Companyare imperative. The common risks of the Company inter alia are financial risk humanresource risk technology obsolescence regulatory risk and strategic risk etc. As amatter of policy these risks are assessed and appropriate steps are taken to mitigate thesame. This policy is available on the website of the companyhttps://www.modernwoollens.com .
INDUSTRIAL RELATIONS AND PARTICULARS OF EMPLOYEES
The Company has enjoyed healthy and cordial industrial relations throughout the period.The information required pursuant to Section 197 read with rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company is provided as Annexure - F to the Board s Report. In terms of Section 136of the Act the reports and accounts are being sent to the members and others entitledthereto excluding the information on employees particulars which is available forinspection by the members at the Registered office of the company during business hours onworking days of the Company up to the date of ensuing Annual General Meeting. If anymember is interested in inspecting the same such member may write to the CompanySecretary in advance.
The Company has complied with the applicable Secretarial Standards issued by theinstitute of Company Secretaries of India.
DISCLOSURES WITH RESPECT TO DEMAT SUSPENSE ACCOUNT/ UNCLAIMED SUSPENSE ACCOUNT(UNCLIAMED SHARES
The Company has not issued any shares during the financial year under review anddisclosure regarding demat suspense account/unclaimed suspense account is not applicable.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report on the operations of the Company asrequired under the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is set out as Annexure- G to the Board s Report and forms an integral part of theReport.
CORPORATE GOVERNANCE REQUIREMENTS
The Company constantly endeavours to follow the Corporate Governance guidelines andbest practices sincerely and discloses the same transparently. The Board is conscious ofits inherent responsibility to disclose timely and accurate information on Company soperations performance material corporate events as well as on the leadership andgovernance matter related to the Company.
The Company has Complied with the requirements of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 to the extent as mentioned in the CorporateGovernance report annexed with the Board s report.
The Company has also adopted the policies in line with new governance requirementsincluding the Policy on Related Party Transactions Whistle Blower Policy Policyguidelines on orderly succession for appointments to the board and senior managementRemuneration Policy Risk Management Policy Policy on preservation of documents etc.These policies are available on the website of the Company at https://www.modernwoollens.com A separate report on Corporate Governance is provided as Annexure -H together with a Certificate from the Practicing Company Secretary regarding compliancewith the conditions of Corporate Governance as stipulated under Listing Regulations.
MATERIAL CHANGES AND COMMITMENTS EFFECTING THE FINANCIAL POSITION OF THE COMPANY
Except as disclosed elsewhere in this Report no material changes and commitmentswhich could affect the Company s financial position have occurred between the end of thefinancial year of the Company and the date of this Report.
Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under review:Issue of equity shares with differential rights as to dividend voting or otherwise; Issueof shares (including sweat equity shares) to employees of the Company under any Scheme; Nosignificant or material orders were passed by the Regulators or Courts or Tribunals whichimpact the going concern status and the Company s operations in the future; and There wasno instance of fraud during the year under review which required the statutory auditorsto report to the audit committee and/or board under section 143(12) of the Act and therules framed thereunder.
APPRECIATIONS AND ACKNOWLEDGEMENTS
Your Directors would like to express their sincere appreciation for the assistance andco operation received from the Banks Government authorities customers vendors andmembers during the year under review. Your Directors also wish to place on record theirdeep appreciation to employees at all levels for their hard work dedication andcommitment.
ANNEXURE A TO THE BOARD S REPORT: SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2020
[Pursuant to section 204(1) of the Companies Act 2013 and Rule No.9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014)
Modern Threads (India) Limited
A-4 Vijay Path Tilak Nagar Jaipur -302004
We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Modern Threads (India) Limited(hereinafter called the company).
Secretarial Audit was conducted in a manner that provided us a reasonable basis forevaluating the corporate conducts/statutory compliances and expressing my opinion thereon.
Based on our verification of the Company s books papers minute books forms andreturns filed and other records maintained by the company and also the informationprovided by the Company its officers agents and authorized representatives during theconduct of secretarial audit We hereby report that in our opinion the company hasduring the audit period covering the financial year ended on 31st March 2020complied with the statutory provisions listed hereunder and also that the Company hasproper Board-processes and compliance-mechanism in place to the extent in the manner andsubject to the reporting made hereinafter:-We have examined the books papers minutebooks forms and returns filed and other records maintained by M/s. Modern Threads (India)Limited for the financial year ended on 31st March 2020 according to theprovisions of:-
(i) The Companies Act 2013 (the Act) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act 1956 ( SCRA ) and the rules madethereunder;
(iii) The Depositories Act 1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act 1999 and the rules and regulations madethereunder to the extent of Foreign Direct Investment and Overseas Direct Investment. Thereis no transaction relating FDI and ODI during the year under review.
(v) The following Regulations and Guidelines prescribed under the Securities andExchange Board of India Act 1992 ( SEBI Act ):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015;
(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations 2009;(Not applicable to the Company during the Period underreview);
(d) The Securities and Exchange Board of India (Share based Employee Benefits)Regulations 2014 (Not applicable to the Company during the Period under review);
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008. (Not applicable to the Company during the Period under review);
(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009 (Not applicable to the Company during the Period under review);and
(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations1998. (Not applicable to the Company during the Audit Period).
(vii) Other applicable Laws like Factories Act 1948; The Payment of Gratuity Act1972; Industrial Disputes Act1947;The Payment of wages Act 1936; Employees StateInsurance Act 1948; The Employees Provident Fund and Misc. Provisions Act 1952;ThePayment of Bonus Act 1985; The Contract Labour (Regulation & Abolition) Act 1970Environment Laws.
(viii)The Sick Industrials Companies (Special Provisions) Act 1985 has been repealedw.e.f. 1st December 2016. The Company has been declared as Sick Company by theBoard for Industrial and Financial Reconstruction (BIFR) and the company has submittedrehabilitation scheme to BIFR.
(ix) As informed and certified by the management there are no other laws that arespecifically applicable to the company based on their sector/industry.
We have also examined compliance with the applicable clauses of the following:-
(i) Secretarial Standards issued by the Institute of Company Secretaries of India.
(ii) The Listing Agreements entered into by the Company with Bombay Stock Exchange TheCalcutta Stock Exchange Ltd. Ahmedabad Stock Exchange Ltd. and National Stock Exchange ofIndia Ltd. The Trading in Securities of the Company has been suspended by BSE sinceJanuary 2002 and by NSE since 11 November 2002.
During the period under review the Company has complied with the provisions of theAct Rules Regulations Guidelines Standards etc. mentioned above except to the extentas mentioned below:-
1. The preference shares were redeemable in four equal instalments commencing from theyear 2003-04. As informed by the management of the Management the same was not paid dueto paucity of funds. Thereafter the preference shares were expected to be redeemed as perRehabilitation Scheme to be approved by BIFR. The Dividend on Cumulative redeemablePreference Shares has not been provided for earlier years. The company was expectedwaiver/ relief under Draft Rehabilitation Scheme pending for approval with BIFR. Butpursuant to Sick Industrial Companies (Special Provision) Repeal Act 2003 (SICA RepealAct) the proceedings pending before BIFR stands abated with effect from 1/12/2016 and thecompany has not initiated any reference to National Company Law Tribunal (NCLT) underInsolvency and Bankruptcy Code 2016. However during the financial year under review300000 Preference shares of Rs. 100/- each were redeemed vide One Time Settlement withGeneral Insurance Corporation of India and LIC Housing Finance Limited at 30% of the facevalue of Shares. The company has not complied with the provisions of Section 55(3) of theCompanies Act 2013. However the company has settled for redemption of Preference shareswith respectiveshareholders.
2. The company has paid Fixed Deposits accepted from Public during the currentfinancial year. The outstanding amount of Public Fixed Deposit as on 31stMarch 2019 wasamounting to Rs. 549.59 Lakhs. In view of petition filed by the company in CLB theHon'ble Company Law Board has passed order dated 30.04.2002. According to which therepayment of Fixed Deposit would be made by the Company as per Rehabilitation Scheme to beapproved by BIFR. After repealing of the Sick Industrials Companies (Special Provisions)Act 1985 the Rehabilitation Scheme has not been under consideration w.e.f. 1st December2016 but company did not initiated any process of making reference to National Company LawTribunal under Insolvency and Bankruptcy Code 2016. During the period under reviewPublic Fixed Deposit of Rs.549.59 Lakhs has been settled by the Company at principalamount and repaid. As informed by the Management of the company interest has been waivedoff by the respective deposit holders. These deposits were accepted before thecommencement of the Companies Act 2013. The company has repaid the same after thespecified period of three years as per clause (b) of Sub-section (1) of Section 74 of theCompanies Act 2013. The Share Application Money had been received before the commencementof the Companies Act2013.
3. The company had an outstanding amount of share application money Rs.1450.00 Lakhsreceived from promoters and associates pursuant to the Draft rehabilitation scheme to beapproved by BIFR. After repealing of the Sick Industrials Companies (Special Provisions)Act 1985 the Rehabilitation Scheme is not under consideration w.e.f. 1st December 2016but company has not initiated any process of making reference to National Company LawTribunal under Insolvency and Bankruptcy Code 2016. The Share Application Money had beenreceived before the commencement of the Companies Act 2013.
4. As per the regulation 29 of SEBI (LODR) Regulations 2015 prior Intimations of theBoard Meetings for considering Financial Results were not given to Stock Exchange. Asinformed to us the Company is in the process of revocation of suspension of trading ofits securities and submitting its documents to Stock Exchanges.
5. As per the regulation 33(3) of SEBI (LODR) Regulations 2015 company had beendelayed in submission of quarterly unaudited financial Results & limited review reportto Stock Exchanges. As informed to us the Company is in the process of revocation ofsuspension of trading of its securities and submitting its documents to Stock Exchanges.
6. As per regulation 34(1) of SEBI (LODR) Regulations 2015 company has been delayed insubmission of annual report to stock exchanges. As informed to us the Company is in theprocess of revocation of suspension of trading of its securities and submitting itsdocuments to Stock Exchanges. As per regulation 34(1)(a) of SEBI (LODR) Regulations 2015the company has not complied with the said regulation regarding sending of Annual reporttoshareholders.
7. As per regulation 46(2)(l) of SEBI (LODR) Regulations 2015 notice of the meetingof Board of Directors for approval Unaudited Financial Results were not available onWebsite. As informed to us the Company is in the process of revocation of suspension oftrading of its securities and submitting its documents to StockExchanges.
8. As per Regulation 40(9) of SEBI (LODR) Regulations2015 Non submission of thecertificate of RTA by the company. As informed to us the Company is in the process ofrevocation of suspension of trading of its securities and submitting its documents toStockExchanges.
9. Requirements of Regulation 47 of SEBI (LODR) Regulations 2015 not complied with bythe company. Hence not disclosed on website of the company as per Reg. 46(1)(q). Howeverthe Company is in the process of revocation of suspension of trading of its securities andsubmitting its documents to Stock Exchanges.
10. Requirements of Regulation 30(8) of SEBI (LODR) Regulations 2015 not complied withby the company. Hence not disclosed on website of the company as per Regulation 30(8). Asinformed to us the Company is in the process of revocation of suspension of trading ofits securities and submitting its documents to Stock Exchanges.
We further report that-
The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors except theobservations made in the Report. The changes in the composition of the Board of Directorsthat took place during the period under review were carried out in compliance with theprovisions of the Act.
Adequate notice is given to all directors to schedule the Board Meetings agenda anddetailed notes on agenda and a system exists for seeking and obtaining furtherinformation and clarifications on the agenda items before the meeting and for meaningfulparticipation at the meeting.
We further report that there are adequate systems and processes in the companycommensurate with the size and operations of the company to monitor and ensure compliancewith applicable laws rules regulations and guidelines except the observations made inthe Report.
This Report is to be read with our letter of even date which is annexed as Annexure Aand forms as an integral part of this report.
Modern Threads (India) Limited
A-4 Vijay Path Tilak Nagar Jaipur -302004
Our report of even date is to be read along with this letter.
1. Maintenance of secretarial record is the responsibility of the management of thecompany. Our responsibility is to express an opinion on these secretarial records based onour audit.
2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on the test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed providereasonable basis of our opinion.
3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the company. We have relied upon the Report of Statutory Auditorsregarding compliance of Companies Act 2013 and Rules made thereun-der relating tomaintenance of Books of Accounts papers and financial statements of the relevantFinancial Year which give a true and fair view of the state of the affairs of thecompany.
4. We have relied upon the Report of Statutory Auditors regarding compliance of FiscalLaws like the Income Tax Act 1961 & Finance Acts the Customs Act 1962 the CentralExcise Act 1944 and Service Tax except some dues as mentioned in Independent AuditorsReport. There are some disputed statutory dues which have not been deposited on accountof matter pending before appropriate authorities as mentioned in Independent AuditorsReport.
5. Wherever required we have obtained the Management representation about thecompliances of laws rules and regulations and happening of events etc.
6. The compliances of the provisions of corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination is limited tothe verification of procedures on test basis.
7. The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the company.
ANNEXURE B TO THE BOARD S REPORT :
Particulars of Energy Conservation Technology Absorption and Foreign Exchange Earningand Outgo required under the Companies (Accounts) Rules 2014
(A) Conservation of energy-
(B) Technology absorption-
(C) Foreign exchange earnings and Outgo-