To the Members Your Directors present the TWENTY EIGHTH Annual Report together withthe Audited Statement of Accounts for the year ended 31st March 2019
1. FINANCIAL RESULTS
| || |
(Rs. in lacs)
|Particulars ||Year ended |
| ||31.3.2019 ||31.3.2018 |
|REVENUE || || |
|Income from operations ||54851 ||52284 |
|Other income ||252 ||81 |
|Changes in Inventories ||355 ||(739) |
|Total ||55458 ||51626 |
|EXPENSES || || |
|a) Cost of materials ||33781 ||32348 |
|b) Employee benefits expense ||3577 ||3546 |
|c) Other expenses ||14433 ||12594 |
|Total ||51791 ||48488 |
|OPERATING PROFIT (EBITDA) ||3667 ||3138 |
|Finance Cost ||2923 ||3308 |
|PROFIT/(LOSS) BEFORE ||744 ||(170) |
|DEPRECIATION AMORTISATION & TAX EXPENSES || || |
|Depreciation and Amortisation ||1033 ||1045 |
|Expenses || || |
|PROFIT/(LOSS) BEFORE TAX AND BEFORE EXCEPTIONAL ITEM ||(289) ||(1215) |
|PROFIT ON SALE OF WINDMILLS & VRS EXPENSES (NET) ||(16) ||947 |
|PROFIT/(LOSS) BEFORE TAX AFTER EXCEPTIONAL ITEM ||(305) ||(268) |
|Tax Expenses || || |
|a) Current Tax (MAT) ||-- ||-- |
|b) Deferred Tax Charge / ||(69) ||166 |
|(Credit) || || |
|PROFIT/(LOSS) AFTER TAX ||(236) ||(434) |
2. FINANCIAL PERFORMANCE
Financial year 2018-19 witnessed many external challenges in the form of fluctuatingdemand constraints and tight liquidity conditions. Despite this your company was able toimprove its revenue to Rs.548.15 Cr. in FY 2018-19 from Rs.522.84 Cr. in the FY 2017-18.Exports were higher at Rs.306.40 Cr. in FY 2018-19 as against Rs.289.74 Cr. in theprevious
FY 2017-18. Operating Profit (EBITDA) was higher at Rs. 36.67 Cr. as against Rs.31.38Cr. in the previous year. Consequently the net loss for the FY 2018-19 was lower atRs.2.36 Cr. compared to the loss of Rs.4.34 Cr. in the previous FY 2017-18.
As regards the debt position your company has since repaid 68% (Rs.173 Cr) of theoutstanding debt of Rs.255 Cr. as at the date of the CDR i.e. 1st April 2012. Howeveron account of continued stress in liquidity position your company is in discussion withits Lenders to restructure its outstanding debts of Rs.82 Cr. as on date under RBI'sprudential framework for resolution of stressed assets circular of 7th June 2019.
In view of the losses for the financial year ended 31st March 2019 the Board ofDirectors regret their inability to recommend any dividend for the year 2018-19 andaccordingly has not recommended / proposed declaration of any dividend.
4. 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.
5. 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 2019.
6. CORPORATE GOVERNANCE
The Company has always strived to adopt appropriate standards for good CorporateGovernance.
As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate section on Corporate Governancepractices followed by the Company together with a Certificate from as well as PracticingCompany Secretary confirming compliance forms an integral part of this Report.
7. DIRECTORS AND KEY MANAGERIAL PERSONS
Shri N.K.Bafna (DIN: 00019372) Shri Prem Malik (DIN: 00023051) and Shi. S.Sundareshan(DIN: 01675195) will be completing their present term as Independent Directors of thecompany on 18th September 2019. On the recommendation of Nomination and RemunerationCommittee the Board in its meeting held on 7th August 2019 subject to the approval ofshareholders by special resolution has recommended the reappointment of Shri N.K.Bafna(DIN: 00019372) Shri Prem Malik (DIN:cotton prices 00023051) and Shi. S.Sundareshan(DIN: 01675195) as Independent Directors of the company for a further term of 5 yearseffective from 19th September 2019.
Pursuant to Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2018 consent of the Members by way of SpecialResolution is required for continuation of a Non-Executive and Independent Directorsbeyond the age of 75 years w.e.f. April 1 2019.
Shri. N.K. Bafna and Shri Prem Malik Independent Directors are above 75 years of age.The Board recommends your approval by Special Resolution for their continuance in theBoard.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of the independence as prescribed both undersection 149(6) of the Companies Act 2013 and under Regulation 16 (1)(b) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
Further in accordance with the provisions of Companies Act 2013 and the Articles ofAssociation of the Company Shri B.K. Patodia (DIN 00003516) Director of the Companyretires by rotation at the ensuing Annual General Meeting and being eligible has offeredhimself for re-election.
Smt. Pamela Anna Mathew Independent Woman Director has resigned from the Board due toher preoccupation with her business with effect from 7.8.2019. The Board records itssincere appreciation for her valuable contribution during her association with thecompany.
Shri. Rajen K Mariwala will be completing his present term as Independent Director ofthe company on 18th September 2019. Due to preoccupation he is unable to continue hisDirectorship beyond his present term. The Board records its sincere appreciation for hisvaluable contribution during his long association with the company.
The required information of the Directors being reappointed pursuant to the provisionsof the Listing Regulations forms part of the Annual Report.
There is no change in the composition of the Board of Directors and the Key ManagerialPersonnel except as stated above.
8. KEY MANAGERIAL PERSONNEL
Shri Umang Patodia Managing Director Shri
T.Ravindran Chief Financial Officer and Shri Dipu
George Company Secretary were appointed as Key Managerial Personnel of your Companyin accordance with the provisions of Section 203 of the Companies Act 2013 and there is nochange in the same during the year under review.
9. NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met 4 times during the year ended 31st March 2019 in accordancewith the provisions of the Companies Act 2013 and rules made there under. The detailsthereof are given in the Corporate Governance Report.
10. 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.
11. 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 2019 and state that:
(i) in the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed and there are no material departures from the same;
(ii) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of your company as at 31st March 2019 and of the profit or loss ofthe company for that period;
(iii) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of your company and for preventing and detecting fraud and otherirregularities;
(iv) they have prepared the Annual Accounts on a going concern basis;
(v) they have laid down internal financial controls to be followed by the company andthat such internal financial controls are adequate and are operating effectively; and (vi)they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
12. 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.
13. 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 on22nd September 2017 to hold office from the conclusion of the 31st AGM of the Company.
Reports issued by the Statutory Auditors on the Standalone financial statements for theyear ended 31st March 2019 are with unmodified opinion (unqualified).
15. SECRETARIAL AUDIT
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 inForm MR-3 forms part to this report as Annexure I. The said report does not contain anyobservation or qualification requiring explanation or adverse remark
16. COST AUDITORS
Pursuant to the provisions of Section 148 (3) of the Companies Act 2013 the Board ofDirectors on the recommendation of the Audit Committee appointed M/s. Hareesh K.N andAssociates Cost Accountants as the Cost Auditors of the company for the year ended 31stMarch 2019. The remuneration payable to the Cost Auditor is subject to approval of theMembers at the Annual General Meeting. Accordingly the remuneration payable to the CostAuditors forms a part of the Notice convening 28th Annual General Meeting and theresolution is recommended for your approval.
17. EXTRACT OF ANNUAL RETURUN
The extract of Annual Return in Form MGT-9 as per Section 92 (3) of the Companies Act2013 and Rule 12 (1) of Companies (Management & Administration) Rules 2014 is annexedhereto as Annexure II and forms part of this report.
18. 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 notrequired. All related party transactions are placed before the Audit Committee as alsobefore 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.
19. 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.
20. 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.
21. 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).
22. 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 2018-19. Accordingly there hasbeen no meeting of CSR Committee held during the year. The statutory disclosures withrespect to CSR is annexed hereto forming part of this Report (Annexure III) Even thoughthe provisions of Section 135 (5) of Companies Act 2013 regarding Corporate SocialResponsibility are not yet attracted the company has been over the years pursuing aspart of its corporate philosophy an unwritten CSR policy voluntarily which goes muchbeyond mere philanthropic gestures and integrates interest welfare and aspirations of thecommunity with those of the Company itself in an environment of partnership for inclusivedevelopment.
23. 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 IV forming part ofthis report
24. 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 Depots.
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. Thefindings of Internal Audit are reviewed by the top management and by the Audit Committeeof 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.
25. NOMINATION & REMUNERATION POLICY
The Board of Directors has framed a policy which lays down a frame work 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.
26. 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 2019.
27. 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 officeof 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.
30. 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.
31. SIGNIFICANT AND MATERIAL ORDERS PASSED BY
There are no significant and material the Regulators or Courts or Tribunals that wouldimpact the going concern status of your Company and its future operations.
a) There was no issue of equity shares with differential rights as to dividend votingor otherwise: and;
b) There was no issue of shares (including sweat equity shares) to the employees of thecompany under any scheme.
Your Directors place on record their gratitude to Central Bank of India State Bank ofIndia Export-Import Bank of India The Karur Vysya Bank Limited IDBI Bank LimitedOriental Bank of Commerce Bank of Maharashtra and Canara Bank and the concernedDepartments of the State and Central Government Valuable customers Employees andShareholders for their assistance support and co-operation to the Company.
| ||For and on behalf of the Board of Directors |
| ||B K PATODIA |
|Place: Kochi ||(DIN:00003516) |
|Date: 7th August 2019 ||Chairman |