Dear Members,
The Directors of your Company are pleased to present their 41st Annual
Report on the business of the Company together with the Audited Accounts of the Company
for the year ended on 31st March, 2017.
1. FINANCIAL RESULTS
The Company's financial performance for the year under review along with previous years
are given hereunder:
|
|
(Rs Lacs) |
| Particulars |
2016-17 |
2015-16 |
| Total Revenues |
2432.23 |
3616.55 |
| Profit/(loss) before interest & depreciation |
(3898.08) |
(2118.24) |
| Less :Financial Expenses |
2.13 |
13.29 |
| Profit/(loss) before depreciation |
(3900.21) |
(2131.53) |
| Less: Depreciation |
180.21 |
202.67 |
| Profit after depreciation and interest |
(4080.42) |
(2334.20) |
| Exceptional income |
1121.66 |
- |
| Net profit/(loss) after tax |
(2958.76) |
(2334.20) |
| Amount transferred to General Reserve |
- |
- |
| Earning per Share (Basic) |
(41.16) |
(33.28) |
| Earning per Share (Diluted) |
(12.69) |
(13.40) |
2. YEAR IN RETROSPECT
M/s Malwa Cotton Spinning Mills Ltd (MCSML), based on its audited balance sheet as at
31st March,2013 had filed a reference under Sick Industrial Companies (Special provisions)
Act 1985 and the reference was registered on 24th May, 2013 with Board for Industrial
& Financial Reconstruction (BIFR) and the BIFR has since been dissolved.
The Company has recorded net loss before depreciation, interest & tax of Rs 3898.08
lac as compared to previous year loss before depreciation, interest & tax of Rs.
2118.24 lac.
The performance of the Company affected badly due to recession, demonetization during
the year. The only machhiwara unit was working partially at very low capacity and closed
down during the year due to high cost of labour, tight working capital cycle and non
recovery of fixed cost and cash losses. Poor recovery of debtors and cash losses resulted
in poor performance of the company. The company has approached lender for One time
settlement with the lenders and negotiations are under process to settle the company
liabilities.
TURNOVER
During the year, your Company has recorded gross sales of Rs 2206.80 lac against Rs.
3602.86 lac in the previous year.
3. SHARE CAPITAL
The paid up Equity Share Capital as on 31st March,2017 was Rs 790.29 lacs
and Preference Share Capital was Rs.2724.61 lacs. During the year under review, the
Company has not:
a) bought back any of its securities.
b) issued any Sweat Equity Shares.
c) issued any Bonus Shares to the existing shareholders of the Company.
d) issued any Equity Shares under the Employees Stock Option Plan during the year under
review.
4. DIVIDEND
No Dividend was declared for the current financial year due to loss incurred by the
Company and outstanding accumulated losses.
5. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND
The provisions of Section 125(2) of the Companies Act, 2013 do not apply as there was
no dividend declared and paid last year.
6. DEPOSITS
The Company has not accepted any deposits from the public during the year under review
and as such, there are no outstanding deposits in terms of the Companies (Acceptance of
Deposits) rules, 2014.
7. DIRECTORS
a) Mr. Rahul Oswal retire at the ensuing Annual General Meeting and is eligible for
re-appointment as Director subject to retirement by rotation. He offer himself for the
re-appointment.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing
Agreement, the Board has carried out an annual evaluation of its performance, the
directors individually, as well as the evaluation of the working of its Committees. At the
meeting of the Board all the relevant factors that are material for evaluating the
performance of the individual Directors, the Board and its various committees were
discussed in detail.
A separate exercise was carried out to evaluate the performance of individual Directors
including the Chairman of the Board, who were evaluated on parameters such as level of
engagement and contribution, independence of judgment, safeguarding the interest of the
Company and its minority shareholders etc. The performance evaluation of the Chairman and
non-independent directors was also carried out by the independent Directors at their
separate meeting. The Directors expressed their satisfaction with the evaluation process.
b) Meetings
During the year four Board Meetings were convened and held. The details thereof are
given in the Corporate Governance Report. The intervening gap between the meetings was
within the period prescribed under the Companies Act, 2013.
8. KEY MANAGEMENT PERSONNEL
The information required pursuant to Section 197 read with Rule 5 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as an
Annexure -I and forms an integral part of this report.
9. REMUNERATION POLICY
The Board on the recommendation of the Nomination and Remuneration Committee shall
review and approve the remuneration payable to the Directors, Key Managerial Personnel and
Senior Management. The key provisions of Nomination and Remuneration policy are appended
as an Annexure-II to the Board's report.
10. STATUTORY AUDITORS
M/s. S.C.VASUDEVA & Co., (Firm Registration Number: 000235) Statutory Auditors of
the Company will retire in of the ensuing Annual General Meeting and M/s K.C Khanna &
Co (Chartered Accountants) will be appointed as statutory Auditors of the company in the
ensuing Annual General Meeting. As required under the provision of Section 139 of the
Companies Act, 2013, the Company has obtained a written confirmation from M/s K.C Khanna
& Co and received a certificate from the above Auditors to the effect that their
appointment, if made, would be in conformity within the limits specified in the said
section.
11. AUDITORS' REPORT
The Auditors' Report on the Accounts is self-explanatory and required no comments
except i) The Company has not been able to redeem 9% cumulative redeemable preference
share capital-Due to cash losses in the company and negative net worth, the company could
not redeem cumulative redeemable Preference Share capital as per schedule. (ii) Employee
Benefits in respect of non provision for liability of gratuity, leave encashment and other
compensated absences in accordance with provision of said accounting standard.
(AS-15)— The company has not made provision for gratuity and leaves with
wages/salaries for year 2016-17 on actuarial basis due to number of employees leaving the
company which may result in reversal of provision already made. (iii) Non-disclosure of
segment results separately in respect of sewing thread segment in accordance with
Accounting Standard (AS)-17. Results of the operations of the sewing thread segment is
compiled to the extent it could be computed
from the books of account however results of the textile segment (yarn & sewing
thread ) is disclosed as per Accounting Standard (AS-17), (iv) Due to recession there is
delay in realization of debtors and the Company is settling with parties for its recovery
and confident of recovery of debtors in respect of which balances were not confirmed and
however the company has made a provision for doubtful debts and advances for Rs.2944.55
lac in respect of these debtors and advances during the year and provision for decline in
investment will be made in due course. (v) The company has not provided interest on
borrowing as the accounts with lenders has been classified as NPA. (vi) The company has
written back loan of Rs 1121.66 lac as the company got approval from ARCIL for OTS subject
to sanction by all the lenders and approval of all lenders for OTS is expected to be
received in 2017-18 and dealt accordingly.
12. COST AUDIT
Cost audit for the financial year 2016-17 is not applicable to the Company as per
Notification No.G.S.R.425 [E] dated 30th June2014 issued by the Ministry Of
Corporate Affairs, hence no cost auditor was appointed for cost audit purpose.
13. SECRETARIAL AUDIT
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 has
appointed M/s Rajeev Bhambri & Associates, a firm of Company Secretaries in practice
(C.P.No 9491) to undertake the Secretarial Audit of the Company. The Secretarial audit
report for the financial year ended 31st March, 2017 is annexed herewith as
Annexure-III to this report. The Secretarial Audit report under review for the period, the
Company has complied with the provisions of the Act, Rules, Regulations, Guidelines,
Standards, etc. mentioned above subject to the following observations:
a. Company has not paid Listing Fees to BSE, National Stock Exchange of India Limited,
NSDL, CDSL and to RTA of Company for the Audit Period- - Due to cash losses, the company
could not pay the listing fee to stock exchanges however will make arrangement for payment
in a short period.
b. Company has not filed with Stock Exchanges the Corporate Governance Report for the
Quarter Ended 30.06.2017, Quarterly Financial Results for the quarter ended 31.03.2017,
Annual Financial Results along with the Part B report of Qualification for the year ending
31.03.2017, Shareholding Pattern for the Quarter ended 30.06.2017, Half yearly Compliance
Report as per Sec 7(3) and 40(10), Share Capital Audit for the Quarter ended 31.03.2017
and 30.06.2017. -Due to cash losses and regular staff problem, the compliance was delayed;
however the same will be complied shortly.
c. Half of the Board was not Independent as on 31.03.2017- The Company will be comply
with in due course.
d. Chairperson of Audit and Nomination & Remuneration Committee were not
independent as on 30.9.2016 -The Company will comply in due course.
e. Evoting facility was not provided to the shareholders during Annual General Meeting
in 2016- Due to non payment to depositories, the same could not be complied with. However
the same will be complied with in future.
f. Website of the company has not disseminated information as required under Regulation
46(2)(b) to (i) of Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 - Will be complied shortly
g. Secretarial Standards 1 and 2 issued by The Institute of Company Secretaries of
India have not been followed.-Will be complied shortly
h. The company has not redeemed its 9% Cumulative Redeemable Preference Shares of
Rs.2725 lacs.- Due to cash losses in the company and negative net worth, the company could
not redeem cumulative redeemable Preference Share capital as per schedule
i. AS-15 regarding "Employee Benefits", in respect of non provision for
liability of gratuity, leave encashment and other compensated absences has not been
complied with. -The company has not made provision for gratuity and leaves with
wages/salaries for year 201617 on actuarial basis due to number of employees leaving the
company which may result in reversal of provision already made
j. AS-17 regarding "Segment Reporting", in respect of results of sewing
thread segment has not been disclosed. - Results of the operations of the sewing thread
segment is compiled to the extent it could be computed from the books of account however
results of the textile segment (yarn & sewing thread ) is disclosed as per Accounting
Standard (AS-17),
k. The company has defaulted/delayed in payment of statutory dues including Provident
Fund, Employees' State Insurance, Labour Welfare fund, Income Tax and VAT/CST. - The
company could not pay the dues of Provident Fund, Employees' State Insurance, Labour
Welfare fund, Income Tax and VAT/CST on account of cash losses and tight cash flow.
However the company is paying the statutory dues pending slowly
l. The company has defaulted in payment/repayment of interest/principal on Cash
credit/Term loans to IFCI Limited, IDBI Bank Limited, SIDBI, PNB, SBI, Vijaya Bank and
J&K Bank. The Company has also not provided interest on borrowing in the books. -The
company has not provided interest on borrowing as the accounts with lenders has been
classified as NPA.
m. The company has not arranged to make available the confirmations and/or
reconciliations to verify the balances of parties. Since the parties have not been dealing
with the company and majority of the parties are doubtful for recover and hence provision
for doubtful debt is made
n. The company has not made provision in respect of balances which are doubtful in
nature amounting to Rs.3,666.86 lacs. The company has a provision for doubtful debts and
advances for Rs.2,944.55 lac in respect of these debtors and advances during the year.
14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE
COMPANIES ACT, 2013
There were no loans, guarantees or investments made by the Company under Section 186 of
the Companies Act, 2013 during the year under review and hence the said provision is not
applicable.
15. DIRECTORS' RESPONSIBILITY STATEMENT
The Board Of Directors acknowledge the responsibility for ensuring compliance with the
provisions of Section 134(3) read with Section 134(5) of the Companies Act, 2013 in the
preparation of annual accounts for the year ended on 31st March,2017 and state :
a) That in preparation of the Annual Accounts, the applicable Accounting Standards have
been followed along with proper explanation relating to material departures.
b) That the Directors had selected such Accounting Policies and applied them
consistently and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company at the end of the
Financial Year and of the Profit or Loss of the Company for that period.
c) That the Directors had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of this Act for safeguarding
the assets of the Company and for preventing and detecting fraud and other irregularities.
d) That the Directors have prepared the Annual Accounts on a going concern basis.
e) That the Directors had laid down internal financial controls to be followed by the
company and such internal financial controls are adequate and operating effectively. That
the Directors had devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems were adequate and operating effectively.
16. CORPORATE GOVERNANCE
As per SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, a
separate Report on Corporate Governance together with Management Discussion and Analysis
and certificate from Company's Auditors is annexed and forms part of the report.
17. AUDIT COMMITTEE & RISK MANAGEMENT
The company has duly constituted Audit Committee, the scope of which is quite
comprehensive and is in conformity with the provisions of the Companies Act, 2013 and SEBI
(Listing Obligation and Disclosure Requirements) Regulations, 2015. The composition of the
Audit Committee is given in Corporate Governance Report.
All the recommendations of the Audit Committee were accepted by the Board.
RISK MANAGEMENT
The Audit Committee has also been assigned the responsibility for monitoring, and
reviewing risk management. The Committee identifies, review and mitigate all elements of
risks which the Company may be exposed to. The Board also reviews the risk management
assessment and minimization procedures.
18. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has adopted Whistle Blower Policy/vigil mechanism for directors and
employees to report
concerns about unethical behavior, actual or suspected fraud, or violation of the
Company's Code of Conduct and Ethics.
19. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL
RESPONSIBILITY INITIATIVES
The Company has not developed and implemented any Corporate Social Responsibility
initiatives as the said provisions are not applicable.
20. RELATED PARTY TRANSACTIONS
There was no contract or arrangement made with related parties as defined under Section
188 of the Companies Act, 2013 during the year under review.
21. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
There are no significant orders passed by the Regulators/Courts which would impact the
going concern status of the Company and its future operations.
22. DECLARATION BY INDEPENDENT DIRECTORS
Necessary declarations have been obtained from the Independent Directors under Section
149(7) of the Companies Act, 2013.
23. INTERNAL FINANCIAL CONTROL SYSTEM
The Company has in place internal financial control system, commensurate with the size
and complexity of its operations to ensure proper recording of financial and operational
information and compliance of various internal controls and other regulatory and statutory
compliances. The internal auditor monitors and evaluates the efficacy and adequacy of
internal control systems in the Company. Based on the report of the internal auditor,
respective departments undertake corrective action in their respective areas and thereby
strengthen the controls. Significant audit observations and corrective actions thereon are
presented to the Audit Committee of the Board.
24. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiary, Joint venture or Associate Company.
25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy, technology absorption, Foreign
exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act,
2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in
Annexure-IV.
26. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE
COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS
RELATE AND THE DATE OF THE REPORT
No material changes and commitments affecting the financial position of the Company
occurred between the end of the financial year to which these financial statements relate
and the date of this report.
27. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of Annual Return in form MGT-9 is annexed
herewith as Annexure- -V
28. ACKNOWLEDGEMENTS
The Board of Directors place on record its appreciation for the valuable assistance,
support and guidance extended to the Company by the various Government Departments, Banks,
Organizations and Agencies. The Company also acknowledges the support and co-operation
received from dealers, agents and other business partners for their support received from
them. The Board also wishes to express its deep gratitude for the continued support from
its shareholders and the employees and appreciate the co-operation and continuous support
extended to the Company.
| Place : Ludhiana |
For and on behalf of Board |
| Date : 30.05.2017 |
JANGI LAL OSWAL |
|
Chairman-cum-Managing Director |
|