ii Rights, preferences and restrictions attached to Equity shares
The company has only one class of equity shares having a par value of ' 10 per share. Each shareholder is eligible for one vote per share. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion of their shareholding.
v There was no issue of shares alloted as fully paid up shares pursuant to contract(s) without payment being received in cash or buyback or Bonus shares in the preceding five years
vi There are nil number of shares (Previous year Nil) reserved for issue under option and contracts or commitments for the sale of shares or disinvestment.
vii There are no issue of shares allotted as fully paid up shares pursuant to contract(s) without payment being received in cash or buy back or bonus shares in the preceding five years.
viii During the year ended 31.03.2025 and in the previous year, no securities convertible into Equity/Preferential shares.
ix During the year ended 31.03.2025 and in the previous year, there are no calls unpaid including calls unpaid by Directors and officers as on balance sheet date.
Note: During the previous year, Company's Bankers have approved and implemented Resolution Plan (RP) as per the Provisions of Prudential Framework for Resolution of Stressed Assets RBI Circular dated 07.06.2019 . As per the said approved RP Terms existing entire 20,51,000 Non-Cumulative Redeemable Preference Shares (NCRPS) of Rs 100 each was subsituted with fresh issue of 20,51,000 nos. 0.5% Non-Cumulative Compulsorily Convertible Preference Shares (NCCCPS) of Rs 100 each. The said NCCCPS shall carry a dividend coupon rate of 0.5% p.a. till conversion and will be converted in to equity shares on 31.03.2030 as per the SEBI guideline prevalent on the date of conversion.
Details of shareholders holding more than 5% of preference shares in the Company
i Working Capital Term Loan are secured by :
(i) Working Capital Term loan of ' 5667.40 lacs (Previous year ' 6334.90 lacs) sanctioned by banks pursuant to an approved Resolution Plan as per RBI Circular dated 07.06.2019. secured by first paripassu charge on the Block assets (Land and Building, Plant & Machinery of Company's kanjicode plant, palakkad, kerala, and pledge of 51% of shares held by promotor (GTN Textiles Limited being 7286405 shares) in favour of the Term Loan Lenders and also guaranteed by chairman of the Company Shri. BK Patodia and Managing Director of the Company Shri. Umang Patodia.
* The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandam dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondance with its customers the Enterpreneurs Memorandum Number as allotted after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at reporting date has been made in the financial statements based on information received and available with the Company and has been relied upon by the auditors.
Further, as per the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro Small and Medium Enterprises Development Act, 2006 (“the MSMED Act”) is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.
33 Employee Benefits Plan Gratuity:
In accordance with the applicable laws, the Company provides for Gratuity, a defined benefit retirement plan (“The Gratuity Plan”) covering eligible employees. The Gratuity plan provides for a lump sum payment to vested employees on retirement (subject to the completion of 5 years of continues employment), death, incapacitisation or termination of the employment are based on last drawn salary and tenure of employement.
Liabilities with regard to the Gratuity Plan are determined by acturial valuation on the reporting date and the Company makes annual contribution to the Gratuity Fund administered by Life Insurance Corporation of India, which is basically a year-on-year cash accumulation plan. Though company has not fully funded to Gratuity fund of LIC ,adequate provision has been made in the Books of accounts. As part of the scheme the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance company, as part of the policy rules, makes payment of all gratuity settlements during the year subject to sufficiency of funds under the policy.
34 The accounts of certain Trade Receivables ,Trade payables, Loans and advances and Banks are subject to formal confirmations /reconciliations and consequent adjustments, if any. The management does not expect any material difference affecting the current year's financial statements on such reconciliation/adjustments.
35 Deferred Tax assets for the current financial year was not recognised. Post restructuring of companies debts under approved resolution proposal by the lenders, Management is hopeful that there would be sufficient taxable profit in the ensuring years against which the unused tax losses and unused tax credits can be utilised/to allow the benefit of part or all of that deferred tax assets to be utilised. In view of this the Deferred tax Assets as at 31.03.2020 is continue to be recognised in the Books.
36 In term of Ind AS-108 Operating Segments, the company operates materially only in one business segment viz., Textile industry and have its production facilities and all other assets located within India.
38 CONTINGENT LIABILITY AND COMMITMENTS:
CONTINGENT LIABILITY
Disputed amounts of Taxes and duties and other claims not acknowledged as debts :
a) Excise duty : ' 72.99 lacs (Previous year ' 72.99 lacs). Deposits against litigation ' 7.31 lacs
b) TANGEDCO has been charging electricity tax @ 5% on Demand Charges through their bills. This was challenged by a consumer in Hon'ble Supreme Court and Hon'ble SC has accepted the appeal on records. Liability towards the same ' 74.67 lacs (Previous year ' 74.67 lacs). Deposits against litigation ' Nil.
c) TANGEDCO has denied deemed demand benefit available for use of self generated thermal power received through group captive arrangement. This was challenged in Hon'ble Chennai High Court and the Hon'ble Hight court has given injuction with a condition to TANGEDCO to Charge only 50% till the matter is decided. Liabilty towards the same was ' 308.42 lacs .(Previous year ' 308.42 lacs). Deposits against litigation ' Nil.
d) Asst Commissioner of GST & Cent Ex Audit , Coimbatore Audit Circle II has raised additional demand on Ocean Freight based on Bills of Entry filed. Liability towards the same is ' 29.92 lacs. (Previous year ' 29.92 lacs). Deposits against litigation ' Nil.
e) GST department has issued a notice on 22.05.2025 for excess claiming input credit in Input Service Distribution (ISD) for an amount of Rs 23.86 lac along with fine and penalty ' 73.89 lac.
39 Absence of Working capital facilities and challenging market conditions for Indian Textiles Industry due to Geopolitical situation and other external factors led to Liquidity stress and consequently, Company continues to carry out job work activity throughout the year.
Since the Company was carrying out Job work and the revenue from job work covers only variable cost, company could service interest on working capital term loan (WCTL) up to 20th Dec 2024 and paid quarterly WCTL installments up to 30.09.2024 from available resources including sale proceeds of Office in Mumbai and the unsecured loan of ' 14.58 Cr received from Promoters.
Due to improved demand scenario for Indian Textiles Industry and considering market dynamics, the company now plans to resume own manufacturing of cotton yarn at its Palakkad plant. The company aims to revive its financial stability by returning to its core business model and restructuring its financial commitments effectively. To support this transition, the company has submitted a new resolution plan to Lenders to restructure outstanding debts (WCTL) with moratorium for Interest and WCTL instalment payments and reduction in Rate of interest to Bank MCLR level. Bankers have carried out TEV study which confirmed Viability of the proposal and now the bankers are pursuing further process. With the significant reduction in the debt level as well as rationalization of labour cost through VRS measures and reducing cotton prices, own manufacturing operations could generate better EBITDA and cash profit.
With improved demand situation and post restructuring of its debts, management is hopeful that there would be sufficient taxable profits in the ensuing years against which the unused tax losses and unused tax credits can be utilized. In view of this, the Company would like to continue to retain the deferred tax assets of ' 3869.27 lakhs as recognized in earlier years and not recognized incremental deferred tax asset for the current financial year ended 31.03.2025.
As per MOU entered with the Promoter directors', an amount of ' 14.58 Cr advanced (bearing interest at 9% p.a) by GTN Textiles Ltd to the company was adjusted by GTN Textiles Ltd against the outstanding unsecured loan from its Promoter directors' in their books as at 31.3.2025. Consequently, the amount of ' 14.58 Cr shown as advance received from GTN Textiles Ltd in the books of the company now stands accounted as interest free advance in the name of Promoter directors' as at 31.3.2025.
40 FINANCIAL RISKS MANAGEMENT
In the course of business, amongst others, the Company is exposed to several financial risks such as Credit Risk, Liquidity Risk, Interest Rate Risk, Exchange Risk and Commodity Price Risk. These risks may be caused by the internal and external factors resulting into impairment of the assets of the Company causing adverse influence on the achievement of Company's strategies, operational and financial objectives, earning capacity and financial position.
The Company has formulated an appropriate policy and established a risk management framework which encompass the following process.
- identify the major financial risks which may cause financial losses to the company
- assess the probability of occurrence and severity of financial losses
- mitigate and control them by formulation of appropriate policies, strategies, structures, systems and procedures
- Monitor and review periodically the adherence, adequacy and efficacy of the financial risk management system.
The Company enterprise risk management system is monitored and reviewed at all levels of management, Internal Auditors, Audit Committee and the Board of Directors from time to time.
Credit Risk
Credit Risk refers to the risks that arise on default by the counterparty on its contractual obligation resulting into financial loss to the company. The company may carry this Risk on Trade and other receivables, liquid assets and some of the non current financial assets.
In case of Trade receivables, the company has framed appropriate policy for extending credits period & limit to each customer based on their profile, financial position etc. The collections of trade dues are strictly monitored. In case of Export customers, even credit guarantee insurance is also obtained wherever required.
*From 2022-23 onwards Company was operating under Contract manufacturing due to Paucity of Working capital and Liquidity stress pending approval of Restructuring proposal from company bankers. Revenue from Top Customers were of conversion charges on contract manufacturing arrangement.
The credit risk on cash & cash equivalent, investment in fixed deposits, liquid funds and deposits are insignificant as counter parties are banks with high credit ratings assigned by the rating agencies of international repute.
Liquidity Risk
Liquidity Risk arises when the company is unable to meet its short term financial obligations.
The company maintains liquidity in the system so as to meet its financial liabilities
Interest Rate Risk
Generally market linked financial instruments are subject to interest rate risk. The company does not have any market linked financial instruments both on the asset side as well liability side. Hence there no interest rate risk linked to market rates.
However the interest rate in respect of major portion of borrowings by the Company from the banks and others are linked with the MCLR / Base Prime lending rate of the respective lender. Any fluctuation in the same either on higher side or lower side will result into financial loss or gain to the company.
The amount which is subjected to the change in the interest rate is of ' 5667.40 lacs out of the total debt of ' 11548.41 Lacs
Based on the Structure of the debt as at year end, a half percentage point increase in the interest rate would cause an additional expense in the net financing cost of ' 28.34 Lacs on annual basis.
Foreign Currency Risk
The company is not exposed to the foreign currency risk from transactions & translation. Since company was operating on contract manufacturing from FY 2022-23 onwards there were no foreign currency exposure either on Exports of Yarn or on Imports of Raw materials.
41 Capital risk management
The Company's objectives when managing capital are to :
♦ create value for its shareholders and other stake holders, and
♦ maintain an optimal capital structure to reduce the cost of capital through a fair mix of equity with combination of short term/long term debt as may be appropriate.
The Company sets the amount of capital required on the basis of annual business and long-term operating plans which includes capital and other strategic investments. The Company's intention is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business.
43 Other Statutory Information
a) All title deeds of Immovable Property are held in the name of the Company and the Company does not have any immovable property without Title in its name.
b) The Company has not availed any Working capital facilities from Banks or Financial institution and hence filing of quarterly statements not applicable.
c) Disclosure on PPE & Intangible Assets
(1) There is no restriction on the title of Property, Plant and Equipment and Property, which was mortgaged to Lenders for the credit facilities sanctioned to Company.
(2) Company has not constructed any item in Property, Plant & equipment.
(3) Company has no contractual commitments for the acquisition of Property,Plant & Equipment.
(4) Company has no Impairment loss during the year for Property, Plant & Equipment.
(5) Company has not revalued any items of Property, Plant & Equipments during the Year
(6) Carrying amount of Property, Plant & Equipment are not retired from active use and not held for disposal.
(7) The existence and carrying amounts of intangible assets whose title is not restricted and the carrying amounts of intangible assets are not pledged as security for liabilities.
d) Company does not hold any benami property and no proceeding were initiated or pending against the company under the Benami Transaction (Prohibition) Act 1988 and rules thereon.
e) The Company is not a declared as wilful defaulter by any bank or financial institution or other lenders.
f) The Company has not entered into any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.
g) The Company does not have any charges or satisfaction of charges which is yet to be registerd with ROC beyond the statutory period.
h) The Company has complied with the number of layers prescribed under clause(87) of section 2 of the Act read with Companies ( Restriction on number of Layers) Rules, 2017.
i) Utilisation of Borrowed funds and share Premium:
A. The Company has not advanced or loaned to or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
B. The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding that the Company shall
(i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or
(ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
j) There were no transactions relating to previously unrecorded income that have been surrendered and disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.
k) Company shall not be required to comply with Corporate Social Responsibility (CSR) as provisions of section 135 of the Companies Act, 2013 due to its losses.
l) The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year.
44 Previous year’s figures have been regrouped/reclassified wherever necessary to conform the current year’s presentation.
| 