| Dear Members,
The Directors of your Company are pleased to present their 39th Annual
Report on the business of the Company together with the Audited
Accounts of the Company for the year ended on 31st March, 2015.
1. FINANCIAL RESULTS
The Company's financial performance for the year under review along
with previous years are given hereunder:
(Rs Lacs)
Particulars' 2014-15 2013-14
TotalRevenues" 11201.69 18904.94
Profit/(loss) before interest & depreciation (3403.16) (4485.94)
Less :Financial Expenses 27.00 48.39
Profit/(loss) before depreciation (3430.16) (4534.33)
Less: Depreciation 257.50 331.34
Profit after depreciation and interest (3687.66) (4865.67)
Net profit/(loss) after tax (3687.66) (4865.67)
Amount transferred to General Reserve -- --
Earning per Share (Basic) (50.37) (65.16)
Earning per Share (Diluted) (20.32) (42.59)
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).
The Company has recorded net loss before depreciation, interest & tax
of Rs 3403.16 lac as compared to previous year loss before
depreciation, interest & tax of Rs.4485.94 lac.
The performance of the Company deteriorated due to volatility and
uncertainty in cotton prices, sudden glut in the synthetic yarn market
, closure of dyeing units resulting in accumulation of fabric stock and
above all undue delay in disbursing of need based funds by lenders in
the past proved fatal & detrimental. Poor export demand and excess
spinning capacity further resulted in accumulation of stock, hence
crash of prices in the domestic market. Increase in power cost, high
cost of labour and general increase in input costs resulted in poor
performance of the company. These factors adversely affected the
capacity utilization of the Company.
During the year, the Company has achieved total production of 36.59 lac
kgs for all types of yarns compared to previous year's production of
66.48 lac kgs. The Cotton Yarn production was 4.63 lac kgs against 8.56
lac kgs in the previous year and other yarns production was 31.96 lac
kgs against 57.92 lac kgs. in the previous year. Thread production of
10.71 lac kgs was also achieved by the company against 19.57 lac kgs in
the previous year.
TURNOVER
During the year, your Company has recorded gross sales of Rs 11071.25
lac against Rs. 18838.16 lac in the previous year. The Company has
achieved Yarn sale of Rs 5667.41 lac, Thread sale of Rs 5080.38 lac and
others of Rs 323.46 lac in the current year ended on 31st March, 2015
against sale of Yarn Rs. 10306.65 lac , Thread Rs.7893.91 lac and
others Rs. 637.60 lac in the previous year. Export of Yarn was at
Rs.754.39 lac (CIF) against Rs. 677.56 lac (CIF) in the previous year.
BARNALA UNIT
The Barnala unit has achieved production of 18.37 lac kgs of Yarn and
capacity utilization at minimal levels in the current year.
PAONTA SAHIB UNIT
The Paonta Sahib unit was operating at low capacity utilization and had
production of 8.97 lac kgs of yarns.
MACHHIWARA UNIT
The Worsted Unit had achieved production of 9.25 lac kgs during the
year and the unit was operating at low capacity utilization .
3. SHARE CAPITAL
The paid up Equity Share Capital as on 31st March,2015 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 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. Rishi Oswal & Mr. Rahul Oswal retire at the ensuing Annual
General Meeting and are eligible for re- appointment as Directors
subject to retirement by rotation. They offer themselves 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: 000235N) Statutory
Auditors of the Company hold office until the conclusion of the ensuing
Annual General Meeting and being eligible, offered themselves for
re-appointment. As required under the provision of Section 139 of the
Companies Act, 2013, the Company has obtained a written confirmation
from M/s. S.C.VASUDEVA & Co., and received a certificate from the above
Auditors to the effect that their appointment, if made, would be in
conformity with 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) 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) (ii) 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 for Rs.1691.28 lac in respect
of these debtors during the year.
12. COST AUDIT
Cost audit for the financial year 2014-15 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, 2015 is annexed herewith as
Annexure-III to this report. The Secretarial Audit report does not
contain any qualification, reservation and adverse remarks.
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,2015 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 Clause 49 of the Listing Agreement, 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 revised clause 49 of the listing agreement.
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 except Mr
Arun Kumar Ahluwalia.
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
The Company has shut down the production activity during the year at
Paonta Sahib unit.
Except closure of Paonta Sahib unit, No material changes and
commitments affecting the financial position of the Company occurred
between the ends of the financial year to which these financial
statements relate on 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, Organisations and Agencies. The
Company also acknowledges the support and co-operation received from
dealers, Retailers, agents and other business partners for excellent
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 unstinted support
extended to the Company.
Place: Ludhiana For and on behalf of Board
Date : 30.05.2015
JANGI LAL OSWAL
Chairman-cum-Managing Director
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