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Winsome Yarns Ltd.

BSE: 514348 Sector: Industrials
BSE 00:00 | 22 Jun Winsome Yarns Ltd
NSE 05:30 | 01 Jan Winsome Yarns Ltd
OPEN 0.80
52-Week high 0.95
52-Week low 0.79
Mkt Cap.(Rs cr) 6
Buy Price 0.80
Buy Qty 10.00
Sell Price 0.80
Sell Qty 4034.00
OPEN 0.80
CLOSE 0.80
52-Week high 0.95
52-Week low 0.79
Mkt Cap.(Rs cr) 6
Buy Price 0.80
Buy Qty 10.00
Sell Price 0.80
Sell Qty 4034.00

Winsome Yarns Ltd. (WINSOME) - Director Report

Company director report

Dear Members

We are pleased to present the 29th Annual Report of the Company and the auditedstatement of accounts for the year ended 31st March 2019. A summary of the financialresults is given below.


(Rs. in lakhs)

INCOME Year Ended 31 March 2019 Year Ended 31 March 2018
Revenue from operations 25025.28 33305.42
Other income 204.01 182.20
Total Income 25229.29 33487.62
Cost of material consumed 15084.57 21858.25
Purchase of stock-in-trade 22.25 --
Excise duty -- 1.80
Change in inventories of finished goods work in process and stock in trade 1178.67 1095.00
Employees benefit expenses 3354.07 3523.83
Finance costs 26.27 36.88
Depreciation and amortisation 1609.55 1706.93
Other expenses 6439.66 7356.35
Total Expense 27715.04 35579.04
Loss before exceptional items and tax (2485.75) (2091.42)
Less: Exceptional items (9016.05) 296.64
Loss before tax (11501.80) (1794.78)
Less/(-Add): Tax expense -- --
Current tax -- --
Deferred tax -- --
Loss after tax (11501.80) (1794.78)
Other comprehensive income 14.79 12.87
Total Comprehensive Income (11487.01) (1781.91)


During the year under review the Company's operations continued to be affected due tolack of sufficient working capital funds required for operations resulting in lowercapacity utilisation and the gross margins have suffered due to high input costs as theCompany is not able to negotiate fine pricing with its suppliers. Furthermore theconstraints of funds have effected Company’s plans to undertake debottlenecking andregular capital expenditure as per industry norms and needed for proper maintenance andupkeep of its plant machinery and equipment.

During the year ended 31.03.2019 the Company incurred a loss of Rs. 11487.01 lakhs incomparison to the loss of Rs. 1781.91 lakhs for the previous year ended 31.03.2018. YourCompany's turnover of Rs. 25229.29 lakhs was lower against the previous year turnover ofRs. 33487.62 lakhs for the aforementioned reasons. The Company has since undertakenmanufacturing for third parties on job work basis which contributes towards fixed costsof the Company.


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 on approval will be binding on alllenders.

Edelweiss Asset Reconstruction Company Limited (EARC) has since filed an Applicationunder Insolvency and Bankruptcy Code 2016 (IBC) for initiating insolvency against theCompany and also Original Applications have been filed by lenders before Debts RecoveryTribunal Chandigarh. The Company alleges that the actions initiated by the lenders arenot correct or valid.

The Company's net worth which continues to be eroded is expected to improve oncomplete implementation of the debt restructuring plan by the Company which is underdiscussion/consideration with the EARC/Lenders and the Company expects that theApplication filed by EARC under IBC will be withdrawn.


The performance of the Company during the current year depends on availability of rawmaterial-cotton at reasonable prices and availability of funds for carrying outnecessary repairs and maintenance at the manufacturing facilities of the Company andmeeting working capital requirements. The Company considers currency stability both ofIndia and of countries wherein its customers are located essential for consistentperformance.


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 by IndianAccounting Standard - 110 issued by the Ministry of Corporate Affairs the consolidatedfinancial statements included in this Annual Report incorporate the accounts of itssubsidiary Companies namely Winsome Yarns (Cyprus) Limited (Unaudited 31.03.2019) andWinsome Yarns (FZE) (unaudited 31.03.2019 ceased operations declared defunct effective01.04.2014).

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) The Directors express their profound grief at the sad demise of Shri SatishBagrodia (DIN : 00638647) their esteemed erstwhile colleague who was ex-chairman of theCompany on 5th March 2019 and place on records their deep sense of appreciation for theinvaluable services rendered by him during his association as MD/ Chairman of the Company.

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

(c) 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.

(d) Mrs. Mridula Goyal has been appointed as Non Independent Woman Director of theCompany w.e.f. 08.02.2019.

(e) Mr. Mukhtar Singh has been appointed as Independent Director of the Company w.e.f.05.08.2019.

(f) Mr. Tilak Raj Dembla has been appointed as Independent Director of the Companyw.e.f. 05.08.2019.

(g) Mr. Sunny Kumar had been appointed as Independent Director of the Company w.e.f.04.01.2019 and resigned on 07.08.2019.

(h) Mr. Kaushal Kashyap had been appointed as Independent Director of the Companyw.e.f. 04.01.2019 and resigned on 09.08.2019.

(i) Ms. Navpreet Kaur Boparai Independent Director of the Company has resigned fromthe Directorship of the Company on 08.02.2019.

(j) Mr. Pradeep Kumar Independent Director of the Company has resigned from theDirectorship of the Company on 08.02.2019.


In terms of the provisions of the Companies Act and the Articles of Association of theCompany the Nomination and Remuneration Committee of the Board and the Board of Directorshave at their meeting held on May 27 2019 reappointed Shri Manish Bagrodia as ManagingDirector of the Company for a further period of five years with effect from July 01 2019subject to the approval of shareholders of the Company and other authorities if required.


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.


Seven board meetings were convened and held during the financial year 2018-19. Thedetails thereof are given in the 'Corporate Governance Report'. The intervening gapbetween the meetings was within the period prescribed under the Companies Act 2013.


M/s. Khandelia and Sharma Chartered Accountants (Firm Registration Number: 510525C)who are Statutory Auditors of the Company hold office up to the forthcoming Annual GeneralMeeting and are recommended for re-appointment for a period of four years from conclusionof 29th Annual General Meeting till conclusion 33rd AGM to audit the accounts of theCompany. As required under the provisions of Section 139 of the Companies Act 2013 theCompany has obtained written confirmation from M/s. Khandelia and Sharma that theirappointment if made would be in conformity with the limits specified in the saidSection.


M/s. Khandelia and Sharma Statutory Auditors of the Company have submitted Auditors'Report on the accounts of the Company for the financial year ended March 31 2019. Thestatement of Impact of Audit Qualifications of Standalone and Consolidated Financials havebeen given after the respective Auditors' Reports.


Explanation of management on the audit qualifications contained in the Auditors' Reportare given in the respective statements of impacts of audit qualifications of thestandalone and consolidated 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. Satish Dhingra and Company CostAccountants to audit the cost accounts of the Company for the financial year 2019-20 on aremuneration as approved by the shareholders of the Company. The Board of Directors intheir meeting held on 13.08.2018 has approved the Cost Audit Report for the financial year2017-18 vide Resolution No. 162.19(5) and thereafter the cost audit report for thefinancial year 2017-18 had been filed on 14.01.2019 vide SRN-H41170010.


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 2019 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 2019 and state that:

a) in the preparation of the annual accounts the applicable accounting standards hadbeen 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 are 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 had 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 had 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; and

f) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.


Shri Manish Bagrodia Chairman and Managing Director Shri Anand Balkishan SharmaPresident (Corporate Finance) and Chief Financial Officer (CFO) and Shri K. V. SinghalGeneral Manager (Legal) & Company Secretary of the Company are the Key ManagerialPersonnel of the 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 and its meetings are includedin 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 2018-19 four meetings of the Nomination and RemunerationCommittee of the Company were held on 18.05.2018 28.09.2018 04.01.2019 and 07.02.2019 inthe presence of Shri Pradeep Kumar Ms. Navpreet Kaur Boparai Shri Sunny Kumar and ShriKaushal Kashyap as its Members. The Committee formulated Remuneration Policy which isattached as Annexure ‘B’ and forms a part 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 i.e. 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 ofSection 188 of the Companies Act 2013. There were no materially significant transactionswith the related parties during the financial year which were in conflict with theinterest of the Company and hence enclosing of Form AOC-2 is not required. Suitabledisclosure as required by the Accounting Standard (AS 18) has been made in the notes tothe Financial Statements.

All Related Party Transactions are placed before the Audit Committee and Board of theCompany (Board). Prior omnibus approval of the Audit Committee and Board is obtained forthe transactions which are of a foreseen and repetitive nature. The transactions enteredinto pursuant to the omnibus approval so granted are audited and a statement givingdetails of all related party transactions is placed before the Audit Committee and Boardfor their approval on a quarterly basis. The policy on Related Party Transactions asapproved by the Board is uploaded on the Company’s website. None of the Directors hasany pecuniary relationships or transactions vis-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.


There are five mini hydro power projects of the Company situated at Sidhwan CanalDistt. Ludhiana Punjab. The details of the same are as under:

Site Name Date of Commissioning Quantum of Power being Generated
Barewal Commissioned on 12th June 2010 900 KW
Bharowal Commissioned on 12th January 2013 750 KW
Isewal Commissioned on 15th July 2011 900 KW
Mansian Commissioned on 22nd Sep. 2010 500 KW
Raowal Commissioned on 29th August 2011 850 KW


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.


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 31.03.2019) and Winsome Yarns FZE(unaudited 31.03.2019 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
Dated : 12.08.2019 Chairman & Managing Director