To the Members
Your Directors present the 30th (THIRTIETH) Board's Report together with theAudited Statement of Accounts for the year ended 31st March 2021
1. FINANCIAL RESULTS
The financial highlights of your Company for the year ended 31st March 2021 aresummarized as follows: (Rs. in Cr)
| ||FY 2020-21 ||FY 2019-20 |
|Revenue from Operations ||148.47 ||395.41 |
|EBITDA ||)3.83( ||1.51 |
|Finance cost ||23.92 ||27.33 |
|Depreciation ||10.21 ||10.35 |
|Profit / (Loss) / before Tax ||37.96 ) ( ||(36.17) |
|Tax expense / (Credit) includ- ing Deferred tax || ||(12.15) |
|Profit / (Loss) after Tax for the year ||) 37.96 ( ||(24.02) |
|Other Comprehensive Income (net of Tax ||)2.09( ||(1.02) |
|Total Comprehensive loss for the year ||40.05 ) ( ||(25.04) |
2. FINANCIAL PERFORMANCE
The sudden outbreak of COVID-19 Pandemic worldwide since January 2020 and in India fromMarch 2020 and the resultant nationwide lockdown announced by Government of India from24th March 2020 has significantly affected normal working of the Company.
Manufacturing operations at both of company's plants in Kerala and Tamil Nadu weresuspended since 24th
March 2020 on account of Nation-wide lock down.
The Manufacturing operations have commenced in a phased manner at Kerala plant on 22ndMay 2020 and at Tamil Nadu plant on 6th May 2020 adhering to required safety precautionsas per Govt.regulations. Post resumption the capacity utilisation at both the plants werelow due to Lower demand on account of Lesser consumer spend paucity of Labour andLiquidity stress. The capacity utilisation was gradually ramped up from 3rd Quarter.Presently due to acute Liquidity stress and paucity of working capital company's TNplant is operating at 60% capacity and Kerala plant at 90% capacity (on contractmanufacturing).
There were Nil revenues during the period of suspension of manufacturing operations dueto nation-wide lock down. However your company had to meet various payment obligationstowards wages & salary Fixed overheads Statutory payments. Your company could notobtain Emergency Credit Line Facility Guaranteed by Central Government to tide overbusiness stress on account of COVID and restart operations due to ineligibility. Due toacute Liquidity stress there were some irregularities in the account and company'sbankers have also expressed their inability to provide credit facilities to surmount theunprecedented business stress caused by COVID pandemic. Due to Liquidity stress andworking capital constraints the Company had no choice but to take up contractmanufacturing.
This has resulted in significant loss situation in FY 2020-
Consequently the Revenue from operations for the year was lower at Rs. 148.47 croresas against Rs. 395.41 crores in the previous year. As against Rs 1.51 Cr
Earnings before Interest Depreciation and Tax (EBITDA) in FY 2019-20 there was anEBITDA Loss of Rs 3.83 Cr for the year. After incurring Lower Finance cost of Rs. 23.92crores (Rs. 27.33 crores for the previous year) and Depreciation of Rs. 10.21 crores (Rs.10.35 crores for the previous year) the loss reported for the year under review wasmarginally higher at Rs. 37.96 crores as against Rs. 36.17 crores for the previous year.
There are no material changes or commitments affecting the financial position of theCompany which have occurred between the end of the financial year and the date of thisReport other than the impact of COVID-19 on the business operations of the Companydetailed in this Report as well as in Notes to the Financial Statements of the Company.There is no change in the nature of your Company's business during the year under review.
3. RESOLUTION PLAN (RP)
Your company had submitted Resolution proposal to Term and Working Capital Lenders torestructure outstanding debts under the Prudential Framework for Resolution of StressedAssets Directions 2019 of RBI vide its circular dated 07.06.2019. However due to changesproposed in RP and Procedural delays by the Consortium of
Lenders the process was indefinitely delayed and RP has undergone changes. Your Boardwould like to inform you that a Revised Resolution Proposal with Proposed sale of itsTamil Nadu plant subject to approval of Shareholders Lenders and otherStatutory/Regulatory Authorities for a Gross sale consideration of Rs 110 Cr. has beensubmitted to Lenders.
Consortium of Lenders in their meeting held on 12th May2021 have agreed to consider theRP and mandated Lead bank to carryout TEV study and obtain credit rating. As approved bythe consortium Lead bank has completed required TEV study confirming Techno EconomicViability of the RP. In July CRA -CRISIL has awarded required RP4 rating to the RP. TheRP is now undergoing the next stage of approval process of the Lenders.
Post restructuring the residual Kerala plant would continue to operate with reduceddebt levels and from its cash generation the remaining debt can be serviced. Withadequate working capital in place reduced labour cost the operational efficiency willimprove significantly thereby the EBITDA levels of the Kerala plant is expected to bebetter.
In the meantime due to default in debt servicing
Consortium of Bankers (except IDBI bank) have classified accounts of your company asNPA on
31.3.2021 and certain Lenders have issued Notice under Section 13 (2) of theSecuritisation and Reconstruction of Financial Assets and Enforcement of Security Interest(SARFAESI) Act 2002.Nevertheless since RP is at next stage of approval process ofLenders we have requested Lenders to withdraw the Notice issued u/s 13(2) of the SARFAESIAct 2002 not to initiate any recovery / legal measures and extend continued support inthis challenging Covid Pandemic time.
In view of the losses for the financial year ended 31st
March 2021 the Board of Directors regret their inability to recommend any dividend forthe year 2020-21.
5. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report on the operations of the Company asrequired under the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (hereinafter referred to as "Listing Regulations") is provided in aseparate section and forms an integral part of this Report.
6. PUBLIC DEPOSITS
The Company does not have "Deposits" as contemplated under Clause V of theCompanies Act 2013. Further the company has not accepted any such deposits during theyear ended 31st March 2021.
7. CORPORATE GOVERNANCE
The Company has taken the requisite steps to comply with the recommendations concerningCorporate Governance. As per Regulation 34 (3) read with Schedule V of the SEBI (ListingRegulations and Disclosure Requirements) Regulations 2015 a separate statement onCorporate Governance practices followed by the Company together with a Certificate fromthe Practicing Company Secretary confirming compliance forms an integral part of thisReport.
8. DIRECTORS AND KEY MANAGERIAL PERSONS
Shri. Prem Malik Independent Director has resigned effective from 05.11.2020 due tohis personal reasons.
He had confirmed that there is no other material reason for his resignation other thanthose provided.
Ms Veena Vishwanath Bhandary has been appointed as an Assistant Company Secretary andCompliance
Officer effective from 01.10.2020.
There is no change in the composition of the Board of
Directors and the Key Managerial Personnel except as stated above.
9. KEY MANAGERIAL PERSONNEL
Shri Umang Patodia Managing Director Shri T.
Ravindran Chief Financial Officer and Ms Veena
Vishwanath Bhandary Assistant Company Secretary and Compliance Officer (w.e.f01.10.2020) were the Key
Managerial Personnel of your Company in accordance with the provisions of Section 203of the Companies Act 2013 during the year under review.
10. NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met 6 (six) times during the financial year 2020 21. The detailsof the meetings of the Board of Directors of the Company convened and attended by theDirectors during the financial year 2020-21 are given in the Corporate Governance Reportwhich forms part of this Annual Report.
11. MEETING OF INDEPENDENT DIRECTORS
The Independent Directors met once during the Financial Year under review. The Meetingwas conducted without the presence of the Non-Independent Directors and members ofmanagement.
12. DIRECTORS' RESPONSIBILITY STATEMENT
The Board of Directors acknowledge the responsibility for ensuing compliances with theprovisions of Section 134(3)(c) read with Section 134(5) of the Companies Act 2013 in thepreparation of annual accounts for the year ended on 31st March 2021 and state that: i.in the preparation of the Annual Accounts the applicable Indian Accounting Standards havebeen followed and there are no material departures from the same; ii. the Directors haveselected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of your company as at 31st March
2021 and of the profit or loss of the company for that period; iii. the Directors havetaken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofyour company and for preventing and detecting fraud and other irregularities; iv. theDirectors have prepared the Annual Accounts on a going concern basis v. they have laiddown internal financial controls to be followed by the company and that such internalfinancial controls are adequate and are operating effectively; and vi. the Directors havedevised proper systems to ensure compliance with the provisions of all applicable laws andthat such systems were adequate and operating effectively.
13. BOARD EVALUATION
Pursuant to the provisions of Companies Act and Listing Regulations annual evaluationof the Board the Directors individually as well as working of its constituted committeeshas been carried out from time to time.
14. FAMILIARISATION PROGRAMME FOR DIRECTORS
At the time of appointing a Director a formal letter of appointment is given to himwhich interalia explains the role function duties and responsibilities expected of himas a Director of the Company. This is to provide insights into the Company to enable theIndependent Directors to understand its business in depth to familiarize them with theprocess business and functionaries of the Company and to assist them in performing theirrole as Independent Directors of the Company. The Director is also explained in detail theCompliance required from him under the Companies Act 2013 SEBI (LODR) Regulations 2015and other relevant regulations and affirmation taken with respect to the same.
The Chairman and the Management has also one to one discussion with the Directors tofamiliarize with the company's operations
M/s. L.U.Krishnan & Co. (Regn.No.001527S) Chartered Accountants Chennai wereappointed as the Auditors of the Company at the 26th Annual General Meeting
(AGM) held on 22nd September 2017 to hold office till the conclusion of the 31st AGMof the Company for a term of 5 years subject to ratification of the appointment by themembers at every Annual General Meeting. The requirement of seeking ratification of themembers for continuance of their appointment has been withdrawn consequent up on thechanges made by the Companies (Amendment) Act 2017 with effect from May 07 2018
The Statutory Auditors have given a confirmation to the effect that they are eligibleto continue with their appointment and that they have not been disqualified in any mannerfrom continuing as Statutory Auditors.
Reports issued by the Statutory Auditors on the
Standalone financial statements for the year ended 31st March 2021 are with unmodifiedopinion (unqualified)
16. SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethere under the Company has appointed Shri. MRL Narasimha (C.P No. 799) PracticingCompany Secretary to undertake the Secretarial Audit of the Company.
Secretarial Audit Report issued by Shri. MRL Narasimha
Practicing Company Secretary in Form MR-3 forms part of this report as Annexure I. Thesaid report does not contain any observation or qualification requiring explanation oradverse remark
17. COST AUDITORS
Pursuant to Section 148 of the Act read with Rule 14 of the Companies (Cost Records andAudit) Amendment Rules 2014 the cost audit records of the Company are required to beaudited. The Directors on the recommendation of the Audit Committee appointed M/s.Hareesh K.N and Associates Cost Accountants (Firm Reg. No. 101974) Cost Accountants toaudit the cost accounts of the Company for the FY ending 31st March 2022 on aremuneration as mentioned in the Notice convening the 30th Annual General Meeting forconducting the audit of the cost records maintained by the company.
18. EXTRACT OF ANNUAL RETURN
Pursuant to provisions of Section 134(3)(a) and Section 92(3) of the Companies Act2013 read with Rule 12 of the Companies( Management and Administration)Rules
2014 the extract of the Annual Return of the company for the Financial Year 31stMarch 2021 is uploaded on the website of the company and can be accessed at thewww.patspin.com
19. RELATED PARTY TRANSACTIONS
All transactions entered with related parties were on arm's length basis and in theordinary course of business.
There were no materially significant transactions with the related parties during thefinancial year and were not in conflict with the interest of the company. Thus adisclosure in Form AOC -2 in terms of Section 134 of the
Companies Act 2013 is not required. All related party transactions are placed beforethe Audit Committee as also before the Board for approval.
The Board of Directors as recommended by the Audit Committee adopted a policy toregulate transactions between the Company and its Related Parties in compliance with theapplicable provisions of the Companies Act 2013 the Rules thereunder and the ListingRegulations. This Policy has been uploaded on the website of the Company.
20. LOANS & INVESTMENTS
Details of loans guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the Notes to Financial Statements forming partof this report.
21. RISK MANAGEMENT
The company has laid down a well-defined risk management mechanism covering the riskmapping and trend analysis risk exposure potential impact and risk mitigation process. Adetailed exercise is being carried out to identify evaluate manage and monitor businessrisks. The Audit Committee and the Board periodically review the risks and suggest stepsto be taken to manage/ mitigate the same through a properly defined framework.
During the year a risk analysis and assessment was conducted and no major risks werenoticed which may threaten the existence of the company
22. VIGIL MECHANISM / WHISTE BLOWER POLICY
The company has a Vigil Mechanism / Whistle Blower Policy to report genuine concerns orgrievances. The Vigil Mechanism (Whistle Blower Policy) has been posted on the company'swebsite (www.patspin.com).
23. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per the provisions of Section 135 read with the Section 198 of the Companies Act2013 the company do not have CSR obligation for the year 2020-21. Accordingly there hasbeen no meeting of CSR Committee held during the year.
Even though the provisions of Section 135 (5) of Companies Act 2013 regardingCorporate Social Responsibility are not yet attracted the company has been over theyears pursuing as part of its corporate philosophy an unwritten CSR policy voluntarilywhich goes much beyond mere philanthropic gestures and integrates interest welfare andaspirations of the community with those of the Company itself in an environment ofpartnership for inclusive development.
24. CREDIT RATING
M/s CRISIL Ratings Ltd has awarded RP-4 Rating for the
Company's proposed Resolution Plan during July 2021.
25. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under section 134 (3) (m) of the Companies Act 2013 read withRule 8 of the Companies
(Accounts) Rules 2014 is given in the Annexure II forming part of this report
26. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an effective internal control and risk mitigation system designed toeffectively control the operations at its Head Office Plants and Depot.
The internal control systems are designed to ensure that the financial and otherrecords are reliable for the preparation of financial statements and for maintainingassets. The Company has well designed Standard Operating Procedures. Independent InternalAuditors conduct audit covering a wide range of operational matters and ensure compliancewith specified standards. Planned periodic reviews are carried out by
Internal Audit. The findings of Internal Audit are reviewed by the top management andby the Audit Committee of the Board of Directors.
Based on the deliberations with Statutory Auditors to ascertain their views on thefinancial statements including the Financial Reporting System and Compliance to AccountingPolicies and Procedures the Audit Committee was satisfied with the adequacy andeffectiveness of the Internal Controls and Systems followed by the company.
27. NOMINATION & REMUNERATION POLICY
The Board of Directors has framed a policy which lays down a framework in relation toremuneration of Directors Key Managerial Personnel and Senior Management of the Company.This policy also lays down criteria for selection and appointment of Board Members. Moredetails on the same are given in the Corporate Governance Report.
28. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
In accordance with the applicable provisions of Companies Act 2013 (hereinafterreferred to as "the Act") read with Investor Education and Protection Fund(Accounting Audit Transfer and Refund) Rules 2016 (hereinafter referred to as the"IEPF Rules") all unclaimed dividends are required to be transferred by theCompany to the IEPF after completion of seven (7) years. Further according to IEPFRules the shares on which dividend has not been claimed by the shareholders for seven (7)consecutive years or more shall be transferred to the demat account of the IEPF Authority.The details relating to shares on which dividends were unclaimed are provided in theGeneral Shareholders Information section of Corporate Governance report forming part ofthis Annual Report.
29. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
The Company has in place an anti-sexual harassment policy in line with the requirementsof the sexual harassment of women at the workplace (Prevention Prohibition and Redressal)Act 2013. Internal Compliance Committee (ICC) is already been functioned for redressingcomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy. The Company has not received anycomplaints under this policy during the year ended 31st March 2021.
30. PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 134 (3) (q) OF THE COMPANIES ACT 2013READ WITH RULE 5 (1) OF THE COMPANIES (APPOINTMENT AND REMUENRATION OF MANAGERIALPERSONNEL) RULES 2014
The information required pursuant to section 134 (3) (q) of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 in respect of employees of the company will be provided uponrequest. In terms of Section 136 of the Act the Report and Accounts are being sent to theMembers and others entitled thereto excluding the information on employees' particularswhich is available for inspection by the Members at the Registered office of the companyduring business hours on working days of the company up to the date of the ensuing AnnualGeneral meeting. If any Member is interested in obtaining a copy thereof such member maywrite to the company in this regard.
31. PERSONNEL & INDUSTRIAL RELATIONS
Industrial Relations were cordial and satisfactory. There were no employees whoseparticulars are to be given in terms of Section 134(3)(q) of the companies Act2013 readwith Rule 5(2) and 5(3) of the companies (Appointment and Remuneration of Managerialpersonnel) Rules 2014.
32. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant and material orders passed by the Regulators or Courts orTribunals that would impact the going concern status of your Company and its futureoperations.
There was no issue of equity shares with differential rights as to dividend voting orotherwise: and; There was no issue of shares (including sweat equity shares) to theemployees of the company under any scheme.
Your Directors place on record their gratitude to Central
Bank of India State Bank of India Export-Import Bank of India The Karur Vysya BankLimited IDBI Bank Limited Punjab National Bank (erstwhile Oriental Bank of Commerce)Bank of Maharashtra and Canara
Bank and the concerned Departments of the State and Central Government valuablecustomer Employees and Shareholders for their assistance support and co-operation to theCompany.
| ||For and on behalf of the Board of Directors |
| ||B K PATODIA |
|Place: Mumbai ||(DIN:00003516) |
|Date: 14.08.2021 ||Chairman |