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Winsome Yarns Ltd.

BSE: 514348 Sector: Industrials
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OPEN 1.02
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Mkt Cap.(Rs cr) 7
Buy Price 1.02
Buy Qty 1.00
Sell Price 1.02
Sell Qty 44.00
OPEN 1.02
CLOSE 1.02
52-Week high 1.94
52-Week low 1.02
Mkt Cap.(Rs cr) 7
Buy Price 1.02
Buy Qty 1.00
Sell Price 1.02
Sell Qty 44.00

Winsome Yarns Ltd. (WINSOME) - Director Report

Company director report

Dear Members

We are pleased to present the 28th Annual Report of the Company and the auditedstatement of accounts for the year ended 31st March 2018. A summary of thefinancial results is given below.

INCOME Year Ended 31 March 2018 Year Ended 31 March 2017
Revenue from operations 33305.42 37131.36
Other income 182.20 195.19
Total Income 33487.62 37326.55
Cost of material consumed 21858.25 26022.48
Purchase of stock-in-trade - 34.12
Excise duty 1.80 11.78
Change in inventories of finished goods work in process and stock in trade 1095.00 (733.17)
Employees benefit expenses 3523.83 3233.79
Finance costs 36.88 44.93
Depreciation and amortisation 1706.93 1812.68
Other expenses 7356.35 8613.31
Total Expense 35579.04 39039.92
Loss before exceptional items and tax (2091.42) (1713.37)
Less: Exceptional items 296.64 -
Loss before tax (1794.78) (1713.37)
Less/(-Add): Tax expense
Current tax - -
Deferred tax - 6.07
Loss after tax (1794.78) (1719.44)
Other comprehensive income 12.87 (7.65)
Total Comprehensive Income (1781.91) (1727.09)


During the year under review the Company's operations continued to be affected due tonon availability of working capital for operations resulting in lower capacity utilisationand constrained margins due to high cost of Raw Material at uneconomical buying.Furthermore the Company has not been able to undertake necessary debottlenecking andregular capital expenditure as per industry norms for proper maintenance and upkeep ofplant and equipment due to paucity of funds. During the year ended 31.03.2018 companyincurred a loss of Rs. 1781.91 lakhs in comparison to the loss of Rs. 1727.09 lakhs forthe previous year ended 31.03.2017. Your Company's turnover of Rs. 33487.62 lakhs waslower against the previous year turnover of Rs. 37326.55 lakhs due to lower capacityutilisation caused by non availability of working capital funds.


Consequent to erosion of entire net worth the Company filed a reference before theHon'ble Board for Industrial and Financial Reconstruction (BIFR) under the Sick industrialcompanies (Special Provisions) Act. 1985 (SICA) which was registered has since beenrepealed effective December 1 2016.

The Company had discussions with its lenders for evolving a scheme of rehabilitation ofits financial debts which continued both during the period that the reference of theCompany was under consideration before the Hon'ble BIFR and the period since repeal ofSICA.

The Company's net worth which continues to be eroded is likely to improve on completeimplementation of the debt restructuring plan by the Company which is underdiscussion/consideration with the EARC/Lenders.


The Company's borrowings from secured lenders exceeding 83% of amount have since beenassigned by the lending banks to Edelweiss Asset Reconstruction Company Limited (EARC)and the Company is in discussions with the Eldelweiss Asset Reconstruction Company Limitedfor a structured payment plan of its dues which will be binding on all lenders on itsfinalisation.

The Company is in process of raising counter claim/s on the lenders at the appropriaterecovery forum as per advise of its legal counsel.

The performance of the Company during the current year shall once again depend onavailability of raw material-cotton at reasonable prices and the Indian currencyremaining stable with the currency of customers in importing countries.


According to the provisions of Section 129 of Companies Act 2013 a statementcontaining salient features of the financial statements of the Company's subsidiaries inForm AOC-1 is attached to the financial statements of the Company. As required byAccounting Standard - 21 issued by the Institute of Chartered Accountants of India theconsolidated financial statements included in this Annual Report incorporate theaccounts of its subsidiary Companies namely Winsome Yarns (Cyprus) Limited (Unaudited31.03.20018) and Winsome Yarns (FZE) (unaudited 31.03.2018 ceased operations declareddefunct effective 01.04.2014).

Pursuant to the provisions of Section 136 of the Companies Act 2013 the financialstatements of the Company consolidated financial statements along with relevant documentsand separate audited/ unaudited accounts in respect of subsidiaries are available on website of the Company.

The ongoing business recessionary conditions in European Countries caused negativeeffects to the three step down subsidiaries of the Company namely S.C. Winsome RomaniaS.r.l. IMM Winsome Italia S.r.l. and S.C. Textil S.r.l. which were placed underliquidation and therefore their Balance Sheets and other financial statements are notavailable; accordingly the instant consolidated financial statements of the Company donot include the financials of the above named three subsidiary Companies.. The Company hasmade necessary provisions in the books of account to take care the losses in thosesubsidiaries.

The present status of these three subsidiary companies is given as under:-

Sr. No. Name of Subsidiary Start of liquidation process Present status
1 IMM Winsome Italia S.r.l. 30.09.2008 Under Liquidation.
2 S.C. Winsome Romania S.r.l. 26.11.2008 Under Liquidation.
3 S.C. Textil S.r.l. 09.02.2010 Under Liquidation.


Your Directors are unable to recommend any dividend on equity shares for the year underreview.


During the year the company has not allotted any securities.


(a) Shri Manish Bagrodia Director retires by rotation and being eligible offershimself for re-election.

(b) None of the Directors are disqualified under the provisions of Section 164(2) ofthe Companies Act 2013. The Directors have made the requisite disclosures as under theprovisions of Companies Act 2013 and under the regulations of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

(c) Ms. Navpreet Kaur Boparai has been appointed as Independent Woman Director of theCompany w.e.f. 19.05.2017. (d) Shri Satish Bagrodia Chairman of the Company has resignedfrom the Directorship of the Company with effect from 26.06.2018.


Pursuant to the provisions of the Companies Act 2013 and under the regulations of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board hascarried out an annual evaluation of its own performance the directors individually aswell as the evaluation of the working of its Committees. At the meeting of the Board allthe relevant factors that are material for evaluating the performance of individualDirectors the Board and its various committees were discussed in detail. A structuredquestionnaire each for evaluation of the Board its various Committees and individualDirectors was prepared and recommended to the Board by Nomination & RemunerationCommittee for doing the required evaluation after taking into consideration the inputreceived from the Directors covering various aspects of the Board's functioning and itsCommittees execution and performance of specific duties obligations and governance etc.

A separate exercise was carried out to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence of judgement safeguarding the interest of theCompany and its minority shareholders etc. The performance evaluation of the IndependentDirectors was carried out by the entire Board. The performance evaluation of the Chairmanand Non- Independent Directors was also carried out by the Independent Directors at theirseparate meeting. The Directors expressed their satisfaction with the evaluation process.


Four board meetings were convened and held during the financial year 2017-18. Thedetails thereof are given in the ‘Corporate Governance Report'. The intervening gapbetween the meetings was within the period prescribed under the Companies Act 2013.


Statutory Auditor M/s K. R. & Co. had submitted to the Board their unwillingness tobe ratified as Statutory Auditor of the company for remaining period of their appointment.The Board approached M/s Khandelia and Sharma Chartered Accountants (FRN- 510525C) NewDelhi to be Statutory Auditors of the Company. The Firm M/s. Khandelia and Sharma havingits office at 407 South-Ext. Plaza-II South Extension-2 New Delhi-110049 is comprisingof Six Chartered Accountants and possessing 28 years of experience in the field ofauditing & management services business advisory and corporate legal services. M/sKhandelia and Sharma agreed to be Statutory Auditors of the Company.

The Board of Directors of the Company recommended to appoint M/s. Khandelia and SharmaChartered Accountants as Statutory Auditors of the Company from the conclusion of 28thAnnual General Meeting till the conclusion of 29th Annual General Meeting of the Companysubject to the approval of shareholders of the Company at ensuing Annual General Meetingof the Company.


M/s K. R. & Co. Statutory Auditors of the Company have submitted Auditors' Reporton the accounts of the Company for the financial year ended March 31 2018. The statementof Impact of Audit Qualifications of Standalone and Consolidated Financials have beengiven after the respective Auditors' Reports.

THE EXPLANATION/COMMENTS OF THE BOARD ON QUALIFICATION/RESERVATION OR ADVERSE REMARKSGIVEN BY AUDITORS IN ITS REPORT FOR THE FINANCIAL YEAR 2017-18: Explanation ofmanagement on the audit qualifications contained in the Auditors' Report are given in therespective statements of Impacts of audit qualifications of the standalone andconsolidated financials.


Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintained by the Companyin respect of various activities are required to be audited. Your Directors had on therecommendation of the Audit Committee appointed M/s. Balwinder and Associates CostAccountants to audit the cost accounts of the Company for the financial year 2018-19 on aremuneration as approved by the shareholders of the Company. The Cost Audit Report for thefinancial year 2016-17 approved by the Board of Directors vide Circulation Resolution No.11/2017-18 dated 25.09.2017 passed on 27.09.2017 and thereafter the cost audit report forthe financial year 2016-17 had been filed on 25/10/2017 vide SRN-G57912701.


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 Sharma Sarin & Associates a firm of Company Secretaries in practice(C.P. No. 2751) to undertake the Secretarial Audit of the Company. The Secretarial AuditReport for the financial year ended 31st March 2018 is annexed herewith as ‘Annexure‘A' to this Report.


During the year the Company has not accepted any deposits from the public and as suchthere are no outstanding deposits in terms of the Companies (Acceptance of Deposits)Rules 2014.


The Board of Directors acknowledge the responsibility for ensuring compliance 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 2018 and statethat: a) in the preparation of the annual accounts the applicable accountingstandards had been followed along with proper explanation relating to material departures;b) the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period; c) thedirectors had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of thecompany and for preventing and detecting fraud and other irregularities; d) thedirectors had prepared the annual accounts on a going concern basis; e) thedirectors had laid down internal financial controls to be followed by the company and thatsuch internal financial controls are adequate and were operating effectively; and f) thedirectors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.


Shri Manish Bagrodia Managing Director Shri Anand Balkishan Sharma President(Corporate Finance) and Chief Financial Officer (CFO) and Shri K. V. Singhal GeneralManager (Legal) & Company Secretary of the Company are the Key Managerial Personnel ofthe Company.


A separate report on ‘Corporate Governance' is enclosed as a part of this AnnualReport. A certificate from the Secretarial Auditor of the Company regarding compliancewith Corporate Governance norms stipulated under the regulations of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is annexed to the Report onCorporate Governance.


The details pertaining to composition of audit committee are included in the‘Corporate Governance' Report.


The Board of the Company has already formed a risk management committee to frameimplement and monitor the risk management plan for the Company. The committee isresponsible for receiving the risk management plan and ensuring its effectiveness. Theaudit committee has additional oversight in the area of financial risks and controls.Major risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis.


During the financial year 2017-18 a meeting of the Nomination and RemunerationCommittee of the Company was held on 30.05.2017 in the presence of Shri Pradeep Kumar asChairman Shri Satish Bagrodia and Ms. Navpreet Kaur Boparai as its Members. The Committeeformulated Remuneration Policy which is attached as Annexure ‘B' and forms apart of this Report of the Directors.


As required under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 the Company had constituted the Internal Complaint Committees atall the work places of the Company. The composition of which and the contact numbers ofthe persons to be approached have been uploaded on the website of the company and has been properly displaced on the Notice Boards at all thepremises of the company including works and head office.

The Committees have been regularly addressing the staff/ workers particularly thefemale staff/ workers to make them aware about their rights under the Act and as to howand to whom the complaint if any can be lodged.


All transactions entered into with related parties as defined under the Companies Act2013 and under the regulations of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 during the financial year were in the ordinary course ofbusiness and on an arm's length pricing basis and do not attract the provisions of Section188 of the Companies Act 2013. There were no materially significant transactions with therelated parties during the financial year which were in conflict with the interest of theCompany and hence enclosing of Form AOC-2 is not required. Suitable disclosure asrequired by the Accounting Standard (AS 18) has been made in the notes to the FinancialStatements. All Related Party Transactions are placed before the Audit Committee and Boardof the Company (Board). Prior omnibus approval of the Audit Committee and Board isobtained for the transactions which are of a foreseen and repetitive nature. Thetransactions entered into pursuant to the omnibus approval so granted are audited and astatement giving details of all related party transactions is placed before the AuditCommittee and Board for their approval on a quarterly basis.

The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website. None of the Directors has any pecuniary relationships or transactionsvis-a-vis the Company.


Necessary declarations have been obtained from the Independent Directors undersub-section (7) of Section 149 of the Companies Act 2013.


During the financial year there was no significant and material order passed by anyCourt or any Tribunal against the Company.


The Company has in place internal financial control systems commensurate with the sizeand complexity of its operations to ensure proper recording of financial and operationalinformation and compliance of various internal controls and other regulatory and statutorycompliances. The internal auditor monitors and evaluates the efficacy and adequacy ofinternal control systems in the Company. Based on the report of the internal auditorrespective departments undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observations and corrective actions thereon arepresented to the Audit Committee of the Board.


The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of The Companies (Accounts) Rules 2014 is annexed herewith as Annexure‘C'.


The Company is continually making its best efforts to save the energy consumption. Toachieve this goal the company had spent approximately an amount of Rs. 15 lacs as capitalexpenditure which resulted in saving the energy cost of more than Rs. 1.00 crore.


Top priority continues to be given to preservation of the environment by all the unitsof the Company. To combat pollution and strengthen the area ecology considerable emphasisis placed on plantation of fragrant and shady trees. We are cautious of preserving waterthrough recycling and rainwater harvesting to the extent possible. All manufacturingfacilities possess the required environmental clearance from the respective PollutionControl Boards and do comply with the relevant legislation.

The Company is well aware of its responsibility towards a better and clean environment.Our efforts in environment management go well beyond mere compliance with statutoryrequirements. The Company has always maintained harmony with nature by adoptingeco-friendly technologies and upgrading the same from time to time incidental to itsgrowth programmes.


The prescribed particulars of employees required under Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is attached as Annexure‘D' and forms a part of this Report of the Directors.


The details forming part of the extract of the Annual Return as provided undersub-section (3) of Section 92 of the Companies Act 2013 is annexed herewith as Annexure‘E'.


In conformity with the provisions of regulations of Listing Regulations the Cash FlowStatement for the financial year is annexed with financial statements.


In accordance with Accounting Standards AS-21 on Consolidated Financial Statementsyour Directors provide the Audited Consolidated Financial Statement of Winsome YarnsLimited Winsome Yarns (Cyprus) Limited (unaudited 31.03.2018) and Winsome Yarns FZE(unaudited 31.03.2018 ceased operations declared defunct effective 01.04.2014) in theAnnual Report.


The properties of your Company have been adequately insured against fire floodearthquake and explosive risks etc.


Your Directors thank the various Central and State Government DepartmentsOrganizations and Agencies for the continued help and co-operation extended by them. TheDirectors also gratefully acknowledge all stakeholders of the Company viz. customersmembers dealers vendors banks and other business partners for the excellent supportreceived from them during the year. The Directors place on record their sincereappreciation to all employees of the Company for their unstinted commitment and continuedcontribution to the Company.

Registered Office : On behalf of the Board
SCO 191-192 Sector 34-A
Chandigarh – 160022 Manish Bagrodia Pradeep Kumar
Dated : 13.08.2018 Managing Director Independent Director