| The Directors have pleasure in presenting the Seventy Third Annual
Report along with the Audited Accounts of the Company for the year
ended 31st March, 2015.
1. Financial Results
(Amt in Rs)
Particulars Consolidated
Year ended 9 month period
31-03-2015 ended 31.03.2014
Revenue from Operations 1,522,074,110 1,274,180,226
Other Income 31,898,534 39,840,969
Total Income 1,553,972,644 1,314,021,195
PBDIT (986,589,524) (119,441.341)
Interest and Finance Expenses 535,100,355 364,962,878
PBDT (1,521,689,879) (484,404,219)
Depreciation 137,393,177 75,284,470
PBT (1,659,083,056) (559,688,689)
Less: Deferred Tax
Liability/(Asset) 2,918,260 -
PROFIT AFTER TAX (PAT) (1,662,001,316) (559,688,689)
Profit transferred to Reserves (1,662,001,316) (559,688,689)
Standalone
Year ended 9 month period
31-03-2015 ended 31.03.2014
Revenue from Operation 1,124,502,678 936,275,688
Other Income 31,898,534 39,833,321
Total Income 1,156,392,646 976,109,009
PBDIT (969,303,670) (105,632,866)
Interest and Finance Experses 534,623,811 364,658,179
PBDT (1,503,927,482) (470,291,045)
Depreciation 137,264,583 75,185,782
PBT (1,641,192,335) (545,476,827)
Less: Deferred Tax Liability
/ (Assets) 2,918,260 -
PROFIT AFTER TAX (PAT) (1,644,110,595) (545,476,827)
Profit transferred to Reserve (1,644,110,595) (545,476,827)
2. Operating and Financial Performance
Since last few years textile industry is passing through very difficult
business conditions. The general business environment continued to be
challenging due to the uncertain global economic scenario. The major
challenge of textile industry is facing by increasing cost of
production arising out of rising wages, high power cost etc and excess
capacity installed in the cotton yarn industry. This led to lower
margins as the Company could not pass on higher costs to customers. The
exports during the year ended are not significant since the ruling
prices of export continued to be non remunerative for our type of
products and China all of sudden stopped buying cotton yarn from India.
Further during the year ended the cotton yarn scenario continues to
remain in pressure due to weak domestic textile market which has
further resulted into severe pressure on the margins. During the year
under review, turnover of your Company is Rs. 1,124,502,678/- as
compared to the turnover of Rs.936,275,688/- during previous accounting
period of 9 months. The loss of your Company has increased to
Rs.1,641,192,335/- during the year under review compared to net loss of
Rs. 545,476,827 in previous accounting period of 9 months due to
adverse market conditions and global recession and also due to
provision of unrecoverable capital advances / writing off capital work
in progress in respect of projects which could not take off. Your
company is relentlessly putting all its efforts to reduce the cost and
improve the operating margins but the profit of the company is still
negative during the current financial year. However, despite all
adverse features, Company is continuing its efforts to explore
opportunities for its products in overseas markets but insufficient
resources is not allowing to reap the benefits to its fullest extent.
3. Erosion of Net-Worth - Reference to BIFR
Due to continuous losses the audited accounts for the financial year
2014-15 shows a total accumulated losses of Rs.1,641,192,335/- which
exceeds the entire net worth of Rs.246,770,632/- of the Company. As,
the net-worth of the Company has eroded at the end of the Financial
year 31st March, 2015, the Company has become a Sick Industrial Company
in term of section 3(1)(0) of the Sick Industrial Companies (Special
Provisions) Act, 1985 (SICA). Accordingly, the Board of Directors of
the Company has opinion to make a reference to the Board for Industrial
and Financial Reconstruction (BIFR) as required under the provisions of
SICA for determination whether the Company is a sick industrial company
or not.
4. Dividend
In view of loss suffered by the Company, your Directors have not
recommended any dividend for the financial year ended 31st March, 2015.
5. Increase in Share Capital
There has been no change in the Share Capital of the Company.
6. Employee Stock Options Plan
The Company had authorized an Employee Stock Option Plan 2007 (ESOP) in
their Extraordinary General Meeting held on 6th December, 2007. No
shares have been allotted under the ESOP till date. The Company has not
granted any stock options during the financial year ended 31st March,
2015.
7. Listing
The Equity Shares of the Company continue to remain listed with Bombay
Stock Exchange Limited and National Stock Exchange of India Limited.
8. Subsidiary Company
The Company has one wholly owned subsidiary at UAE in the name of Birla
Cotsyn (India) Limited FZE which has been setup to develop the overseas
market for the Company.
The Audited Accounts for the wholly owned Subsidiary Company, Birla
Cotsyn (India) Ltd FZE have been received by the Company and a
statement pursuant to section 129 of the Companies Act, 2013, forms
part of this Annual Report. Your Directors have pleasure in enclosing
the consolidated financial statements of the Company in accordance with
the listing agreement and Accounting standards issued by the Institute
of Chartered Accountants of India.
In compliance with the general circular issued by Ministry of Corporate
Affairs (MCA), Government of India, the Balance Sheet, Statement of
Profit & Loss and other documents of the subsidiary are not attached
hereto. As per the general exemption, a statement containing brief
financial details of the Company's subsidiary for the year ended 31st
March, 2015, is included in this Annual Report. The Annual Accounts of
the subsidiary and the related detailed information will be made
available to any Member of the Company/its subsidiary seeking such
information at any point of time and are also available for inspection
by any Member of the Company/its subsidiary at the Registered Office of
the Company/its subsidiary.
9. Management Discussion and Analysis and Corporate Governance Report
In compliance with Clause 49 of the Listing Agreement with Bombay Stock
Exchange Limited and National Stock Exchange of India Limited, a
separate section on Management Discussion and Analysis Report which
also includes further details on the state of affairs of the Company
and Corporate Governance Report, as approved by the Board of Directors,
together with a certificate from the Practicing Company Secretary
confirming the compliance with the requirements of Clause 49 forms part
of this Annual Report.
10. Corporate Governance Report
A report on Corporate Governance along with the Compliance Certificate
from the Auditors is annexed hereto and forms part of this report.
11. Directors Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors of
the Company state as under that:
1. In the preparation of the annual accounts, the applicable
Accounting Standards had been followed along with proper explanation
relating to material departures;
2. The selected accounting policies were applied consistently and the
Directors made judgments and estimates that are reasonable and prudent
so as to give true and fair view of the state of affairs of the Company
for the financial year ended 31st March, 2015 and the Loss of the
Company for the financial year ended 31st March, 2015.
3. Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013, for safe guarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
4. The annual accounts have been prepared on a 'going concern' basis;
5. Internal financial controls had been laid down to be followed by
the company and that such internal financial controls are adequate and
were operating effectively; and
6. Proper systems had been devised to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
12. Board of Directors, Evaluation Etc.
Appointment / Resignation of Directors
Shri Sanjay Rane and Smt. Nirmala Mathur are appointed as Additional
Directors by the Board of Directors of the Company at its meeting held
on 27th May, 2015. Their office expires at the ensuing Annual General
Meeting and the Company has received notice under section 160 of the
Companies Act, 2013 proposing their candidature for Directorship along
with the deposit as prescribed thereunder. They are eligible for being
appointed as Directors at the ensuing Annual General Meeting and it is
proposed to appoint Shri Sanjay Rane as an Independent Director with a
fixed tenure of 5 (five) years subject to approval of shareholders at
the ensuing general meeting in term of Section 149 of the Companies
Act, 2013. Further it is proposed to appoint Smt. Nirmala Mathur as
Non-Independent Non- Executive Director liable to retirement by
rotation subject to approval of shareholders at the ensuing general
meeting in term of Section 160 of the Companies Act, 2013.
Shri Rakesh Kumar Dixit, Director of the Company, retires by rotation
and being eligible offers himself for re-appointment.
Shri Jignesh Mehta, Shri Ram Prakash Mishra and Shri Vinod Kumar Kapur,
resigned as Independent Directors of the Company. The Board noted their
resignation w.e.f 27th May, 2015 and placed on record their sincere
appreciation of the service rendered by them during their tenure with
the Company.
Company's Policy on Directors Appointment and Remuneration etc.
The Company has prepared a policy on Director's appointment and
remuneration pursuant to Section 178 of the Act. The Company has also
laid down criteria for determining qualifications, positive attributes
and independence of Director.
Formal Annual Evaluation
The Formal Annual Evaluation has been made as follows:
a. The Company has laid down evaluation criteria separately for Board,
Independent Directors, Directors other than Independent Directors and
various committees of the Board. The criteria for evaluation of
Directors included parameters such as willingness and commitment to
fulfill duties, high level of professional ethics, contribution during
meetings and timely disclosure of all the notice/details required under
various provisions of laws. Based on such criteria, the evaluation was
done in a structured manner through peer consultation & discussion.
b. Evaluation of the Board was made by a Separate Meeting of
Independent Directors held under Chairmanship of Shri. Satyanarayan
Baheti, Independent director (without attendance of non - Independent
Director and members of management).
c. The performance evaluation of all committees were done by the Board
of Directors namely:
i. Audit Committee
ii. Nomination and Remuneration Committee iii. Stakeholders
Relationship Committee
d. Performance evaluation of non - Independent Directors was done by
Separate meeting of Independent Directors.
e. Evaluation of Independent Directors was done (excluding the
Director who was evaluated) by the Board of Directors of the Company.
f. In addition, the Nomination and Remuneration Committee has carried
out evaluation of every Director's performance as required under
Section 178 (2) of Companies Act, 2013.
g. The Directors expressed their satisfaction with the evaluation
process.
Key Managerial Personnel
During the year, Shri. Vipin Varkhawat, Chief Financial Officer of the
Company was designated as Key Managerial Personnel under Section 203 of
the Companies Act, 2013.
Further, Shri Satya Kishore Mathur who was already a Manager of the
Company and Ms. Vineeta Shah who was working as the Company Secretary
were designated as Key Managerial Personnel's (KMPs) of the Company
under the above mentioned provisions of Companies Act, 2013 in their
respective positions.
In compliance with the Clause 49 IV (G) of the Listing Agreement, brief
resume of the aforesaid Directors, their expertise and other details of
Directors proposed to be appointed/ re-appointed are provided in the
Corporate Governance Report. Appropriate resolutions for appointment/
re-appointment of the aforesaid Directors are being placed for approval
of the members at the ensuing Annual General Meeting.
13. Fixed Deposits
1. Deposits Accepted during the year NIL
2. Deposits remained unpaid or
unclaimed as at end of the year Rs. 70,856,978/-
3. Whether there has been any default in
repayment of deposits or payment of
interest thereon during the year and
if so, number of such cases and the
Principal Interest total amount
involved:
i. At the beginning of the year Rs. 22,957,000 Rs. 16,130,872
ii. Maximum during the year Rs. 43,329,363 Rs. 19,426,451
iiii. At the end of the year Rs. 43,329,363 Rs. 19,426,451
4. The details of deposits which are not
in compliance with the requirements Not Applicable
of Chapter V of the Act
The Company has filed a petition for sanctioning the scheme for
rescheduling the period of repayment of Fixed Deposits and payments of
interest before the Company Law Board, Western Region, Mumbai and the
Company Law Board has passed order dated 19th May, 2015 for
rescheduling the repayment of Fixed Deposits for a specified period
under Section 58A(9) of the Companies Act, 1956 read with Section 74(2)
of the Companies Act, 2013. The Company is now making payment to the
Fixed Deposit holders as per the order dated 19th May, 2015 passed by
the Company Law Board and also pursuant to orders passed by the Company
Law Board from time to time to whom Fixed Deposit holders have
approached for making payment of their Fixed Deposits. Further Company
is also making payment on compassionate ground to all Fixed Deposit
holders, who are approaching the Company looking to their genuine
needs.
14. Related Party Transactions
There are no related party contracts, arrangements or transactions of
the nature mentioned in sub-section (1) of Section 188 of the Companies
Act, 2013 which are not at arm's length and during the year under
review the Company did not enter into any related party contracts,
arrangements or transactions which are at arm's length.
15. Extract of Annual Return
Extract of Annual Return in Form MGT - 9 is attached as 'Annexure A' to
this Report.
16. Vigil Mechanism
The company has a vigil mechanism named Whistle Blower Policy to deal
with instances of fraud and mismanagement.
17. Significant and Material Orders Passed by the Regulators or Courts
There are no significant material orders passed by the
Regulators/Courts which would impact the going concern status of the
Company and its future operations.
18. Auditors
Statutory Auditors
M/s. Samria & Co., Chartered Accountants, Mumbai, Statutory Auditors of
the Company, holds office until the conclusion of the ensuing Annual
General Meeting and are eligible for re-appointment. The Company has
received a letter from M/s. Samria & Co., Chartered Accountants, to the
effect that their appointment, if made, would be within the prescribed
limits under Section 139 & 141 of the Companies Act, 2013.
Members are requested to re-appoint M/s. Samria & Co., Chartered
Accountants as the Statutory Auditors of the Company.
Cost Auditors
The Board has subject to the approval of Central Government approved
the appointment of M/s. M. Goyal & Co., Cost Accountants as Cost
Auditors of the Company for conducting Cost Audit of Malkapur Textile
unit for F. Y. 2015-16 as required pursuant to section 148 of the
Companies Act, 2013 read with the rules made there under and the order
No. F. No. 52/26/CAB/2010 dated 24th January, 2012 of the Government of
India, Ministry of Corporate Affairs and for issuance of Compliance
Report, pursuant to the Companies (Cost Accounting Records) Rules,
2011.
Secretarial audit
Secretarial Audit Report dated 30th June, 2015 by Roy Jacob & Co.,
Practicing Company Secretary (CP no.8220) is attached herewith as
'Annexure B' to this Report. The report does not contain any
qualification.
19. Auditors Remarks
Explanation for the Qualified Opinion of the Auditors report.
1. The Company has not obtained the confirmation from all the ICD
parties as all the ICD parties have filed legal cases against the
Company including winding up petitions for recovery of their dues. The
Company is contesting all the legal cases and also trying for out of
court settlement by way of reschedulement, concessions or one time
settlement.
2. The Company is in process of getting confirmation of dues of
related parties.
3. Over the past few years the Company has been providing for interest
receivable on loans given to related parties. However none of the
related party has paid the interest amount to the Company resulting in
unrealized income which further increases the receivable amount from
the parties. Similarly, the Company has not been paying interest on
loan taken from related parties in view of its default on repayment of
dues to financial institutions and the need to preserve the scarce
working capital resources. As such, the management has decided that it
is prudent and conservative to not provide for such interest receivable
and payable from the related parties till such time as they are settled
in cash.
4. The Company has filed a petition before the Company Law Board,
Mumbai for reschedulement of re-payment of fixed deposits and interest
thereon. The Hon'ble Company Law Board has passed an order dated 19th
May, 2015 for rescheduling the repayment of the fixed deposits and
interest thereon for a specified period. The Company is now making
payments as per order dated 19th May, 2015.
5. The Company has made provision for capital advances given to
various equipment suppliers and other parties mainly towards
implementing the Weaving Project and other projects which have not
taken off. The parties are neither giving confirmation of outstanding
amount nor repaying the advance amount. The Company is pursuing with
the vendors for recovery of such advances. Pending such recovery, o ut
of prudence the Company has decided to make provision for such advances
totaling to Rs.94,32,23,851/-
In addition the Company had also incurred certain expenses for the
above weaving project which had been capitalized. Given that the
Company does not plan to pursue the project, such expenses amounting to
Rs.4,62,00,730/- have been written off.
6. The Company is trying to obtain confirmation / reconciliation of
such loans. The Company is confident of recovery of the loan amount
from all the related parties.
7. One factory unit of the Company is operating at low capacity due to
shortage of need based working capital as bankers have stopped
providing working capital facility as their working capital accounts
have become Non Performing Assets. As per valuation carried out by
bankers, there is no diminution in the value of fixed assets of this
unit.
Other observations made in Auditors' Report together with relevant
notes are self explanatory and hence do not call for any further
comments under section 134 of the Companies Act, 2013.
20. Particulars of Loans, Guarantees and Investments
During the year under review, the Company has not given loans,
guarantees or investments under Section 186 of the Companies Act, 2013.
The details of the investments made by the Company are provided in the
accompanying financial statements.
21. Employees' Safety
The Company is continuously endeavoring to ensure safe working
conditions for all its employees.
22. Disclosure under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition And Redressal) Act, 2013
The Company has in place a Policy for Prevention Prohibition and
Redressal of Sexual Harassment at work place which is in line with the
requirements of the Sexual Harassment of women at the Workplace
(Prevention, Prohibition & Redressal) Act, 2013 and Rules made
thereunder. All employees (permanent, contractual, temporary and
trainees) are covered under this policy. The Company has constituted an
Internal Complaint Committee for its Head Office and branch/sales
offices under Section 4 of the captioned Act. No complaint has been
filled before the said committee till date.
23. Disclosure under Rule 5(1) of the Companies (Appointment And
Remuneration), Rules, 2014
The information required pursuant to Section 197 read with Rule 5(1) of
the Companies (Appointment and Remuneration), Rules, 2014 in respect of
employees of the Company and Directors is attached as 'Annexure C'.
24. Particulars of Employees
There were no employees receiving remuneration above the prescribed
limit in terms of Rule 5(2) of the Companies (Appointment and
Remuneration) Rules, 2014 during the year ended 31st March, 2015.
25. Particulars of Conservation of Energy, Technology Absorption and
Foreign Exchange earnings and outgo
The particulars relating to energy, technology absorption and foreign
exchange earnings and outgo as required to be disclosed under Section
134 (3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the
Companies (Accounts) Rules, 2014, are provided in 'Annexure D' to
Directors Report.
26. Personnel
Your Directors place on the record their appreciation of the
contribution made by the employees at all levels who, through their
competence, diligence, solidarity, co-operation and support, have
enabled the Company to achieve the desired results during the period.
27. Acknowledgements
The Board of Directors wishes to acknowledge the invaluable support
extended to the Company by the Government of Maharashtra, Bankers,
Vendors, Suppliers, Shareholders and Customers.
For and on behalf of the Board of Directors
Place: Mumbai S. N. BAHETI R. K. DIXIT
Date : 22nd July, 2015 Director Director |