Winsome Yarns Ltd.
|BSE: 514348||Sector: Industrials|
|NSE: WINSOME||ISIN Code: INE784B01035|
|BSE 00:00 | 22 Jun||Winsome Yarns Ltd|
|NSE 05:30 | 01 Jan||Winsome Yarns Ltd|
|BSE: 514348||Sector: Industrials|
|NSE: WINSOME||ISIN Code: INE784B01035|
|BSE 00:00 | 22 Jun||Winsome Yarns Ltd|
|NSE 05:30 | 01 Jan||Winsome Yarns Ltd|
We are pleased to present the 30th Annual Report of the Company and the auditedstatement of accounts for the year ended 31st March 2020. A summary of the financialresults is given below.
OPERATIONS & PERFORMANCE:
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 31.03.2020 the Company incurred a loss of Rs. 4800.97 lakhs incomparison to the loss of Rs. 11487.01 lakhs for the previous year ended 31.03.2019. YourCompany's turnover of Rs. 10804.84 lakhs was lower against the previous year turnover ofRs. 25229.29 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) and Indian Overseas Bank (IOB)had filed an Application under Insolvency and Bankruptcy Code 2016 (IBC) before NationalCompany Law Tribunal Chandigarh (NcLT) for initiating insolvency against the Company andalso Original Applications have been filed by all the lenders before Debts RecoveryTribunal Chandigarh. The Company alleges that the actions initiated by the lenders arenot correct or valid.
The Financial Commissioner of the State of Punjab has since determined that theAgreements for Assignment of debt by lenders of the Company to EARC are insufficientlystamped and therefore defective. The Company is seeking advise from its Counsel in thematter.
NCLT vide its order dated 17-03-2020 had dismissed the application filed by EARC.Indian Overseas Bank has initiated insolvency proceedings against the Company before NCLTwhich is being contested by the Company.
Further the Company's net worth which continues to be eroded is expected to improveon complete implementation of the debt restructuring plan by the Company which is underdiscussion/consideration with the EARC/Lenders.
INITIATION OF MSME REGISTRATION:
In view of the recently notified criteria for classification of MSME the Company hasapplied on 18th July 2020 for registration as a Medium Enterprise under MSME Act.
OUTLOOK AND IMPACT OF COVID-19 PANDEMIC:
In the wake of the global COVID-19 pandemic and in compliance with the directives ofGovernment of India/State Governments Winsome Yarns Limited ("the Company") hasadopted several measures to ensure the safety and well being of all its employees. In workplace the Company has implemented heightened hygiene health and sanitation measures andis promoting social distancing.
In view of the 21-days nationwide lockdown announced by the Government of India (GOI)with effect from March 25 2020 to April 14 2020 ("Phase 1") 19-daysnationwide lockdown from April 15 2020 to May 03 2020 ("Phase 2") 14-daysnationwide lockdown from May 04 2020 to May 17 2020 ("Phase 3") and 14-daysnationwide lockdown from May 18 2020 to May 312020 ("Phase 4") besides the"Janta Curfew" on March 22 2020 to control the spread of COVID-19 pandemicthe Company's operations related to manufacturing unit warehouses and offices aredisrupted. The impact of COVID-19 pandemic on the Company's operations cannot be fullyascertained at this point.
Based on the guidelines issued by the GOI various ministries/ departments of StateGovernment the Company commenced its operations and is operating at below optimallevelsof its normal capacity .
We would like to further inform you that the safety and well-being of the employeescustomers vendors business partners and the communities in which we live and work is ofparamount importance to us. The Company has issued few key guidelines for employees whichinclude:
? Mandatory self-declaration of good health before joining;
? Wearing of face-masks face shield regular sanitization of personal itemswork-stations premises and maintaining social distancing;
? Thorough sanitization of all workplaces regularly & other official vehiclesafter each trip.
The performance of the Company during the current year depends on availability of rawmaterial-cotton at reasonable prices demand of yarn which depends on sentiments ofcustomers which is subdued for the time being on account of world wide spread of pandemicand availability of funds for carrying out necessary repairs and maintenance at themanufacturing facilities of the Company and meeting working capital requirements..
TRADING OF EQUITY SHARES OF THE COMPANY
The NSE and BSE had suspended trading of the Equity shares of the company due to delayin payment of certain amounts to the NSE and BSE. The delay occurred due to a technicalglitch in the banking network wherefrom the payment was initiated by the Company. TheCompany has represented to the Stock Exchanges for review and revocation of their decisionto suspend trading and has also filed an appeal against the decision of the StockExchanges before SAT.
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 Indian Accounting Standard - 110 issued by the Ministry of CorporateAffairs the consolidated financial statements included in this Annual Reportincorporate the accounts of its subsidiary Companies namely Winsome Yarns (Cyprus) Limited(Unaudited 31.03.2020) and Winsome Yarns (FZE) (unaudited 31.03.2020 ceased operationsdeclared defunct 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 business recessionary conditions in European Countries earlier on account offinancial crises and now spread of Covid-19 caused negative effects to the three stepdown subsidiaries of the Company namely S.C. Winsome Romania S.r.l. IMM Winsome ItaliaS.r.l. and S.C. Textil S.r.l. which were placed under liquidation and therefore theirBalance Sheets and other financial statements are not available; accordingly the instantconsolidated financial statements of the Company do not include the financials of theabove named three subsidiary Companies.. The Company has made necessary provisions in thebooks of account to take care the losses in those subsidiaries.
The present status of these three subsidiary companies is given as under:-
Your Directors are unable to recommend any dividend on equity shares for the year underreview.
During the financial year 2019-20 there was no change in the securities of theCompany.
(a) Mr. Manish Bagrodia Director retires by rotation and being eligible offershimself for re-election.
(b) Mr. Mukhtar Singh has been appointed as Independent Director of the Company w.e.f.05.08.2019 and resigned w.e.f. 14.07.2020.
(c) Mr. Tilak Raj Dembla has been appointed as Independent Director of the Companyw.e.f. 05.08.2019.
(d) Mr. Sunny Kumar has resigned from the directorship of the Company w.e.f.07.08.2019.
(e) Mr. Kaushal Kashyap has resigned from the directorship of the Company w.e.f.09.08.2019.
(f) Mr. Rajiv Chadha has been appointed as Independent Director of the Company w.e.f.14.07.2020. DECLARATION/ DISCLOSURES BY DIRECTORS:
The Directors have made the requisite declaration/ disclosures under the provisions ofCompanies Act 2013 and under the regulations of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. None of the Directors is disqualified underthe provisions of Section 164(2) of the Companies Act 2013.
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 NonIndependent Directors was also carried out by the Independent Directors at theirseparate meeting. The Directors expressed their satisfaction with the evaluation process.
NO. OF BOARD MEETINGS:
Five board meetings were convened and held during the financial year 2019-20. Thedetails thereof are given in the 'Corporate Governance Report'. The intervening gapbetween the meetings was within the period prescribed under the Companies Act 2013.
Pursuant to Section 139 of the Companies Act 2013 read with the Companies (Audit andAuditors) Rules 2014 the members of the Company in its 29th Annual General Meeting heldon 14th September 2019 approved reappointment of M/s. Khandelia and Sharma CharteredAccountants (Firm Registration Number: 510525C) as the Statutory Auditors of the Companyfor another period of four consecutive years from the conclusion of 29th Annual GeneralMeeting till the conclusion of 33rd Annual General Meeting of the Company.
Further as per the notification dated 7th May 2018 issued by Ministry of CorporateAffairs the appointment of Statutory Auditors is no more required to be ratified bymembers of the Company in every Annual General Meeting.
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 312020. Thestatement of Impact of Audit Qualifications of Standalone and Consolidated Financials havebeen given 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 2019-20:
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.
M/s Satish Dhingra & Company Cost Accountants were appointed as Cost Auditor ofthe Company for auditing the cost accounts records for the financial year 2019-20 underprovisions of Section 148 of the Companies Act 2013 read with The Companies (Cost Recordsand Audit) Amendment Rules 2014. Further the Company has made and maintained proper costrecords as specified by the central government under section 148 of the Companies Act2013 for its business activities carried out during the year.
Further the Board recommended to appoint M/s. Balwinder and Associates CostAccountants as Cost Auditors of the Company for the financial year 2020-21 on aremuneration to be decided by the shareholders in their forthcoming Annual GeneralMeeting. The Company has received written confirmation(s) from M/s.Balwinder andAssociates Cost Accountants to the effect that their appointment if made would be inaccordance with the provisions of section 148 of the Companies Act 2013 and that they arenot disqualified for such appointment within the meaning of section 141 of the CompaniesAct 2013 read with The Companies (Audit & Auditors) Rules 2014.
FILING OF COST AUDIT REPORT:
The Board of Directors in their meeting held on 08.11.2019 vide Resolution No.171.17(7) has approved the Cost Audit Report for the financial year 2018-19 and thereafterthe cost audit report for the financial year 2018-19 duly signed by the Cost Auditor andAuthorised Signatory of the Company had been filed on 04.03.2020 vide SRN-R34688796.
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 Girish Madan & Associates a firm of Company Secretaries in practice(C.P. No. 3577) to undertake the Secretarial Audit of the Company for the financial year2020-21. The Secretarial Audit Report for the financial year ended 31st March 2020 isannexed 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.
DIRECTORS' RESPONSIBILITY STATEMENT:
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 2020 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.
KEY MANAGERIAL PERSONNEL:
Shri Manish Bagrodia Chairman and Managing Director Mr. Sanjay Sharma CFO and Mrs.Aman Priya Company Secretary are the Key Managerial Personnel of the Company. FurtherShri Anand Balkishan Sharma Chief Financial Officer (Upto 06.08.2019) Shri KhushvinderSinghal Company Secretary (upto 13.08.2019) and Ms. Meenu Khandelwal Company Secretary(from 04.12.2019 to 31.05.2020) were also the Key Managerial Personnel of the Company.
A separate report on 'Corporate Governance' is enclosed as a part of this AnnualReport. The certificates 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 are annexed to the Report onCorporate Governance.
AUDIT COMMITTEE :
The details pertaining to composition of Audit Committee and its meetings are includedin the 'Corporate Governance Report'.
NOMINATION AND REMUNERATION COMMITTEE:
The details pertaining to composition of Nomination and Remuneration Committee and itsmeetings are included in the 'Corporate Governance Report'. The Committee formulatedRemuneration Policy which is attached as ANNEXURE 'B' and forms a part of thisReport of the Directors.
STAKEHOLDERS RELATIONSHIP COMMITTEE :
The details pertaining to composition of Stakeholders Relationship Committee and itsmeetings are included in the 'Corporate Governance Report'.
RISK MANAGEMENT COMMITTEE:
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. The details pertaining to composition ofRisk Management Committee and its meetings are included in the 'Corporate GovernanceReport'.
SEXUAL HARASSMENT COMMITTEE :
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.www.winsomegroup.com 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.
RELATED PARTY TRANSACTIONS:
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 has been made in the notes to the FinancialStatements.
All Related Party Transactions are placed before the Audit Committee and Board of theCompany. Prior omnibus approval of the Audit Committee and Board is obtained for thetransactions which are of a foreseen and repetitive nature. The transactions entered intopursuant to the omnibus approval so granted are audited and a statement giving details ofall related party transactions is placed before the Audit Committee and Board for theirapproval on a quarterly basis.
The policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website (www.winsomegroup.com). None of the Directors has any pecuniaryrelationships or transactions vis-a-vis the Company.
SIGNIFICANT AND MATERIAL ORDER:
During the financial year there was no significant and material order passed by anyCourt or any Tribunal against the Company.
INTERNAL FINANCIAL CONTROLS:
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.
MINI HYDRO POWER PROJECTS:
There are five mini hydro power projects of the Company situated at Sidhwan CanalDistt. Ludhiana Punjab. The details of the same are as under:
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
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'.
ENERGY SAVING INITIATIVES :
The Company is continually making its best efforts to save the energy consumption.
ENVIRONMENT AND POLLUTION CONTROL:
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.
PARTICULARS OF EMPLOYEES:
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.
EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return (Form No. MGT-9) asprovided under sub-section (3) of Section 92 of the Companies Act 2013 is annexedherewith as ANNEXURE 'E'.
CASH FLOW ANALYSIS:
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 31.03.2020) and Winsome Yarns FZE(unaudited 31.03.2020 ceased operations declared defunct effective 01.04.2014) in theAnnual Report.
The properties of the Company have been adequately insured against fire floodearthquake and explosive risks etc. ACKNOWLEDGEMENTS:
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.