Mar 31, 2023
The Company''s Directors are pleased to present the 31st Annual Report (1st Annual report after Corporate Insolvency Resolution Process (âCIRPâ)) of the Company, along with the Audited Financial Statements prepared by the Resolution Professional under the CIRP for the financial year ended on 31st March 2023.
FINANCIAL SUMMARY
(Rs. in Lakhs) |
||
Particulars |
2022-23 |
2021-22 |
Total Income |
0.63 |
0.89 |
Total Expenses |
1,095.04 |
1,146.74 |
Profit / (loss) before Tax |
(1,094.41) |
(1,145.85) |
Provision for Taxation |
- |
- |
Profit / (loss) after Tax |
(1,094.41) |
(1,145.85) |
Other Comprehensive income |
(0.02) |
(0.04) |
There were no business operations during the year under review as the Company was under Corporate Insolvency Resolution Process (âCIRPâ). The turnover of the Company for the financial year 2022-23 was Nil. The net loss after tax stood at Rs. 1,094.41 lakhs as against Rs. 1,145.85 lakhs over last year.
The segment reporting is provided at note no. 38 of the audited financial statements.
The Board do not propose any transfer to reserves.
The Board of Directors does not recommend dividend for the financial year ended on 31st March, 2023 in view of loss suffered by the company for the year under consideration.
SUBSIDIARY / JOINT VENTURE / ASSOCIATE COMPANY
The Company has made a provision on the investment made in Amit Spinning Industries Limited (ASIL), a subsidiary company.
Further, the investment in another subsidiary, namely Spentex Netherlands B.V. shall be transferred to erstwhile promoters of the Company in accordance with the relevant terms of the Resolution Plan approved by the Hon''ble National Company Law Tribunal vide date 12th May, 2023.
Apart from the above, the Company does not have any other subsidiaries / joint venture / associate company as on March 31st, 2023.
In view of the above, the disclosure in form AOC-1 shall not be applicable to the Company for the financial year 2022-23.
The Company was under Corporate Insolvency Resolution Process (âCIRPâ) Also, the CIRP of the Company as per the provisions of the Insolvency and Bankruptcy Code, 2016 (âIBC, 2016â) and it was initiated by Edelweiss Asset Reconstruction Limited (EARCL) a Financial Creditor of the Company. The Financial Creditor''s petition to initiate the CIR Process was admitted by the Hon''ble National Company Law Tribunal (âNCLTâ), Principal Bench, New Delhi by vide Order dated January 3, 2020.
In accordance with Section 30(6) of the IBC, the Resolution Plan submitted by Manjeet Cotton Private Limited & Vitthal Corporation Limited (âResolution Applicantsâ) as approved by the Committee of Creditors with the requisite majority as per Section 30(4) of the IBC, was filed with Hon''ble NCLT, Principal Bench, New Delhi and The Hon''ble NCLT, Principal Bench, New Delhi, vide its order dated May 12th, 2023, approved the Resolution Plan submitted by the Resolution Applicants. Resolution Applicants are in the process of regularising the compliances of Company.
A copy of Annual Return as provided under section 92(3) and section 134(3)(a) of the Companies Act, 2013 (''the Act'') in form MGT-7 is made available on the website of the Company and can be accessed at www.spentex.net.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Subhash Kumar Kundra, Resolution Professional was responsible for the day-to-day work of the Company during the tenure of the Corporate Insolvency Resolution Process. As per Resolution Plan, on the NCLT Approval Date i.e. May 12th, 2023, all the existing directors i.e. Mukund Choudhary, Managing Director, Kapil Choudhary, Deputy Managing Director, Ms. Honey Deep Kaur, Independent Woman Director and Mohd. Asim, Independent Director of the Company, without any further action being required on the part of any Person, shall deemed to have resigned from the Board of Directors of the Company.
The Hon''ble NCLT, Principal Bench, New Delhi, vide its order dated May 12, 2023, approved the Resolution Plan submitted by the Resolution Applicants i.e. Manjeet Cotton Private Limited & Vitthal Corporation Limited and on July 12, 2023 and on August 31,2023, the Implementation and Monitoring Committee appointed following Directors for constituting a Board of Directors of the Company. The resolution for regularization of the appointed directors shall be placed before the ensuing Annual General Meeting of the Company.
Date of Appointment |
Name of Directors |
Designation |
12thJuly, 2023 |
Mr. Bhupendra Singh Rajpal |
Additional Director |
31st August, 2023 |
Mr. Sanchit Bhupendra Singh Rajpal |
Additional Director |
31st August, 2023 |
Mr. Gautam Maheshchandra Nandawat |
Additional Independent Director |
31st August, 2023 |
Mr. Satinder Kaaur |
Additional Independent Director |
The newly constituted Board of Directors as referred above at their first meeting held on October 9, 2023 have appointed Mr. Bhupendra Singh Rajpal as Chairman and Whole-time Director of the Company for the period of 5 years and Mr. Sanchit Bhupendra Singh Rajpal appointed as Managing Director of the Company for the period of 5 years, subject to approval of the members of the Company at the ensuing Annual General Meeting.
POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION
The Board of Directors at their meeting held on October 9, 2023 has constituted the Nomination and Remuneration Committee and also adopted the remuneration policy under Companies Act, 2013 and other applicable laws and it will be disclosed on the website of the Company www.spentex.net.
ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD, ITS COMMITTEES AND OF INDIVIDUAL DIRECTORS:
The Company was undergoing Corporate Insolvency Resolution Process (âCIRPâ) in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 read with the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016. Upon approval of the Resolution plan pursuant to CIRP, new Board of Directors was formed.
DECLARATION BY INDEPENDENT DIRECTORS
Necessary declarations have been obtained from all the Independent Directors that they meet the criteria of independence under Section 149(6) of the Companies Act, 2013 (âthe Actâ) and under Regulation 25 read with Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ). In terms of Regulation 25(8) of the Listing Regulations, Independent Directors have confirmed that they are not aware of any circumstance or situation which exists or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective of independent judgement and without any external influence. The Board of Directors have taken on record the declaration and confirmation submitted by the Independent Directors and is of the opinion that they fulfil the conditions specified in the Act & Listing Regulations and are independent of the management.
Your Company''s Board is of the opinion that the Independent Directors possess requisite qualifications, experience and expertise in Corporate Governance, Legal & Compliance, Financial Literacy, General Management, Human Resource Development, Industry Knowledge, Technology, digitization & innovation.
TERMS AND CONDITIONS OF APPOINTMENT
The terms and conditions of appointment Independent Director stipulates the manner of appointment, role & functions, duties, relevant provisions of section 149, 150 and 152 of the Act and ''Guidelines for Professional Conduct'' pursuant to Schedule IV to the Act and are forming part of appointment letter.
COMMITTEES OF THE BOARD OF DIRECTORS
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, there were no committees of the former Board of Directors which were functional.
The various applicable committees of the newly formed Board of Directors are constituted in accordance with the applicable laws at their meeting held on October 9, 2023.
FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, there were no Independent Directors in the Company and no such program was conducted during CIRP process.
NUMBER OF MEETINGS OF THE BOARD
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, no meetings of the former Board of Directors were held during financial year.
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, and hence no meeting of the Board of Directors or the shareholders were held during CIRP period and therefore compliance with secretarial standards would not applicable during the reporting period.
PARTICULARS OF LOANS, GUARANTEE, SECURITY AND INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in note no. 3 and 11 of the financial statements.
The newly appointed Board of Directors at their meeting held on October 9, 2023 has adopted the Risk Management Policy for the Company. The Audit Committee shall review the status of key risks and steps to be taken by the Company to mitigate such risks at regular intervals.
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, the compliance with the related party transactions were dealt by the Resolution Professional in accordance with the mechanism of IBC. The details of related party transactions are disclosed in note. No. 39 of the financial statements.
WHISTLE BLOWER MECHANISM / VIGIL MECHANISM
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and the affairs of the Company was managed by the Resolution Professional under IBC, and the Board of Directors unable to comment regarding complaints received from any whistleblower during the period under review.
The Board of directors of the Company at their meeting held on October 9, 2023 approved and adopted the Whistle Blower Policy and same is available on the website of the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company was under CIRP process during the year under review. The Company during the implementation of Resolution Plan has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, to provide protection to women (including outsiders) at the workplace and for prevention and redressal of complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure.
The Company is in the process of constitution of an Internal Complaints Committee to consider and to redress complaints of sexual harassment.
The Company has not received any complaint of sexual harassment during the year under review.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company was under CIRP during the financial year 2022-23 and the provisions of Corporate Social Responsibility were not applicable to the Company as the company does not fall under any of the threshold limits given in Section 135 of the Companies Act, 2013.
Since, the Company was under CIRP and the affairs of the Company were managed by the Resolution Professional and since the Company has paid remuneration of Rs. 4.97 lakhs during the year, the disclosure under section 197 of the Companies Act, 2013 and rules made thereunder not attracted for the financial year 2022-23.
DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors of the Company based on the financials received from the Resolution Professional confirms that:
⢠in the preparation of the annual accounts for the financial year ended 31stMarch, 2023, the applicable accounting standards have been followed and that no material departures have been made from the same;
⢠they have 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 loss of the Company for that period;
⢠they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
⢠they have prepared the annual accounts on a going concern basis;
⢠they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.
Since the Company was under Corporate Insolvency Resolution Process (âCIRPâ) during the financial year 2022-23, it has not accepted any deposits covered under Chapter V of the Companies Act, 2013. However, there is an outstanding amount of Rs. 479.48 lakhs received from Committee of Creditors under CIRP.
Your Company''s shares were listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE), however trading was suspended on account of Corporate Insolvency Resolution Process during the year under review.
In conformity with the provisions of Regulation 34(2) of SEBI (LODR) Regulations, the Cash Flow Statement for the year ended 31st March, 2023 is enclosed as a part of this Annual Report.
During the year under review, since the affairs of the Company was managed by the Resolution Professional under the provisions of Insolvency and Bankruptcy Code, 2016, no audit committee was functional. The Board of Directors of the Company constituted upon approval of the Resolution Plan at their meeting held on October 9, 2023 formed an Audit Committee in accordance with the applicable laws.
STAKEHOLDERS RELATIONSHIP COMMITTEE
During the year under review, since the affairs of the Company was managed by the Resolution Professional under the provisions of Insolvency and Bankruptcy Code, 2016, no stakeholders relationship committee was functional. The Board of Directors of the Company constituted upon approval of the Resolution Plan at their meeting held on October 9, 2023 formed an Stakeholders Relationship Committee in accordance with the applicable laws.
The financial statements prepared by Mr. Subhash Kumar Kundra, Resolution Professional have been audited by M/s. R. N. Marwah & Co LLP, Chartered Accountants (FRN: 001211N/N500019), statutory auditors of the Company.
The notes on Financial Statements referred to in the Auditors Report are self-explanatory and do not call for any further comments.
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 had appointed M/s. Ajit Kumar & Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as âAnnexure Aâ.
BOARD''S EXPLANATION OR COMMENTS ON EVERY QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE BY THE AUDITOR IN HIS REPORTReconstituted Board of Directors'' View on the Statutory Auditor''s Qualifications/Reservations
The Honâble Company Law Tribunal, Principal Bench, New Delhi (hereinafter referred to as âAdjudicating Authorityâ) admitted the Corporate Insolvency Resolution Process (hereinafter referred to as âCIRPâ) application filed against M/s. CLC Industries Limited by Financial Creditor, Edelweiss Asset Reconstruction Company Limited U/s.7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as âCodeâ) and appointed Mr. Subhash Kumar Kundra as the Interim Resolution Professional under the Code vide order dated January 03, 2020. Further, the Committee of Creditors (hereinafter referred to as âCoCâ) constituted during the CIRP has confirmed the appointment of Mr. Subhash Kumar Kundra as the Resolution Professional (hereinafter referred to as âRPâ) on February 20, 2020 to manage the affairs of M/s. CLC Industries Limited as per the provisions of the Code.
The Resolution Plan as submitted by Successful Resolution Applicants Consortium of M/s. Manjeet Cotton Pvt. Ltd. & M/s. Vitthal Corporation Ltd. was approved by members having 92.85% voting share in the CoC on April 02, 2021. The application for approval of the Resolution Plan was filed by the RP with the Adjudicating Authority on May 05, 2021. The Adjudicating Authority approved the said Resolution Plan vide its order pronounced on May 12, 2023.
In terms of the Resolution Plan, all the existing directors without any further action being required on part of any person, shall deemed to have resigned from the Board of Directors of the Company. On July 12, 2023 and on August 31, 2023, the Implementation and Monitoring Committee reconstituted new Board of Directors as below:
Date of Appointment |
Name of the Directors |
Designation |
12th July, 2023 |
Mr. Bhupendra Singh Rajpal |
Additional Director |
31st August, 2023 |
Mr. Sanchit Bhupendra Singh Rajpal |
Additional Director |
31st August, 2023 |
Mr. Gautam MaheshchandraNandawat |
Additional Independent Director |
31st August, 2023 |
Mrs. Satinder Kaaur |
Additional Independent Woman Director |
(The newly constituted Board of Directors as referred above at their first meeting held on October 9th, 2023 have appointed Mr. Bhupendra Singh Rajpal as Chairman and Whole-time Director of the Company for a period of 5 years and Mr. Sanchit Bhupendra Singh Rajpal appointed as Managing Director of the Company for a period of 5 years, subject to approval of the members of the Company at the ensuing Annual General Meeting).
In view of above, entire management & powers of the board of directors of the company including maintenance of books of accounts for the period under consideration i.e. F.Y.2022-23 was entirely looked upon by the RP(As F. Y.2022-23 being part & parcel of the Phase I period in terms of Clause 3.12 of the Resolution Plan i.e. date of approval of the Resolution Plan by the Committee of Creditors till the NCLT Approval Date). The Statutory Auditor himself has also identified the RP as the Management/Board in the Para âManagementâs Responsibility and Those Charged with Governanceâ in his Statutory Audit Report vide dated October 31, 2023 on the Standalone Financial Statements.
As a result, the newly reconstituted aforesaid Board of Directorsâ have no legitimate imperative/prerogative in its farthest domain to comment/express anyviews over the qualifications/reservations of the Statutory Auditor as issued in his audit report.
Moreover, it is to be noted that the newly reconstituted Board of Directors as referred above are nowhere the signatories of the audited financial statements for the period under consideration as the appointment of the reconstituted Board itself has been made post the closure of the financial year i.e. after 31.03.2023 & approval of the Resolution Plan by the Adjudicating Authority.
REPORTING OF FRAUD BY AUDITORS
During the year under review, neither the statutory auditors nor the secretarial auditors has reported to the Audit committee, under section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officer or employees, the details of which would need to be mentioned in the Board''s report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
The Company was under Corporate Insolvency Resolution Process (âCIRPâ) and the financial creditor''s petition to initiate the CIR Process was admitted by the Hon''ble National Company Law Tribunal (âNCLTâ), Principal Bench, New Delhi by vide Order dated January 3rd, 2020. In accordance with Section 30(6) of the Insolvency and Bankruptcy Code (âIBCâ), the Resolution Plan submitted by Manjeet Cotton Private Limited & Vitthal Corporation Limited (âResolution Applicantsâ) as approved by the Committee of Creditors with the requisite majority as per Section 30(4) of the IBC, was filed with Hon''ble NCLT, Principal Bench, New Delhi and The Hon''ble NCLT, Principal Bench, New Delhi, vide its order dated May 12th, 2023, approved the Resolution Plan submitted by the Resolution Applicants.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
As the Company was under Corporate Insolvency Resolution Process (âCIRPâ), during this tenure Company has not transferred any fund to the Investor Education and Protection Fund.
Since the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and affairs of the Company was managed by the Resolution Professional and the former Board of Directors and its committees were not functional, the disclosure in Corporate Governance are not provided for the financial year 2022-23.
The Board of Directors constituted pursuant to the Resolution Plan approved by the Hon''ble National Company Law Tribunal, Principal bench, New Delhi vide its order dated May 12th, 2023 is taking appropriate steps / actions after its formation with effect from August 31st, 2023 and constituted various committees, adopted policies in accordance with the applicable laws during the implementation of Resolution Plan.
Since the required actions have taken in current financial year, the Corporate Governance Report shall be provided by the Board of Directors for the financial year 2023-24 in the next annual report.
MANAGEMENT DISCUSSION AND ANALYSIS
Since the Company was under Corporate Insolvency Resolution Process (CIRP) during the year under review and affairs of the Company was managed by the Resolution Professional and there were no business operations as such in the Company, the newly constituted Board of Directors of the Company which took control effective from August 31,2023 is not in position to provide disclosure on management discussion and analysis for the financial year 2022-23.
The details of significant changes in key financial ratios are provided at Note no. 60 of the financial statements provided by the Resolution Professional.
The disclosure in Management Discussion and Analysis Report shall be provided by the Board of Directors for the financial year 2023-24 in the next annual report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS & OUTGOA. Conservation of Energy
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) period, no business activity has been carried out during the CIRP proceedings.
Since, the Company was under Corporate Insolvency Resolution Process (CIRP) period, no business activity has been carried out during the CIRP proceedings.
C. Foreign Exchange Earning and Outgoing
There were no foreign exchange earnings and outgo during the financial year as per the audited financial statements.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
As the Board of Directors of the Company is recently constituted with effect from August 31st, 2023, the necessary steps shall be taken to effectively put the systems for internal control and its adequacy.
Your Directors express their gratitude to the Company''s vendors, customers, banks, financial institutions, shareholders and society at large for their understanding and support. Finally, your directors acknowledge the dedicated services rendered by all employees of the Company.
Mar 31, 2016
Dear Members,
The Directors are pleased to present the 24th Annual Report on the business and operations of the Company along with the Audited Financial Statements for the financial year ended March 31, 2016.
Financial Results
The highlights of the financial results for the year ended 31st March, 2016 are as under:
(Rs. in Crores)
Particulars |
2015-2016 |
2014-2015 |
||
|
Consolidated |
Standalone |
Consolidated |
Standalone |
Net Sales (Turnover) |
799.07 |
799.08 |
911.07 |
891.14 |
Other Income |
9.20 |
9.15 |
17.94 |
16.66 |
EBIDTA |
(1.13) |
7.35 |
18.89 |
27.49 |
Financial charges |
88.93 |
77.01 |
90.35 |
79.37 |
Depreciation |
14.71 |
11.25 |
15.12 |
11.68 |
Profit/(Loss) before tax (PBT) |
(104.77) |
(80.91) |
(86.58) |
(63.56) |
Extra ordinary items (income)/ Impairment loss @ Fixed Assets |
- |
- |
1.37 |
1.37 |
Exceptional Items |
- |
- |
- |
- |
Net Profit from Operations |
(104.77) |
(80.91) |
(85.21) |
(62.19) |
Prior Period Items |
- |
- |
- |
- |
Tax expenses |
- |
- |
0.60 |
0.60 |
Net Profit/(Loss) |
(104.77) |
(80.91) |
(85.81) |
(62.79) |
EPS |
(11.67) |
(9.01) |
(9.56) |
(7.15) |
Management Discussion and Analysis Report:
The Indian Textile Industry has a pre -eminent position in the Indian economy with an aggregate turnover of $ 110 billions with exports of $ 40 billion. India is the second largest exporter of textiles in the world & Textile industry is the 2nd largest employer after agriculture & contributes over 4% of GDP. The industry has potential for creation of employment especially in semi urban & rural areas both in organized and unorganized sector. It provides employment also to semi skilled labor and employees women in large segment of operations. The industry is self reliant and has very little to import, thus contributes in accretion of foreign exchange.
Spentex has integrated Cotton, Polyester & blended Yarn manufacturing facilities in India with stable customer base with long term mutually beneficial business relationship both in India and abroad. The company has presence across the entire value chain of cotton and polyester yarn with ability to offer varied products as required by the Indian and global markets.
The operations of the Company during the year were adversely impacted due to shortage of working capital, demand & supply gap and slow off take in internal market and overall subdued sentiments in the business world. The Company''s Exports have also failed to cheer us up due to the tariff disadvantage created by FTAs of our competitors with the big buying nations. A huge disparity between spot cotton prices and yarn prices affected the margins of the company. As a result, there has been significant decline in EBIDTA levels which have resulted in huge financial strain on the Company.
However, with due strategic focus on efficient plant operations and day to day supervision of operations by management and other administrative and operational initiatives taken by the company, the EBITA levels have slightly improved as compared to previous year. Keeping in view the market trends and the emerging business scenario, Spentex is confident of improvement in its operational performance in near future.
Management Perception on Opportunities, Risks, Concern & Outlook
The weakening Indian Rupee, as compared to U.S Dollar and other European currencies provides an opportunity to the textile industry to optimize its sales volumes and margins respectively in exports. Spentex will continue to offer market driven quality product mix for progressively improving its operations and output. The Indian textile sector is also facing the challenges of outdated technology especially in weaving and processing resulting into lower productivity thus impacting the competitiveness of the industry. High power tariffs in India are impacting the viability of the industry.
Due to fluctuating prices and uncertainties in the foreign exchange market, increase in power cost and lack of adequate working capital, the EBITA levels may remain stagnant during the year. Management is keeping a close watch on various threats/risks facing the company and taking all appropriate steps to improve the performance of the Company. The Indian Textile industry is expected to become strong & vibrant through various support measures announced by the Government of India, especially technology up gradation fund and a package for apparel Industry.
Another key challenge presently is the Fiber/Raw Material cost, which has increased abruptly and increase is not fully absorbed in the yarn prices and accordingly yarn spinners are hit the most in the entire textile chain. However, your directors and management would take all necessary measures to hedge this risk and increase the EBITA levels in coming quarters.
Quarter 3 & 4 of the financial year 2015-16 witnessed an increase in demand of cotton yarn in domestic as well as foreign market. With the strong domestic consumption trend and initiatives formulated by the Company with regard to product mix, waste management control & other related issues, your directors are confident that sales volumes would reasonably shore up with consequent strengthening of the margins in due course.
Financial Analysis and Performance Review
During the financial year 2015-16 the Company''s operations were adversely impacted due to increase in Fiber/Raw Material cost which is not fully absorbed in the yarn prices, high power tariff, and constraints of working capital leading to non optimal utilization of plant capacities and consequent decrease in EBIDTA.
The financial performance of the Company has been presented in two parts, as under:
i) Spentex Industries Limited (Standalone) excluding the performance of its subsidiaries and step-down subsidiaries.
(ii) Spentex Industries Limited (Consolidated) including the performance of its subsidiaries and step-down subsidiaries. The Consolidated Financial Statements reflect the performance of Spentex Group of companies and are more relevant for understanding the overall performance of the Group.
Segment-wise Performance Yarn Manufacturing
During the year under review, your Company on standalone basis has manufactured 46,939.32 MT of yarn as compared to 44,930.63 MT of yarn produced during the previous year.
Subsidiaries
The Company has following four subsidiaries/step down subsidiaries as on March 31, 2016.
(a) M/s Amit Spinning Industries Limited.
(b) M/s Spentex (Netherlands) B.V.
(c) M/s. Schoeller Textile (Netherlands) B.V.
(d) M/s Spentex Tashkent Toytepa LLC. (due to breach of Investment Agreement by Republic of Uzbekistan with its Investors, its holding Company SNBV, has filed case in ICSID)
There was no material change in the nature of the business carried on by the subsidiaries.
Performance of Subsidiaries
The details of turnover and overall performance of material subsidiary companies is as under:
Amit Spinning Industries Ltd., India: The company has its manufacturing facilities at Kolhapur, Maharashtra with capacity of 30,672 spindles. During the year under review, the subsidiary''s operations remained suspended due to financial constraints and non-availability of working capital. The Rehabilitation Scheme filed by the company with BIFR is yet to be considered and approved. Accordingly, the subsidiary''s revenue has been severely affected and revenue from operations during the year 2015-16 was Rs. 38.98 Lakhs as compared to Rs. 32.05 Crores during 2014-15.
Spentex Tashkent Toytepa LLC, Uzbekistan (STTL) & Spentex Netherlands B.V, Netherlands (SNBV): During the period under review, the Arbitration Proceedings against GOU for Investment Dispute Claim before International Center for Settlement of Investment Dispute (ICSID) were held at the World Bank from 14th Sept., 2015 to 25th Sept. 2015 and both the parties i.e. M/s. Spentex (Netherlands) B.V., a subsidiary of the company and Government of Uzbekistan (GOU) have submitted the pre & post hearing briefs to tribunal on 7th December, 2015. The judgment/award is yet awaited.
Consolidated Financial Statements
There are no associate companies or joint venture companies within the meaning of section 2(6) of the Companies Act, 2013. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of financial statements of subsidiaries, associates and joint venture companies in Form AOC-1 is attached to the Accounts.
In accordance with the provisions of Section 136 of the Companies Act, 2013, the audited financial statements including consolidated financial statements of the Company and audited accounts in respect of each of the subsidiary companies are available on website of the Company www.spentex.net. These documents shall also be kept open for inspection during business hours at the Registered Office of the Company on or before ensuing General Meeting. The Company will also make available these documents upon request by any Member of the Company interested in obtaining the same.
The Consolidated Financial Statements of the Company prepared in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India form part of this Annual Report.
Share Capital
As on 31st March, 2016, the Company''s issued and paid up capital stands Rs. 89, 77, 20,350/- divided into 8,97,72,035 fully paid up equity shares of Rs. 10/- each. During the year, under review, the Company has not issued any share(s). Further the Company has not issued any share with differential Voting Rights/Sweat Equity shares/under Stock Option Scheme (ESOS) earlier and during the year.
The Company had issued 500 non-convertible debentures of Rs. 10.00 lacs each; however during the year under review, no debenture has been issued.
The Company has no scheme or provision of money for purchase of its own shares by employees or by trustees for the benefit of employees. Hence the details under rule 16 (4) of Companies (Share Capital and Debentures) Rules, 2014 are not required to be disclosed.
During the year under review, your Company had obtained approval of the members at their 23rd Annual General Meeting held on 30th September, 2015 for issuance of 1,10,95,000 equity shares of Rs. 10/- each to Promoters/Promoter Group on preferential basis. Subsequently, the Company had applied to NSE and BSE for obtaining in-principal approval for issuance of aforesaid shares. However, since these shareholders are holding shares, a non disposal undertaking under Regulation 78 of SEBI (ICDR) Regulations is required from the lenders to whom the said shares have been pledged. However, since the lenders have refused to provide such undertaking in principle approval was not accorded and the Company has since withdrawn the application filed before stock exchanges. The Board of Directors are looking for alternate options for issue of said shares to the promoters.
Directors
(a) Change in Directors or Key Managerial Personnel
In terms of provisions of the Companies Act, 2013 read with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the following appointment/re-appointment/cessation are made in directors/Key Managerial Personnel during the period under review:
1. Mr. Samir Kumar Nath has been appointed as non retiring Nominee Director (nominated by State Bank of India, Lead Bank) on the Board of the Company w.e.f 17th September, 2015.
2. Mr. Prem Malik, Independent Director, Mr. Sitaram Parthasarathy, Director Works and Mr. Rajeev Kalra, Nominee Director (Nomination withdrawn by VCIGPM Ltd.) have resigned from the Board of Directors of the Company w.e.f 13th August, 2015, 7th November, 2015 and 11th September, 2015 respectively.
3. Dr. Sunil Kumar Gupta has been appointed as Company Secretary of the Company in place of Mr. Ranjan Mangtani w.e.f. 10th February, 2016.
In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Amrit Agrawal, director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment.
Brief resume of the Directors proposed to be appointed/re-appointed, nature of their expertise in specific functional areas and names of the companies in which they hold directorship and membership/chairmanships of the Board or its Committees is provided in the Report of Corporate Governance forming part of the Annual Report.
Number of Meetings of the Board
Four meetings of the Board were held during the year. The detailed information of the meetings of the Board held during the year is mentioned in the Corporate Governance Report which forms part to this report.
Declaration by Independent Directors
The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than the sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.
Board evaluation
In terms of the applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as Board Committees.
The board and the nomination and remuneration committee reviewed the performance of the individual directors on the basis of the laid down criteria.
The Independent directors in their separate meetings held on 29th May, 2015 and 10th February, 2016, evaluated the performance of non-independent directors. Performance of the board as a whole has been carried out taking into account the views of independent directors. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. During the year, neither the Managing Director nor the Whole-time Directors of the Company received any remuneration or commission from any of its subsidiaries. The Company affirms that remuneration is as per the remuneration policy of the Company.
Committees of the Board
Currently, the Board has eight committees namely the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, the Stakeholders Relationship Committee, the Risk Management Committee, Banking Committee, Investment Committee and Fund Management Committee.
Audit Committee
As on 31st March, 2016, the Audit Committee comprised of Mr. Ram Kumar Thapliyal, Independent Director (Chairman), Mr. Dhananjaya Prasad Singh, Independent Director and Mr. Amrit Agrawal, Executive Director (Members).
Corporate Social Responsibility
In accordance with the provisions of Section 135 of the Companies Act, 2013, the Corporate Social Responsibility (CSR) Committee of the Board has been constituted on 28th May, 2014, inter alia, to formulate and recommend to the Board, a CSR Policy which shall indicate the activities to be undertaken by the Company and monitor the same from time to time. The composition of committee is disclosed in Corporate Governance Report forming part to this report. The CSR policy has also been hosted on the website of the company www.spentex.net Risk Management
The Board of Directors of the Company has constituted a Risk Management Committee to oversee the risk management plan in the Company. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board''s Report. The Risk Management Policy has also been hosted on the website of the Company.
A detailed note on the composition of the Board and its various committees is provided in the Corporate governance report forming part to this Annual Report.
Vigil Mechanism
The Company has framed and implemented a vigil mechanism named as Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The details of the Whistle Blower Policy are provided in the Corporate Governance Report and also posted on the website (www.spentex.net) of the Company. The Company has received three complaints till date and the same were duly redressed. Directors'' Responsibility Statement
Pursuant to the requirement of Section 134(3)(c) of the Companies Act, 2013, with respect to Directors'' Responsibility Statement, it is hereby confirmed that:
(a) In the preparation of the annual accounts for the financial year ended 31st March, 2016, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) 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 as at March 31, 2016 and of the profit and loss of the company for that period;
(c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets 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; and
(e) The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
(f) 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.
Related Party Transactions
None of the transactions with related parties falls under the scope of section 188(1) of the Act. All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There were no materially significant related party transactions entered into by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.
Prior omnibus approval of the Audit Committee was obtained for Related Party Transactions for the quarter/year ended 31st March, 2016, transactions proposed to be entered into with the related parties in the year 2016-17 were placed before the said committee and consent of said the committee was obtained.
The policy on Related Party Transactions as approved by the Board has been uploaded on the Company''s website www.spentex.net. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm''s length basis, form AOC - 2 is not applicable to the Company. Significant and Material Orders passed by the Regulators or Courts
During the year under review, there are no significant or material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
Auditors
Pursuant to the provisions of Section 139 of the Companies Act, 2013 and rules framed there under, M/s. J C Bhalla & Co., Chartered Accountants, (Registration No. 001111N) were appointed as Statutory Auditors of the Company at Annual General Meeting held on 11th September, 2014 to hold office till conclusion of 25th Annual General Meeting for a period of three years subject to ratification of their appointment at every Annual General Meeting.
The Company has received a confirmation from M/s. J C Bhalla, Chartered Accountants to the effect that their appointment, if made, at the ensuing AGM would be in terms of Sections 139 and 141 of the Companies Act, 2013 and rules made there under and that they are not disqualified for re-appointment.
Auditors Report
The Auditors'' Report read with the Notes to Accounts is self-explanatory and does not call for any further explanation under Section 134 of the Companies Act, 2013, except for the responses in respect of some observations as mentioned here in below.
Directors'' view on Auditor''s Observations
Directors'' response to the various observations of the auditors made in their report, even though explained wherever necessary through appropriate notes to accounts, is reproduced hereunder in compliance with the relevant legal requirements:
Note No. 39 of the Financial Statement qualified by Auditors
The company has an investment of Rs. 204,469,921/- in and has amount recoverable amounting to Rs. 732,239,193/- to Amit Spinning Industries Limited (ASIL), a subsidiary, as on March 31, 2016. The accumulated losses of ASIL, at the year end exceeded its net worth. There is also reduction in market value of the investment at the yearend by Rs. 187,475,249/-. In the opinion of the management, diminution in this long term investment is due to adverse business conditions in the past. Management believes that diminution in the value of investment is of temporary nature and that outstanding would be realized within a reasonable period of time. Accordingly no provision considered necessary in the value of investment held and amount due from ASIL.
Note No. 40 of the Financial Statement qualified by Auditors
The Company has an investment of Rs. 561,011,339 and Rs. 9,323,779 in its subsidiary Spentex Netherlands B. V. (SNBV) and its step down subsidiary Spentex Tashkent Toytepa LLC (STTL) respectively. Further it has Rs. 70,012,404 as export receivable from STTL and advances recoverable of Rs. 95,070,902 in SNBV as on March 31st, 2016. During the period of investment, Government of Uzbekistan (GOU) changed certain laws and policies breaching the investment agreement and rendered operation of STTL not only unviable, but also expropriated its investment. All the assets and liabilities of STTL have been taken over by National Bank of Uzbekistan (NBU) and existence of STTL has been liquidated as per bankruptcy laws. In view of this corporate guarantee given by company in respect of STTL liability for deferred payment to Tashkent Toytepa Textile (TTL) stand extinguished. SNBV, which had made around 99% investment in the equity of STTL, had filed request for Arbitration against GOU for Claim through its lawyer before International Center for Settlement Investment Dispute (ICSID). Based on the claim lodged with ICSID, Board of Directors has decided not to make any provision for the aforesaid amounts. In addition to above claim, the company has sent notice to the GOU for indemnify the further losses caused to company directly or indirectly on account of investment made in Uzbekistan.
Note No. 42 of the Financial Statement qualified by Auditors
As regards an amount of Rs. 12,830,469 (Rs. 12,830,469) dues from Government Authorities, company filed an application for release with concerned authorities. The Company is making effort to recover the same and expects to reduce the outstanding dues significantly. The management is of the opinion that ultimately there would be no losses against these old balances and hence no provision is considered necessary at this stage.
Note No. 43 of the Financial Statement qualified by Auditors
Advance balances aggregating to Rs. 55,982,580 are due from certain parties where payments are not forthcoming. The company is making appropriate concerted efforts including negotiations with these parties to recover the same and expect to reduce the outstanding dues significantly. The management is of the view that ultimately there would be no losses against these outstanding balances and hence no provision is considered necessary at this stage.
Note No. 49 of the Financial Statement qualified by Auditors
The company''s accounts have become Nonperforming assets (NPA) with majority of the dealing banks. The company has submitted restructuring proposal proposing various alternatives to the banks which is under discussions. None of the banks has initiated action in any legal forum. The company has provided interest on such loans, however penal interest, if any, has not been provided.
Note No. 4 of the Financial Statement without qualifying by Auditors
The Company has not allotted shares against the share application amount of Rs. 1,109.50 Lakh which was brought in by the promoters in more than one installment under restructuring scheme approved by the Bankers. Due to pending necessary approvals and directions for allotment of shares, the Company has not complied with the provisions of Section 42 of the Companies Act, 2013. The Company is looking for alternative options for issuance of said shares to promoters/promoter group.
Note No. 41 of the Financial Statement without qualifying Auditors
The accumulated losses of the Company had exceeded its net worth during the year 2011-12. Accordingly company in compliance with the provisions of section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 filed a reference with Board for Industrial and Financial Restructuring (BIFR). The company''s operations were adversely affected in earlier financial years due to sluggish market demand, greater decline in cotton prices globally as compared to India, and higher power cost in Maharashtra, certain policies of the Government and shortage of working capital. In spite of the unfavorable market scenario and financial constraints, the units of the company continue to operate at satisfactory capacity utilization levels and are generating positive Earnings before Interest Depreciation Tax and Amortization (EBIDTA). The company''s accounts have become Nonperforming assets (NPA) with majority of the dealing banks and the company is also in receipt of NPA cum recall notice. The company has submitted/in process of submitting restructuring proposal proposing various alternatives to the banks which is currently under discussion. With strong management focus on strategic initiatives for cost rationalization, optimum product mix and efficient plant operations, the management believes that accumulated losses would reasonably be paired, in due course. The financial statements, as such have been prepared on a going concern basis.
Note No. 42 of the Financial Statement without qualifying by Auditors
Advance balances aggregating to Rs. 18,410,722 from a party where payments are not forthcoming. Against the above, the Company has filed a suit for recovery. Based on outcome of the legal suit coupled with further negotiations with the party, the management is of the opinion that ultimately there would be no losses against these old balances and hence no provision is considered necessary at this stage.
Note No. 44 of the Financial Statement without qualifying by Auditors
The company has applied to Securities & Exchange Board of India (SEBI) seeking exemption for maintaining at least 15% of the amount of its debenture maturing during the financial year 2016-17 vide circular no 04/2013 dated 11-Feb-2013 issued by Ministry of Corporate Affair, which is still awaited.
Note No. 45 of the Financial Statement without qualifying by Auditors
The outstanding balance as on 31st March, 2016 in respect of certain trade receivables, trade payables and loans & advances are subject to confirmation/reconciliation and consequential adjustment if any, from the respective parties. The management, however, does not expect any material variations.
Cost Auditors
Mr. Rajesh Goyal, Cost Accountant of M/s. K G Goyal & Associates, Cost Accountants (Firm Registration No.000024) has been appointed as Cost Auditors to carry out audit of the Cost Accounts maintained by the Company for the financial year 2016-17.
Secretarial Auditor & Audit Report:
The Board has appointed M/s. Loveneet Handa & Associate, Practicing Company Secretary (having CP No. 10753 & Membership No. 25973) as Secretarial Auditor to conduct secretarial audit for the financial year 2015-2016. The Secretarial Audit Report for the financial year ended March 31, 2016 in Form MR-3 is annexed herewith as Annexure I to this Report in compliance with the provisions of Section 204 of the Companies Act, 2013.
The Secretarial Auditors'' Report does not contain any qualifications or reservation or adverse remarks except non issue of 1.10 cr. equity shares of Rs. 10/- each to promoters group due to non receipt of in-principle approval from stock exchanges and non payment of EPF dues for the month of March, 2016 in respect of Pithampur Plant and Corporate Office.
Internal Auditors
Pursuant to section 138 of the Companies Act, 2013 read with The Companies (Accounts) Rules, 2014, the Company has appointed Dr. Sunil Kumar Gupta as Internal Auditor of the Company.
Internal Financial Control Systems and Adequacy
The Company has adequate system of internal financial control with regard to various business processes, financial reporting and compliance with applicable laws and regulations, etc. with clearly defined roles and responsibilities for all managerial positions. All operating parameters are continuously monitored and controlled.
The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the internal audit reports, process owners undertake corrective actions in their respective areas and thereby further strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.
Extract of the Annual Return
As provided under section 92(3) of the Act, the extract of annual return in the prescribed Form MGT-9 is annexed as Annexure-2 to this Report. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
Company has implemented energy conservation initiatives and such action has resulted into major savings in energy consumption as well as in cost control. The information as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014 is set out in the Annexure - 3 to this Report.
Particulars of Employees
The statement containing particulars of employees as required under section 197(12) of the Act read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended, shall be made available to any shareholder on a specific request made by him in writing on or before 27th September, 2016.
Deposits
The Company has not accepted or renewed any deposit during the year and there are no outstanding and/or overdue deposits as at 31st March, 2016.
Particulars of Loans, Guarantees or Investments
Details of loans, Guarantees and Investments covered under the provision of Section 186 of the Companies Act, 2013 have been disclosed in the Financial Statements.
Dividend
During the year under review, the Company has no distributable profits hence your Directors do not recommend payment of any dividend. Transfer of Reserves
During the year, the Company has not transferred any amount to reserves.
Material changes and commitments affecting the financial position of the Company between the date of Board Report and end of Financial Year
There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.
Human Resources/Industrial Relations
The Company and its management value the talent, commitment and dedication of its employees and acknowledge their contribution. All employees in the Company work as a team and integral part of the family, sharing their ideas and concerns through discussions, Town Hall meetings and intranet communication network installed across the units.
Industrial Relations scenario at all units continues to be healthy and enthusiastic.
To foster a positive workplace environment, free from harassment of any nature, the Company has framed a policy on Prevention of Sexual Harassment of Employees and constituted an internal committee to address and redress complaints of sexual harassment at the workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, no case has been filed in this regard.
Information Technology
Information Technology continues to be an integral part of your company''s business strategy. The Company is working on SAP platform integrating all its units located at different places/locations, its business processes, financial parameters, customer transactions and people, effectively on real time basis.
Change in the nature of Business
There is no change in the nature of the business of the company.
Corporate Governance and Management Discussion and Analysis
As stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a report on Corporate Governance is attached separately as a part of the Annual Report and the Management Discussion and Analysis (MD & A) is also included in this report so that duplication and overlapping between Directors'' Report and a separate MD & A is avoided and the entire information is provided in a composite and comprehensive manner.
Listing of Shares
Presently Company''s shares are listed and traded at the BSE Ltd., Mumbai (BSE) and National Stock Exchange of India Ltd, Mumbai (NSE), for which annual Listing Fee has been paid by the Company, till 31st March, 2017.
Conclusion
Your Company enjoys leadership position in domestic market with strong competitive advantage in the export segment. However due to sluggish market and consequent losses in the recent past, the Company is currently in consolidation mode. We shall, continue to explore the opportunities to further strengthen our leadership position.
Acknowledgements
Your Directors take this opportunity to thank the Financial Institutions, Banks, Central and State Governments authorities, Regulatory authorities, Stock Exchanges, stakeholders, customers and vendors for their continuous support and co-operation, and for the trust reposed by them in the Management. Your Directors also wish to thank all the employees of the Company for their unstinted commitment and valuable contributions.
For and on behalf of Board of Directors
Sd/-
Place: New Delhi Ajay Kumar Choudhary
Dated: August 11, 2016 Chairman
Mar 31, 2015
Dear Members,
The Directors are pleased to present the 23rd Annual Report together
with the Audited Financial Statements for the year ended March 31,2015.
Financial Results
The highlights of the financial results for the year ended 31st March,
2015 are as under: ( Rs. in Crores)
Particulars 2014-2015
Consolidated Standalone
Net Sales (Turnover) 911.07 891.14
Other Income 17.94 16.66
EBIDTA 18.89 27.49
Financial charges 90.35 79.37
Depreciation 15.12 11.68
Profit/(Loss) before tax (PBT) (86.58) (63.56)
Extra ordinary items (income)/ 1.37 1.37
Impairment loss @ Fixed Assets
Exceptional Items - -
Net Profit from Operations (85.21) (62.19)
Prior Period Items - -
Tax expenses 0.60 0.60
Net Profit/(Loss) (85.81) (62.79)
EPS (9.56) (6.99)
Particulars 2013-2014
Consolidated Standalone
Net Sales (Turnover) 1142.94 1142.90
Other Income 16.49 13.87
EBIDTA 87.06 87.96
Financial charges 92.48 81.04
Depreciation 22.31 18.21
Profit/(Loss) before tax (PBT) (27.72) (11.29)
Extra ordinary items (income)/ - -
Impairment loss @ Fixed Assets
Exceptional Items - -
Net Profit from Operations (27.72) (11.29)
Prior Period Items 0.57 0.57
Tax expenses - -
Net Profit/(Loss) (28.29) (11.86)
EPS (3.16) (1.32)
Financial Analysis and Performance Review
During the financial year 2014-15 the Company's operations were
adversely impacted due to sluggish demand, progressive decrease in yarn
prices, high power cost in Maharashtra where the company's plants are
located ,and adverse cash outflow due to the liability of servicing
term & working capital loans availed by the company led to non optimal
utilization of plant capacities and consequent decrease in EBIDTA.
The financial performance of the Company has been presented in two
parts, as under:
(i) Spentex Industries Limited (Standalone) excluding the performance
of its subsidiaries and step-down subsidiaries.
(ii) Spentex Industries Limited (Consolidated) including the
performance of its subsidiaries and step-down subsidiaries. The
Consolidated Financial Statements reflect the performance of Spentex
Group of companies and are more relevant for understanding the overall
performance of the Group.
Segment-wise Performance Yarn Manufacturing
During the year under review, your Company on standalone basis has
manufactured 44930.63 MT of yarn as compared to 68941.08 MT of yarn
produced during the previous year.
Subsidiary Companies
At the end of the accounting period under review, the Company has the
following subsidiaries and step down subsidiaries :
Subsidiaries Companies
(a) M/s Amit Spinning Industries Limited
(b) M/s Spentex Netherlands B.V (SNBV)
(c) M/s. Spentex (Mauritius) Private Limited (The Company ceased to
exist on 25th March 2015)
Step down subsidiary Companies
(a) M/s. Schoeller Textile Netherlands B.V. (STNBV)
(b) M/s Spentex Tashkent Toytepa LLC. (due to breach of Investment
Agreement by Republic of Uzbekistan with its Investors, its holding
Company SNBV, has filed case in ICSID)
(c) M/s. Schoeller Litvinov k.s. (Creditors taken over the subsidiary
against their dues)
(d) M/s. Botekos Plus s.r.o. (Creditors taken over the subsidiary
against their dues)
Pursuant to the provisions of Section 129(3) of the Companies Act,
2013, a statement containing salient features of financial statements
of subsidiaries, associates and joint venture companies in Form AOC-1
is attached to the Accounts. The separate audited financial statements
in respect of each of the subsidiary companies shall be kept open for
inspection at the Registered Office of the Company. The Company will
also make available these documents upon request by any Member of the
Company interested in obtaining the same.
Performance of Subsidiaries
The details of turnover and overall performance of material subsidiary
companies is as under:
Amit Spinning Industries Ltd., India: During the year under review, due
to market and financial constraints, the subsidiary could although
manufactured 1,281.64 MT of yarn under own production and 1,112.65 MT
of yarn on job work basis as compared to 5,123.08 MT of yarn produced
under job work basis in the previous year, yet it could not fully
utilize and leverage its capacity. It has been declared as a sick
company by Board For Industrial and Financial Reconstruction (BIFR)
under section 3 (1) (o) of Sick Industries (Companies) Act, since 2012
and has been awaiting approval of Debt Rehabilitation Scheme (DRS).
The Company has its manufacturing facilities at Kolhapur, Maharashtra
with capacity of 30,672 spindles.
Spentex Tashkent Toytepa LLC, Uzbekistan (STTL) & Spentex Netherlands
B.V, Netherlands (SNBV): During the period of investment, Government of
Uzbekistan (GOU) changed certain laws and policies breaching the
investment agreement and rendered operation of STTL not only unviable,
but also expropriated its investment. SNBV (a subsidiary company),
which had made around 99% investment in the equity of STTL, has
initiated Arbitration Proceedings against GOU for its Investment
Dispute Claim through its lawyers before International Center for
Settlement of Investment Dispute (ICSID).
Schoeller Litvinov k.s., Czech Republic: During the year under review,
the step down subsidiary could not manufacture yarn due to adverse
market conditions, crises in the European Union and financial
constraints, the Company had filed application for liquidation at Czech
Republic. The Company has manufacturing unit situated at Czech
Republic with capacity of 59,000 spindles. (Creditors taken over the
subsidiary against their dues)
Management Perception on Opportunities, Risks, Concern & Outlook
The persistent weakness of Indian Rupee, as compared to U.S Dollar and
other European currencies provides an opportunity on short term basis
to the textile industry to optimize its sales values and margins
respectively on its exports. Spentex will continue to offer market
driven quality product mix for progressively improving its operational
profile. The Indian textile sector is also facing the challenges of
technology backwardness especially in weaving and processing segments,
lower productivity and high power cost which has an adverse cascading
effect on the industry as a whole.
With focus on Make in India, the Indian Textile industry is expected to
become resilient and robust through various support measures likely to
be announced by the government. The future outlook for the Indian
textile industry looks promising, buoyed by both strong domestic
consumption and increase in export turnover.
Slow but potentially promising increase in demand of cotton yarn in
domestic market and talk of economic reforms by the new Government as
well as encouraging export promotion policy for textile sector have
already improved market sentiments to some extent, with the strategic
efficiency improvement and cost containment measures being adopted by
the company, and with the continued support and co operation of the
company's bankers, your directors have confidence that sales volumes
are reasonably expected to shore up with consequent strengthening of
the margins in due course.
Consolidated Financial Statements
The Company is having six subsidiaries/step down subsidiaries . As per
the Companies Act, 2013, the Company is not required to furnish the
Balance Sheet and Statement of Profit & Loss and other documents of
foreign subsidiary companies. These documents will however be available
for inspection at the registered office of the Company during business
hours. The Consolidated Financial Statements presented by the Company
includes financial results of its subsidiary companies.
The Consolidated Financial Statements of the Company prepared in
accordance with the applicable Accounting Standards issued by the
Institute of Chartered Accountants of India form part of this Annual
Report.
Share Capital
The Company's issued and paid up capital as on 31st March, 2015 stands
Rs. 89,77,20,350/- divided into 8,97,72,035 fully paid up equity shares
of Rs. 10/- each. During the year, under review, the Company has not
issued any share(s). Further the Company has not issued any share with
differential Voting Rights/Sweat Equity shares/under Stock Option
Scheme (ESOS) earlier and during the year.
The Company has issued 500 non-convertible debentures of Rs. 10.00 lacs
each, however during the year under review, no debenture has been
issued.
The Company has no scheme or provision of money for purchase of its own
shares by employees or by trustees for the benefit of employees. Hence
the details under rule 16 (4) of Companies (Share Capital and
Debentures) Rules, 2014 are not required to be disclosed.
Directors
Change in Directors or Key Managerial Personnel
In terms of provisions of the Companies Act, 2013 read with Clause 49
of Listing Agreement, during the year, Ms. Kamal Kapur has been
appointed as an Additional Director as a Women Non Executive
Independent Director on the Board of the Company w.e.f 14th November,
2014 and holds office upto ensuing Annual General Meeting. She however
being eligible for reappointment, Company has received an application
from the Member for consideration of her appointment as Women Non
Executive Independent Director on the Board in the ensuing AGM itself.
During the year, under review, the Board of Directors have appointed
Sh. Sharat Kumar Gupta as the Chief Finance Officer (CFO) of the
Company in place of existing CFO w.e.f. 1st April, 2015.
Sh. Ajay Kumar Choudhary and Sh. Kapil Choudhary are retiring by
rotation in the forthcoming Annual General Meeting and being eligible,
offer themselves for re-appointment.
The Company is required to seek Central Government approval for payment
of existing remuneration to Shri Ajay Kumar Choudhary, Shri Kapil
Choudhary and Shri Sitaram Parthasarathy for a period of 3 years. In
case of Shri Ajay Kumar Choudhary, approval is required to be taken
w.e.f. 1st April, 2015 to 1st December, 2017 (till the date of his
existing tenure of appointment), and in the case of Shri Kapil
Choudhary and Shri Sitaram Parthasarathy approval has to be taken for
the period from 1st April, 2015 to 31st March, 2018
Brief resume of the Directors proposed to be appointed/re-appointed,
nature of their expertise in specific functional areas and names of the
companies in which they hold directorship and membership/chairmanships
of the Board or its Committees, as stipulated under Clause 49 of the
listing agreement entered by the Company with stock exchanges in India,
is provided in the Report of Corporate Governance forming part of the
Annual Report.
Number of Meetings of the Board
Four meetings of the Board were held during the year. The detailed
information of the meetings of the Board held during the year is
mentioned in the Corporate Governance Report which forms part to this
report.
Declaration by independent directors
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
Annual Evaluation by the Board
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out an annual performance
evaluation of its own performance, the directors individually as well
as its Committees. The manner in which the evaluation has been carried
out has been explained in the Corporate Governance Report.
Remuneration Policy
The Board has, on the recommendation of the Nomination & Remuneration
Committee, framed a policy for selection and appointment of Directors,
Senior Management and their remuneration. The Remuneration Policy is
stated in the Corporate Governance Report. During the year, neither the
Managing Director nor the Whole-time Directors of the Company received
any remuneration or commission from any of its subsidiaries. The said
policy has also been hosted on the website of the company.
Directors' Responsibility Statement
Pursuant to the requirement of Section 134(3)(c) of the Companies Act,
2013, with respect to Directors' Responsibility Statement, it is hereby
confirmed that:
(a) in the preparation of the annual accounts for the financial year
ended 31st March, 2015, the applicable accounting standards had been
followed along with proper explanation relating to material departures;
(b) 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 as at March 31,2015 and of the profit and loss of the
company for that period;
(c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets 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; and
(e) the directors had laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively.
(f) 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.
Related Party Transactions
All related party transactions that were entered into during the
financial year were on an arm's length basis and were in the ordinary
course of business. There were no materially significant related party
transactions entered into by the Company with Promoters, Directors, Key
Managerial Personnel or other designated persons which may have a
potential conflict with the interest of the Company at large.
Prior omnibus approval of the Audit Committee was obtained for Related
Party Transactions for a period upto 31st March, 2015 and for the
financial year 2015-16. The transactions entered into pursuant to the
omnibus approval so granted were audited and a statement giving details
of all related party transactions were placed before the Audit
Committee for its review on a quarterly basis.
The Company has framed a Related Party Transactions Policy for purpose
of identification and monitoring of such transactions. The policy on
Related Party Transactions as approved by the Board has been uploaded
on the Company's website. None of the Directors has any pecuniary
relationships or transactions vis-a-vis the Company. Since all related
party transactions entered into by the Company were in ordinary course
of business and were on an arm's length basis, form AOC - 2 is not
applicable to the Company.
Significant and Material Orders passed by the Regulators or Courts
There are no significant or material orders passed by the Regulators /
Courts which would impact the going concern status of the Company and
its future operations.
Auditors
M/s. J C Bhalla & Co., Chartered Accountants, (Registration No.
001111N) have been appointed as Statutory Auditors of the Company at
22nd Annual General Meeting held on 11th September, 2014 to hold office
until conclusion of 25th Annual General Meeting for a period of three
years, as provided in Section 139 of the Companies Act, 2013, the said
appointment is being placed for ratification at the forthcoming Annual
General Meeting.
The Company has received a confirmation from M/s. J C Bhalla & Co.,
Chartered Accountants to the effect that their appointment, if made, at
the ensuing AGM would be in terms of Sections 139 and 141 of the
Companies Act, 2013 and rules made there under and that they are not
disqualified for re-appointment.
Auditors Report
The Auditors' Report read with the Notes to Accounts is
self-explanatory and does not call for any further explanation under
Section 134 of the Companies Act, 2013, except for the responses in
respect of some observations as mentioned here in below.
Directors' view on Auditor's Observations
Directors' response to the various observations of the auditors made in
their report, even though explained wherever necessary through
appropriate notes to accounts, is reproduced hereunder in compliance
with the relevant legal requirements:
Note No. 14 of the Financial Statement qualified by Auditors
Auditors stated that they are unable to comment on the recoverability
of advance balance of Rs.19,040,000/-, included under the head "Advance
against expenses" in Note No. 14 of the standalone financial
statements, for which no provision has been made in the books of
account.
Note No. 41 of the Financial Statement qualified by Auditors
The company has an investment of Rs. 204,469,921/- in and has amount
recoverable amounting to Rs. 642,244,069/- to Amit Spinning Industries
Limited (ASIL), a subsidiary, as on March 31,2015. The accumulated
losses of ASIL, at the year end exceeded its net worth. There is also
reduction in market value of the investment at the year end by
Rs.184,537,898. In the opinion of the management, diminution in this
long term investment is due to adverse business conditions in the past.
ASIL has started generating EBIDTA and cash profits. In view of these
developments, management believes that diminution in the value of
investment is of temporary nature and that outstanding would be
realised within a reasonable period of time. Accordingly no provision
considered necessary in the value of investment held and amount due
from ASIL. Note No. 42 of the Financial Statement qualified by
Auditors
The Company has an investment of Rs. 561,011,339 and Rs.9,323,779' in
its subsidiary Spentex Netherlands B. V. (SNBV) and its step down
subsidiary Spentex Tashkent Toytepa LLC (STTL) respectively. Further it
has Rs.'70,012,404 as export receivable from STTL and advances
recoverable of Rs.95,070,902 in SNBV as on March 31st, 2015. During the
period of investment, Government of Uzbekistan (GOU) changed certain
laws and policies breaching the investment agreement and rendered
operation of STTL not only unviable, but also expropriated its
investment. All the assets and liabilities of STTL have been taken over
by National Bank of Uzbekistan (NBU- Government of Uzbekistan) and
existence of STTL has been liquidated as per bankruptcy laws. In view
of this corporate guarantee given by company in respect of STTL
liability for deferred payment to Tashkent Toytepa Textile (TTL) stand
extinguished. SNBV, which had made around 99% investment in the equity
of STTL, had filed request for Arbitration against GOU for Claim
through its lawyer before International Center for Settlement
Investment Dispute (ICSID). As per the schedule prescribed in the
procedural order issued by ICSID, SNBV has filed the memorial on
Jurisdictions and Merits on 30th June, 2014. Based on the claim lodged
with ICSID, Board of Directors has decided not to make any provision
for the aforesaid amounts. In addition to above claim, the company has
sent notice to the GOU for indemnifying the further losses caused to
company directly or indirectly on account of investment made in
Uzbekistan.
Note No. 44 of the Financial Statement qualified by Auditors
Rs. 1,28,30,469 dues from Government Authorities against which company
has filed an application for release with concerned authorities. The
Company is making effort to recover the same and expects to reduce the
outstanding dues significantly. The management is of the opinion that
ultimately there would be no losses against these old balances and
hence no provision is considered necessary at the stage.
Note No. 4 of the Financial Statement without qualifying by Auditors,
have drawn attention:
The Company has not allotted shares against the share application
amount of Rs.110,950,000/- which was brought in by the promoters in
more than one installments under restructuring scheme approved by the
Bankers. However, the company has not complied with the provisions of
Section 42 of the Companies Act, 2013.
Note No. 43 of the Financial Statement without qualifying by Auditors,
have drawn attention:
As on March 31,2012, the accumulated losses of the Company had exceeded
its net worth. Accordingly company in compliance with the provisions of
section 15(1) of Sick Industrial Companies (Special Provisions) Act,
1985 filed a reference with Board for Industrial and Financial
Restructuring (BIFR). The Company's operations were adversely affected
in 2011-12 due to adverse Govt. policies and high volatility of Raw
Material prices. Further, considering the change in scenario, recent
performance and trends of the company as well as overall industry
outlook, the management believes that losses incurred in the past would
reasonably be made good, in due course. The financial statements, as
such have been prepared on a going concern basis on the strength of
management's plan of revival including reorganization of business.
Note No. 44 of the Financial Statement without qualifying by Auditors,
have drawn attention:
Trade receivables, advance balances and receivables amount aggregating
to Rs. 6,371,477, Rs. 27,314,712, Rs. 17,869,256 respectively due from
certain parties where payments are not forthcoming. Against the above,
the Company has filed a suit for recovery. The Company is making effort
to recover the same and expects to reduce the outstanding dues
significantly. Based on outcome of the legal suit coupled with further
negotiations with these parties, the management is of the opinion that
ultimately there would be no losses against these old balances and hence
no provision is considered necessary at the stage.
Note No. 45of the Financial Statement without qualifying by Auditors,
have drawn attention:
The company has applied to Securities & Exchange Board of India (SEBI)
seeking exemption for maintaining at least 15% of the amount of its
debenture maturing during the financial year 2013-14 vide circular no
04/2013 dated 11-Feb-2013 issued by Ministry of Corporate Affair, which
is still awaited.
Note No. 46 of the Financial Statement without qualifying by the
Auditors, have drawn attention:
The outstanding balance as on 31st March, 2014 in respect of certain
trade receivables, trade payables and loans & advances are subject to
confirmation/reconciliation and consequential adjustment if any, from
the respective parties. The management, however, does not expect any
material variations.
Cost Auditors
Sh. Rajesh Goyal, Cost Accountant of M/s. K G Goyal & Associates, Cost
Accountants (Firm Registration No.000024) has been appointed as Cost
Auditors to carry out audit of the Cost Accounts maintained by the
Company for the financial year 2015-16.
Secretarial Auditor & Audit Report:
Pursuant to provisions of Section 204 of the Companies Act, 2013, the
Company has appointed M/s. Loveneet Handa & Associate, Practicing
Company Secretary (having CP No. 10753 & Membership No. 25973) as
Secretarial Auditor to carry out the secretarial audit for the
financial year 2014-2015.
The Secretarial Audit Report for the financial year ended March 31,2015
is annexed herewith as Annexure I to this Report.
There are no qualifications or observations or remarks made by the
Secretarial Auditors in their Report.
Internal Auditors
Pursuant to section 138 of the Companies Act, 2013 read with The
Companies (Accounts) Rules, 2014, the Company has appointed Dr. Sunil
Kumar Gupta as Internal Auditor of the Company.
Internal Control Systems and Adequacy
The Company has adequate system of internal control with regard to
various business processes, financial reporting and compliance with
applicable laws and regulations, etc. with clearly defined roles and
responsibilities for all managerial positions. All operating parameters
are continuously monitored and controlled.
The Internal Audit Department monitors and evaluates the efficacy and
adequacy of internal control systems, accounting procedures and
policies at all locations of the Company and its subsidiaries. Based on
the report of internal audit function, process owners undertake
corrective actions in their respective areas and thereby further
strengthen the controls. Significant audit observations and corrective
actions thereon are presented to the Audit Committee of the Board.
Extract of the Annual Return
The details forming part of the extract of the Annual Return in form
MGT 9 is annexed herewith as Annexure-2 to this Report.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
Company has implemented energy conservation methods and such action has
resulted into major savings in energy consumption as well as in cost
control. The information as required to be disclosed under Section
134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies
(Accounts) Rules, 2014 is set out in the Annexure - 3 to this Report.
Particulars of Employees
List of the employees who have received remuneration exceeding the
limit as stated in rule 5(2) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 read with the
Companies(Particulars of Employees) Rules, 1975, as amended, shall be
made available to any shareholder on a specific request made by him in
writing on or before 30th September, 2015.
Deposits
The Company has not accepted or renewed any deposit during the year and
there are no outstanding and/or overdue deposits as at 31st March,
2015.
Particulars of Loans, Guarantees or Investments
Details of loans, Guarantees and Investments covered under the
provision of Section 186 of the Companies Act, 2013 are given in the
notes to the Financial Statements.
Corporate Social Responsibility
In accordance with the provisions of Section 135 of the Companies Act,
2013, the Corporate Social Responsibility (CSR) Committee of the Board
has been constituted on 28th May, 2014, inter alia, to formulate and
recommend to the Board, a CSR Policy which shall indicate the
activities to be undertaken by the Company and monitor the same from
time to time. The composition of committee is disclosed in Corporate
Governance Report forming part to this report. The CSR policy has also
been hosted on the website of the company Risk Management
A Risk Management Committee has been constituted to oversee the risk
management process in the Company as required under the Companies Act,
2013 and Clause 49 of the Listing Agreement. The details of Committee
and its terms of reference are set out in the Corporate Governance
Report forming part of the Board's Report. The Risk Management Policy
has also been hosted on the website of the Company Vigil Mechanism
The Company has framed and implemented a vigil mechanism named as
Whistle Blower Policy to deal with instances of fraud and
mismanagement, if any. The details of the Whistle Blower Policy are
provided in the Corporate Governance Report and also posted on the
website of the Company.
During the year under review, there were no cases filed pursuant to the
Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013.
Dividend
During the year under review, the Company has no distributable profits
hence your Directors do not recommend payment of any dividend.
Transfer of Reserves
During the year, the Company has not transferred any amount to
reserves.
Material changes between the date of Board Report and end of Financial
Year
There have been no material changes and commitments, if any, affecting
the financial position of the Company which have occurred between the
end of the financial year of the Company to which the financial
statements relate and the date of the report.
Human Resources/Industrial Relations
The Company and its management value the talent, commitment and
dedication of its employees and acknowledge their contribution. All
employees in the Company work as a team and integral part of the
family, sharing their ideas and concerns through discussions, Town Hall
meetings and intranet network installed across the units.
Industrial Relations scenario at all units continues to be healthy and
enthusiastic.
Information Technology
Information Technology continues to be an integral part of your
company's business strategy. The Company is working on SAP platform
integrating all its units located at different places/locations, its
business processes, financial parameters, customer transactions and
people, effectively on real time basis.
Change in the nature of Business
There is no change in the nature of the business of the company.
Corporate Governance and Management Discussion and Analysis
As stipulated under Clause 49 of the Listing Agreement entered with the
Stock Exchanges, a report on Corporate Governance is attached
separately as a part of the Annual Report and the Management Discussion
and Analysis (MD & A) is also included in this report so that
duplication and overlapping between Directors' Report and a separate MD
& A is avoided and the entire information is provided in a composite
and comprehensive manner.
Listing of Shares
Presently Company's shares are listed and traded at the BSE Ltd.,
Mumbai (BSE) and National Stock Exchange of India, Mumbai (NSE), for
which annual Listing Fee has been paid by the Company, till 31st March,
2016.
Conclusion
Your Company enjoys leadership position in domestic market with strong
competitive advantage in the export segment. However due to sluggish
market and consequent losses in the recent past, the Company is
currently in consolidation mode. We shall, however continue to explore
the opportunities to make investments and progress to further
strengthen our leadership position.
Acknowledgments
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Central and State Governments authorities,
Regulatory authorities, Stock Exchanges, stakeholders, customers and
vendors for their continued support and co-operation, and for the trust
reposed by them in the Management. Your Directors also wish to thank
all the employees of the Company for their commitment and
contributions.
For and on behalf of Board of Directors
Sd/-
Place: New Delhi Ajay Kumar Choudhary
Dated: August 13, 2015 Chairman
Mar 31, 2014
Dear Members,
The Directors are pleased to present the 22nd Annual Report together
with the Audited Accounts for the year ended March 31,2014.
FINANCIAL RESULTS
The highlights of the financial results for the year ended 31st March,
2014 are as under: (Rs in Crores)
Particulars 2013-2014
Consolidated Standalone
Net Sales (Turnover) 1142.94 1142.90
Other Income 16.49 13.87
EBIDTA 87.07 87.96
Financial charges 92.48 81.04
Depreciation 22.31 18.21
Profit/(Loss) before tax (PBT) (27.72) (11.29)
Extra ordinary items (income)/ - -
Impairment loss @ Fixed Assets
Exceptional Items - -
Net Profit from Operations (27.77) (11.29)
Prior Period Items 0.57 0.57
Tax expenses - -
Net Profit/(Loss) (28.29) (11.86)
EPS (0.49) (1.32)
Particulars 2012-2013
Consolidated Standalone
Net Sales (Turnover) 1190.72 1129.66
Other Income 27.66 20.75
EBIDTA 119.33 126.24
Financial charges 88.57 76.81
Depreciation 75.43 26.20
Profit/(Loss) before tax (PBT) (44.67) 23.23
Extra ordinary items (income)/ (402) _
Impairment loss @ Fixed Assets
Exceptional Items - -
Net Profit from Operations (40.65) 23.23
Prior Period Items 2.65 2.65
Tax expenses - -
Net Profit/(Loss) (43.30) 20.58
EPS (0.49) 234
MANAGEMENT DISCUSSION AND ANALYSIS REPORT :
The Indian Textile Industry is the one of leading Industry in the World
and is one of the oldest, largest and significant industrial sectors in
India. The Textile Industry is providing basic necessity and an
important contributor to the GDP, employment, Industrial output and
exports of India. Considering the demand in Asian Markets, the Indian
textile producers are taking advantage of the current situation and
have increased their exposure in these emerging markets. During the
year 2013-14 the exports of textile industry has increased by 15-20%
and is expected to touch around US$ 220 billion by 2020. The export
opportunities are opening up for Indian Cotton/Synthetic Yarn in
overseas markets and the same is bound to increase exports volume.
During the Fiscal 2013-14 under review, the cost of production has
considerably increased owing to the increase in power tariff,
production loss, fortnight increase of fuel prices, procurement of raw
material at higher price and due to shortage of working capital funds
etc, leading to decrease in EBITA levels. While the management has
increased its sales volume as compared to last year but the factors
like, the inadequate working capital limits and adverse external
environment has impacted the margins negatively.
Further the Government''s sudden decision for removal of the exports
benefits under focus market scheme (FMS) on cotton yarn, has decreased,
the yarn exports by 20%, coupled with lower demand from key markets of
the US & EU has adversely affected the operations of your Company and
it could not achieve expected margins. However, with the gradual
improvement in business dynamics viz. restoration of TUF subsidy,
removal of ban on export of cotton yarn, upward revision of duty
drawback rates on some of the textile products and revival of demand
from the US market alongwith continued weakness of rupee against US
dollar, Spentex is quite confident for improvement in its operational
performance in near future.
FINANCIAL ANALYSIS AND PERFORMANCE REVIEW
During the Fiscal 2013-14 under review, your company has suffered
production losses due to increase in Production cost and inadequate
margins. Frequent increases in power tariff and fuel prices, higher
payment for procurement of raw material and sudden glut in the domestic
& international market has lead to decrease in EBITA levels. Inadequate
working capital limits and adverse external environment also impacted
the margins negatively.
The financial performance of the Company has been presented in two
parts, as under:
(i) Spentex Industries Limited (Standalone) which excluded the
performance of its subsidiaries and step-down subsidiaries.
(ii) Spentex Industries Limited (Consolidated) which included the
performance of its subsidiaries and step-down subsidiaries. The
Consolidated Financial Statements have brought out comprehensively the
performance of Spentex Group of companies and are more relevant for
understanding the overall performance of Spentex Group.
SEGMENT-WISE PERFORMANCE Yarn Manufacturing
During the year under review, your Company on standalone basis has
manufactured 68941.08 MT of yarn as compared to 55100.47 MT of yarn
produced during the previous year.
PERFORMANCE OF SUBSIDIARIES
The details of turnover and overall performance of material subsidiary
companies is as under:
Amit Spinning Industries Ltd., India: During the year under review, due
to financial constraints, the subsidiary could although manufacture
5123.08 MT of yarn under job work basis as compared to 4983.01 MT of
yarn produced under job work basis in the previous year, yet it could
not utilize its full capacity. However, during the current year its
operations have improved and it would try utilizing its capacity to
full extent. The Company has its manufacturing facilities at Kolhapur,
Maharashtra with a capacity of 30,672 spindles.
Spentex Tashkent Toytepa LLC, Uzbekistan (STTL) & Spentex Netherlands
B.V, Netherlands (SNBV): During the period of investment, Government of
Uzbekistan (GOU) changed certain laws and policies breaching the
investment agreement and rendered operation of STTL not only unviable,
but also expropriated its investment. SNBV (a subsidiary company),
which had made around 99% investment in the equity of STTL, has filed
request for Arbitration against GOU for its Investment Dispute Claim
through its lawyer before International Center for Settlement of
Investment Dispute (ICSID). As per the schedule prescribed in the
Procedural Order issued by ICSID, SNBV has filed the memorial on
Jurisdictions and Merits on 30th June, 2014.
Schoeller Litvinov k.s., Czech Republic: During the year under review,
the step down subsidiary could only manufacture 1525.31 MT of yarn as
compared to 2530.40 MT of yarn produced during the previous year, due
to adverse market conditions and financial constraints. The Company has
manufacturing unit situated at Czech Republic with a capacity of 59,000
spindles.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Company has adequate internal control systems for business
processes, with regards to efficiency of operations, financial
reporting and controls, compliance with applicable laws and
regulations, etc. Clearly defined roles and responsibilities down the
line for all managerial positions have also been institutionalized. All
operating parameters are monitored and controlled. Regular internal
audits and checks to ensure that responsibilities are being executed
effectively are carried out. The Audit Committee of the Board of
Directors also reviews the adequacy and effectiveness of internal
control systems and suggests improvement for strengthening them, from
time to time.
MANAGEMENT PERCEPTION ON OPPORTUNITIES, RISKS, CONCERN & OUTLOOK
Rebounding of economic growth in key export destinations, the Indian
Textile Industry is reasonably expected to bounce back its margins from
negative to stable. Indian Yarn manufactures are further likely to be
benefited in the Fiscal 2014-15 due to decreased yarn exports from
China and simultaneous increase in demand for its exports in overseas
market and as well Asian domestic market, which will in turn improve
the fortunes of textile sector. With market oriented product mix, high
value added products developed by the management of Spentex, the
production-Sell of yarn is likely to go up and Company is optimistic to
achieve better margins in near future.
Devaluation of Indian Rupee has continued to offer an opportunity of
short term benefit to Textile Industry to optimize its day to day sales
volumes and margins, by increased exports. Continued subsidy benefits
under the revised TUF scheme, focus market scheme and reinstating of
export incentives, are further likely to help Spentex to improve its
margins.
However, any change in demand pattern from key markets of the US and
EU, which are still reeling under recessionary condition could impact
dip in exports, besides high import duty imposed by China against
textile imports, uncertainty in fuel prices, strengthening of Indian
rupee and inconsistent change in government policies etc are other
factors which may impact margins in coming years.
Whereas, factors like formation of Stable Government, increase in
demand of cotton yarn in domestic market and talk of economic reforms
of new Government, have already improved market sentiments and the same
is resulting in showing some recovery signs in the business environment
prevailing since last year and further with the support of company
bankers, your directors believe that sales volumes are reasonably
expected to increase and consequently margins are also expected to be
strengthened in due course.
HUMAN RESOURCES/INDUSTRIAL RELATIONS
The Company and its management value the talent, commitment and
dedication of its employees and acknowledge their contribution.
Consequently, the employee turnover is negligible. Everybody, in the
Company is working as a team and is an integral part of the family,
sharing their ideas and concerns through conclaves, Town Hall meetings
and intranet network installed across the units and is instrumental in
making your Company, a globally admired company. Management of your
Company believes that it is an integration of human resources and
business strategy that has culminated into its success. High
performance orientation is the pivot of the HR philosophy of the
Company and all the HR policies and strategies are centered on the
same.
Industrial Relations scenario at all units continues to be healthy and
enthusiastic.
CONSOLIDATED FINANCIAL STATEMENTS IN RESPECT TO SUBSIDIARIES
The Company, having five subsidiaries/step down subsidiaries, the Board
of Directors at their meeting held on 14th February, 2014 approved to
disclose the financial information of the subsidiary companies in the
Annual Report as per format approved by the Board. Accordingly, the
Balance Sheet and Profit & Loss Account and other documents of
subsidiary companies are not being attached with the Balance Sheet of
the Company. These documents will however be available for inspection
at the registered office of the Company during business hours. The
Consolidated Financial Statements presented by the Company includes
financial results of its subsidiary companies.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Accounting Standard AS-21 of Institute of
Chartered Accountants of India, (ICAI) an audited Consolidated
Financial Statement read with Accounting Standard AS-23 of ICAI in
respect of Investments in Associates, has been provided in the Annual
Report. INFORMATION TECHNOLOGY
Information Technology continues to be an integral part of your
company''s business strategy. The Company is working on SAP platform
integrating all its units located at different places/locations, its
business processes, financial parameters, customer transactions and
people, effectively on real time basis. Besides, it minimizes the
chances of manipulation of accounts by any individual.
DIVIDEND
During the year under review, the Company has no distributable profits
hence your Directors do not recommend payment of any dividend.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As stipulated under Clause 49 of the Listing Agreement entered with the
Stock Exchanges, a report on Corporate Governance is attached
separately as a part of the Annual Report and the Management Discussion
and Analysis (MD & A) is also included in this report so that
duplication and overlapping between Directors'' Report and a separate MD
& A is avoided and the entire information is provided in a composite
and comprehensive manner.
DIRECTORS
Mr. Amrit Agrawal is retiring by rotation in the forthcoming Annual
General Meeting and being eligible, offer himself for re-appointment.
During the year, subject to approval of shareholders in the ensuing
General Meeting, the members of Remuneration Committee and Board of
Directors at their respective meetings held on 13th November, 2013,
have re-appointed Mr. Ajay Kumar Choudhary as Chairman for another term
of 4 years w.e.f. 02-12-2013, Mr. Kapil Choudhary as Dy. Managing
Director and Mr. Sitaram Parthasarthy as Director Works, both for
another term of 5 years w.e.f. 02-12-2013.
Pursuant to Section 149 and 152 of Companies Act, 2013 and applicable
provisions, Mr. Prem Malik, Mr. R K Thapliyal, Mr. Shyamal Ghosh, Mr.
D.P. Singh, and Mr. Deepak Diwan, being the Independent Directors of
the Company are proposed to be re- appointed as Independent Directors
for a period of five years effecting from the ensuing Annual General
Meeting.
Brief resume of the Directors proposed to be re-appointed, nature of
their expertise in specific functional areas and names of the companies
in which they hold directorship and membership/chairmanships of the
Board or its Committees, as stipulated under Clause 49 of the listing
agreement entered by the Company with stock exchanges in India, is
provided in the Report of Corporate Governance forming part of the
Annual Report.
AUDITORS
The Auditors of the Company M/s. J C Bhalla, Chartered Accountants
retire at the ensuing Annual General Meeting and being eligible offer
themselves for re-appointment for a period of three financial years.
AUDITORS REPORT
The Auditors'' Report read with the Notes to Accounts is
self-explanatory and do not call for any further explanation under
Section 217 (3) of the Companies Act, 1956, except for the responses in
respect of some observations as mentioned here in below.
DIRECTORS'' VIEW OF AUDITOR''S OBSERVATIONS
Directors'' response to the various observations of the auditors made in
their report, even though explained wherever necessary through
appropriate notes to accounts, is reproduced hereunder in compliance
with the relevant legal requirements:
Note No. 41 of the Financial Statement qualified by Auditors
The company has an investment of Rs.20,44,69,921/- in and has amount
recoverable amounting to Rs 54,82,77,206/- to Amit Spinning Industries
Limited (ASIL), a subsidiary, as on March 31,2014. The accumulated
losses of ASIL, at the year end exceeded its net worth. There is also
reduction in market value of the investment at the year end by Rs
19,60,77,490. In the opinion of the management, diminution in this long
term investment is due to adverse business conditions in the past.
Management believes that diminution in the value of investment is of
temporary nature and that outstanding would be realised within a
reasonable period of time. Accordingly no provision considered
necessary in the value of investment held and amount due from ASIL.
Note No. 42 of the Financial Statement qualified by Auditors
The Company has an investment of Rs 56,10,11,339 and Rs 93,23,779 in its
subsidiary Spentex Netherlands B. V. (SNBV) and its step down
subsidiary Spentex Tashkent Toytepa LLC (STTL) respectively. Further it
has Rs 7,00,12,404 as export receivable from STTL and advances of Rs
9,50,70,902 in SNBV as on March 31,2014. During the period of
investment, Government of Uzbekistan (GOU) changed certain laws and
policies by breaching the investment agreement and rendered operation
of STTL unviable and insolvency proceedings have been initiated against
it. Since investment agreement entered between GOU and company,
Treaties entered between countries were breached, Company has initiated
Arbitration proceeding against GOU for protection of investment and
dues & compensation dispute Claim in International Centre for
Settlement of Investment Dispute (ICSID) SNBV appointed various experts
to assess losses suffered by the company. Based on the reports and
claims lodged with ICSID, Board of Director''s have decided not to make
any provision for the aforesaid amounts.
Note No. 43 of the Financial Statement without qualifying Auditors,
have drawn attention:
As on March 31,2012, the accumulated losses of the Company had exceeded
its net worth. Accordingly company in compliance with the provisions of
section 15(1) of Sick Industrial Companies (Special Provisions) Act,
1985 filed a reference with Board for Industrial and Financial
Restructuring (BIFR). The Company''s operations were adversely affected
in 2011-12 due to adverse Govt policies and high volatility of Raw
Material prices. Further, considering the change in scenario, recent
performance and trends of the company as well as overall industry
outlook, the management believes that losses incurred in the past would
reasonably be made good, in due course. The financial statements, as
such have been prepared on a going concern basis on the strength of
management''s plan of revival including reorganization of business.
Note No. 44 of the Financial Statement without qualifying by Auditors,
have drawn attention:
Trade receivables, advance balances and receivables amount aggregating
to Rs 63,71,477, Rs 2,73,14,712, Rs 17,869,256 respectively due from
certain parties where payments are not forthcoming. Against the above,
the Company has filed a suit for recovery. In addition to above for Rs
1,28,30,469 dues from Government Authorities company filed an
application for release with concerned authorities. The Company is
making effort to recover the same and expects to reduce the outstanding
dues significantly. Based on outcome of the legal suit coupled with
further negotiations with these parties, the management is of the
opinion that ultimately there would be no losses against these old
balances and hence no provision is considered necessary at the stage.
Note No. 45 of the Financial Statement without qualifying by Auditors,
have drawn attention:
The company has applied to Securities & Exchange Board of India (SEBI)
seeking exemption for maintaining at least 15% of the amount of its
debenture maturing during the financial year 2013-14 vide circular no
04/2013 dated 11-Feb-2013 issued by Ministry of Corporate Affair, which
is still awaited
Note No. 46 of the Financial Statement without qualifying by Auditors,
have drawn attention:
The outstanding balance as on 31st March, 2014 in respect of certain
trade receivables, trade payables and loans & advances are subject to
confirmation/reconciliation and consequential adjustment if any, from
the respective parties. The management, however, does not expect any
material variations COST AUDITORS
Mr. Rajesh Goyal, a Cost Accountant of M/s. K G Goyal & Associates,
Cost Accountants has been appointed to carry out audit of the Cost
Accounts maintained by the Company for the financial year ending 31st
March, 2014. The Central Government has approved the appointment of Mr.
Rajesh Goyal, Cost Accountant to conduct the audit of the Cost Accounts
of the Company for the financial year ending 31st March, 2014 for the
product "Textile". Cost Auditor would submit its report to
concerned authorities in due course, in terms of applicable rules,
guidelines and statutory provisions.
FIXED DEPOSITS
The Company has not accepted any deposit during the year and there are
no outstanding and/or overdue deposits as at 31st March, 2014. LISTING
OF SHARES
Presently Company''s shares are listed and traded at the Bombay Stock
Exchange Ltd., Mumbai (BSE) and National Stock Exchange of India,
Mumbai (NSE), for which annual Listing Fee has been paid by the
Company, till 31st March, 2015.
DIRECTORS'' RESPONSIBILITY STATEMENT Your Directors hereby state and
confirm that:
i) in preparing the Annual Accounts for the year ended 31st March 2014
all the applicable Accounting Standards have been followed,
ii) accounting policies were adopted and applied consistently and made
judgements and estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the Company as at 31st
March 2014,
iii) proper and sufficient care for the maintenance of adequate
accounting records in accordance with the applicable provisions of the
Companies Act for safeguarding the assets of the Company and for
preventing / detecting fraud and irregularities has been taken and
iv) the Annual Accounts have been prepared on a "going concern" basis.
PARTICULARS OF EMPLOYEES
In terms of Section 217(2A) of the Companies Act, 1956, read with the
Companies (Particulars of Employees) Rules, 1975, as amended, the names
and other particulars of employees are set out in the Annexure to the
Directors'' Report. However, as per the provisions of Section 219(1)
(b)(iv) of the Companies Act, 1956 the Annual Report excluding the
aforesaid information is being sent to all the members of the Company
and others entitled thereto. Any member interested in obtaining such
particulars may write to the Company Secretary at the Registered Office
of the Company.
ENERGY CONSERVATION, TECHNOLOGYABSORPTION AND FOREIGN EXCHANGE EARNINGS
AND OUTGO
Company has implemented energy conversion methods and such action has
resulted into major savings in energy consumption as well as in cost
control. However the information as required under Section 217(1)(e) of
the Companies Act, 1956 read with Companies (Disclosure of Particulars
in the Report of Board of Directors) Rules, 1988 is set out in the
Annexure - I; the same is forming part of this Report.
INDUSTRIAL RELATIONS
The industrial relations during the year under review remained
harmonious and cordial. Your Directors wish to place on record their
appreciation for the wholehearted co-operation received from all the
employees at various units/divisions of the Company.
CONCLUSION
Your Company enjoys the leadership position in domestic market with
strong competitive advantage in the export segment. However due to
losses in recent past, the Company is in consolidation mode. We will,
however continue to explore the opportunities to make investments and
progress to further strengthen our leadership position.
ACKNOWLEDGEMENTS
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Central and State Governments authorities,
Regulatory authorities, Stock Exchanges, stakeholders, customers and
venders for their continued support and co-operation, and also thank
them for their trust reposed in the Management. Your Directors also
wish to thank all the employees of the Company for their commitment and
contributions.
For and on behalf of Board of Directors
Sd/-
Place: New Delhi Ajay Kumar Choudhary
Dated: August 13, 2014 Chairman
Mar 31, 2013
Dear Members,
The Directors are pleased to present the 21st Annual Report together
with the Audited Accounts for the year ended March 31, 2013.
FINANCIAL RESULTS
The highlights of the financial results for the year ended 31st March,
2013 are as under:
(Rs.in Crores)
Particulars 2012-2013 2011-2012
Consolidated Standalone Consolidated Standalone
Net Sales
(Turnover) 1,190.72 1,129.66 1,090.60 967.84
Other Income 27.66 20.75 7.68 15.41
EBIDTA 119.34 126.24 (81.66) (30.43)
Financial charges 88.57 76.81 97.09 85.42
Depreciation 75.43 26.20 78.17 33.08
Profit/(Loss)
before tax (PBT) (44.66) 23.23 (256.52) (149.42)
Extra ordinary
items (income) (4.02) 0.41 0.41
Impairment loss @
Fixed Assets
Exceptional Items 16.74 48.59
Net Profit from
Operations (40.64) 23.23 (273.67) (198.42)
Prior period expenses 2.65 2.65
Tax expenses 3.03 3.03
Net Profit/(Loss) (43.29) 20.58 (276.70) (201.45)
EPS (0.49) 2.34 (33.31) (24.25)
CONSOLIDATED FINANCIAL STATEMENTS IN RESPECT TO SUBSIDIARIES
The Company is having six subsidiaries/ step down subsidiaries.
Pursuant to SEBI Circular No. 2/2011 dated 08.02.2011, the Board of
Directors at their meeting held on 13th February, 2013 approved to
disclose the financial information of the subsidiary companies in the
Annual Report as per format approved by the Board. Accordingly, the
Balance Sheet and Profit & Loss Account and other documents of
subsidiary companies are not being attached with the Balance Sheet of
the Company. These documents will however be available for inspection
at the registered office of the Company during business hours. The
Consolidated Financial Statements presented by the Company includes
financial results of its subsidiary companies.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Accounting Standard AS-21 of Institute of
Chartered Accountants of India, (ICAI) an audited Consolidated
Financial Statement read with Accounting Standard AS-23 of ICAI in
respect of Investments in Associates, is has been provided in the
Annual Report.
INFORMATION TECHNOLOGY
Information Technology continues to be an integral part of your
company''s business strategy. The Company is working on SAP platform
integrating all its units located at different places/locations, which
integrates its business processes, financial parameters, customer
transactions and people, effectively on real time basis. Besides it
minimizes the chances of manipulation of accounts by any individual.
DIVIDEND
During the year under review, the Company has no distributable profits
hence your Directors do not recommend payment of any dividend.
ISSUE OF EQUITY SHARES
During the year under review, your Company has issued and allotted
51,00,000 equity shares of Rs. 10/- each on 8th October, 2012 to CLC
Technologies Private Limited, a promoters group Company in terms of CDR
rework package which rank pari passu with the existing equity shares.
Accordingly, the paid-up capital of the Company has been increased from
Rs. 83,27,20,360 to Rs. 883,720,350/-consisting of 8,83,72,035 equity
shares of Rs. 10/- each.
TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND
The Company informs herewith to all its shareholders whose dividend
still remained unclaimed for the year 2004-05 (declared by erstwhile
Indo Rama Textiles Limited, which has since been amalgamated with the
Company) that pursuant to Section 205A of the Companies Act, 1956, the
Company is required to transfer unpaid and unclaimed dividend to
Investor Education & Protection Fund on completion of 7 years of
transferring of unpaid dividend into unpaid dividend account.
Accordingly, Company is taking appropriate steps in this regard.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As stipulated under Clause 49 of the Listing Agreement entered with the
Stock Exchanges, a report on Corporate Governance is attached
separately as a part of the Annual Report and the Management Discussion
and Analysis (MD & A) is also included in this report so that
duplication and overlapping between Directors'' Report and a separate MD
& A is avoided and the entire information is provided in a composite
and comprehensive manner.
DIRECTORS
Shri Ajay Kumar Choudhary, Shri Kapil Choudhary and Shri Sitaram
Parthasarathy are retiring by rotation in the forthcoming Annual
General Meeting and being eligible, they offer themselves for
re-appointment. Further, subject to approval of shareholders in the
ensuing General Meeting and Central Government, the members of
Remuneration Committee and Board of Directors at their meeting held on
13th February, 2013, have re-appointed Shri Mukund Choudhary as
Managing Director and Shri Amrit Agrawal as Director Finance for
another term of 5 years.
Brief resume of the Directors proposed to be re-appointed, nature of
their expertise in specific functional areas and names of the companies
in which they hold directorship and membership/chairmanships of the
Board or its Committees, as stipulated under Clause 49 of the listing
agreement with stock exchanges in India, is provided in the Report of
Corporate Governance forming part of the Annual Report.
AUDITORS
M/s. J C Bhalla, Chartered Accountants who are the Statutory Auditors
of the Company hold office until the conclusion of the ensuing Annual
General Meeting and are eligible for re-appointment. The Company has
received a letter from them to the effect that their re-appointment, if
made, would be in accordance with Section 224(1B) of the Companies Act,
1956. The Board recommends for their re-appointment.
DIRECTORS'' VIEW OF AUDITOR''S OBSERVATIONS
Directors'' response to the various observations of the auditors made in
their report, even though explained wherever necessary through
appropriate notes to accounts, is reproduced hereunder in compliance
with the relevant legal requirements :
Note No. 41 of the Financial Statement qualified by Auditors
''The company has an investment of Rs. 20,44,69,921/- in and has amount
recoverable amounting to Rs. 47,10,47,260/- from Amit Spinning
Industries Limited (ASIL), a subsidiary, as on March 31, 2013. The
accumulated losses of ASIL, at the year end exceeded its net worth.
There is also reduction in market value of the investment at the year
end by Rs. 18,18,10,358. In the opinion of the management, diminution
in this long term investment is due to adverse business conditions in
the past. ASIL has started generating EBIDTA and cash profits. In view
of these developments, management believes that diminution in the value
of investment is of temporary nature and that outstanding would be
realised within a reasonable period of time. Accordingly no provision
considered necessary in the value of investment held and amount due
from ASIL.''
Note No. 42 of the Financial Statement without qualifying Auditors,
have drawn attention:
The Company has an investment of Rs. 56,10,11,339 and Rs. 93,23,779 in
its subsidiary Spentex Netherlands B. V. (SNBV) and its step down
subsidiary Spentex Tashkent Toytepa LLC (STTL) respectively. Further it
has Rs. 7,00,12,404 as export receivable from STTL and advances of Rs.
9,50,70,902 in SNBV as on March 31, 2013. During the period of
investment Government of Uzbekistan changed certain laws and policies
by breaching the investment agreement and rendered operation of STTL
unviable. Since treaties entered between the Governments of India and
Uzbekistan and the Investment agreement entered between Govt. of
Uzbekistan and STTL were breached, company has issued notice claiming
in excess of USD 100 Mn. towards protection of investment and payment
of dues & compensation for the losses suffered by the company. Company
has since been making all possible efforts to settle the same amicably
with the Govt. of Uzbekistan, failing which arbitration proceeding
would be initiated by the company to recover its Investment and claims.
In view of the legal opinion and claim lodged with the Govt of
Uzbekistan, the Directors have decided not to make any provision for
diminution in value of investment at this stage.
Note No. 43 of the Financial Statement without qualifying Auditors,
have drawn attention:
Trade receivables and advance balances include amount aggregating to
Rs. 63,71,477/- and Rs. 2,73,14,712/- respectively due from certain
parties where payments are not forthcoming. Against the above, the
Company has filed a suit for recovery. The Company is making effort to
recover the same and expects to reduce them significantly. Based on
outcome of the legal suit coupled with further negotiations with these
parties, the management is of the opinion that ultimately there would
be no losses against these old balances and hence no provision is
considered necessary at the stage.
Note No. 47 of the Financial Statement without qualifying by Auditors,
have drawn attention:
As on March 31, 2012, the accumulated losses of the Company had
exceeded its net worth. Accordingly company in compliance with the
provisions of section 15(1) of Sick Industrial Companies (Special
Provisions) Act, 1985 filed a reference with Board for Industrial and
Financial Restructuring (BIFR). The Company''s operations were adversely
affected in 2011-12 due to adverse Govt policies and high volatility of
Raw Material prices. Further, considering the change in scenario,
recent performance and trends of the company as well as overall
industry outlook, the management believes that losses incurred in the
past would reasonably be made good, in due course. The financial
statements, as such have been prepared on a going concern basis on the
strength of management''s plan of revival including reorganization of
business.
COST AUDITORS
Pursuant to a directive of the Central Government, your Company is
required to get Cost Audit conducted for the product "Textile" for
every year until further notice. Accordingly Shri Rajesh Goyal, a Cost
Accountant of M/s. K G Goyal & Associates, Cost Accountants was
appointed to carry out audit of the Cost Accounts maintained by the
Company for the financial year ending 31st March, 2013. Cost Auditor
would submit its report to concerned authorities in due course, in
terms of applicable rules, guidelines and statutory provisions.
FIXED DEPOSITS
Your Company has not accepted any deposits during the year under review
within the meaning of Section 58A of the Companies Act, 1956 and rules
made there under.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 217(2AA) of the Companies Act,
1956, your Directors hereby state and confirm that:
i) in preparing the Annual Accounts for the year ended 31st March 2013
all the applicable Accounting Standards have been followed,
ii) accounting policies were adopted and applied consistently and made
judgements and estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the Company as at 31st
March 2013,
iii) proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies
Act,
1956 for safeguarding the assets of the Company and for preventing /
detecting fraud and irregularities has been taken and iv) the Annual
Accounts have been prepared on a "going concern" basis.
PARTICULARS OF EMPLOYEES
In terms of Section 217(2A) of the Companies Act, 1956, read with the
Companies (Particulars of Employees) Rules, 1975, as amended, the names
and other particulars of employees are set out in the Annexure to the
Directors'' Report. However, as per the provisions of Section 219(1)
(b)(iv) of the Companies Act, 1956 the Annual Report excluding the
aforesaid information is being sent to all the members of the Company
and others entitled thereto. Any member interested in obtaining such
particulars may write to the Company Secretary at the Registered Office
of the Company.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
Company has implemented energy conversion methods and such action has
resulted into major savings in energy consumption as well as in cost
control and new products also been developed. However the information
as required under Section 217(1)(e) of the Companies Act, 1956 read
with Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 is set out in the Annexure  I; the same is
forming part of this Report.
INDUSTRIAL RELATIONS
The industrial relations during the year under review remained
harmonious and cordial. Your Directors wish to place on record their
appreciation for the wholehearted co-operation received from all the
employees at various units/divisions of the Company.
CONCLUSION
Your Company enjoys the leadership position in domestic market with
strong competitive advantage in the export segment. However due to
losses in recent past, the Company is in consolidation mode. We will,
however continue to explore the opportunities to make investments and
progress to further consolidate our leadership position.
ACKNOWLEDGEMENTS
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Central and State Governments authorities,
Regulatory authorities, Stock Exchanges, stakeholders, customers and
venders for their continued support and co-operation, and also thank
them for the trust reposed in the Management. Your Directors also wish
to thank all the employees of the Company for their commitment and
contributions.
For and on behalf of Board of Directors
Place: New Delhi Ajay Kumar Choudhary
Dated: May 29, 2013 Chairman
Mar 31, 2011
The Directors are pleased to present the 19th Annual Report together
with the Audited Accounts for the year ended March 31, 2011.
FINANCIAL RESULTS
The highlights of the financial results for the year ended 31st March,
2011 are as under: (Rs. in Crores)
Particulars 2010-2011 2009-2010
Consolidated Standalone Consolidated Standalone
Net Sales (Turnover) 1604.32 1027.00 1223.38 732.22
Other Income 64.44 51.74 61.04 47.74
EBIDTA 210.29 151.63 109.72 81.86
Financial charges 93.24 80.05 80.19 69.16
Depreciation 74.24 34.08 75.29 35.04
Extra Ordinary Items (Income) - - 32.04 -
Profit/(Loss) before tax (PBT)42.82 37.50 (45.06) (22.34)
Fringe benefit tax - - 0.02 0.02
Net Profit from Operations 42.82 37.50 (45.08) (22.36)
Impairment loss @ Fixed Assets41.07 - - -
Net Profit/(Loss) 1.75 37.50 (45.08) (22.36)
EPS 0.23 4.87 (10.79) (3.13)
DIVIDEND
During the year the Company has no distributable profits hence your
Directors do not recommend any dividend.
ISSUE OF EQUITY SHARES ON CONVERSION OF SHARE WARRANTS
During the year under review, your Company has issued and allotted
75,89,000 equity shares on 13th August, 2010 and 31st March, 2011 to
CLC Technologies Private Limited, a promoters group Company in respect
to option exercised by warrant holder to convert same number of share
warrants at a price of Rs.16.95 (including premium of Rs. 6.95).
Accordingly, the paid-up capital of the Company has been increased from
Rs. 737,330,350/- to Rs. 813,220,350/- consisting 81,322,035 equity
shares of Rs. 10/- each.
TRANSFER OF INVESTOR EDUCATION & PROTECTION FUND
The Company informs herewith all its shareholders whose dividends are
unclaimed for the year 2003-04 (declared by erstwhile Indo Rama
Textiles Limited, which has since been amalgamated with the Company)
that pursuant to Section 205A of the Companies Act, 1956, the Company
is required to transfer unpaid and unclaimed dividend to Investor
Education & Protection Fund on completion of 7 years of transferring
into unpaid dividend account and shall ensure that they receive their
rightful dues. Company is taking appropriate steps in this regard.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As stipulated under Clause 49 of the Listing Agreement entered with the
Stock Exchanges, a report on Corporate Governance is attached
separately as a part of the Annual Report and the Management Discussion
and Analysis (MD & A) is also included in this report so that
duplication and overlap between Directors Report and a separate MD & A
is avoided and the entire information is provided in a composite and
comprehensive manner.
DIRECTORS
Shri R K Thapliyal, Shri Prem Malik and Shri Shyamal Ghosh are retiring
by rotation in the forthcoming Annual General Meeting and being
eligible offer themselves for re-appointment. During the year, the five
year term of Shri Ajay Kumar Choudhary, Chairman, Shri Kapil Choudhary,
Deputy Managing Director and Shri Sitaram Parthasarathy, Director Works
ceased on 1st December, 2010. The Remuneration Committee and Board of
Directors, subject to requisite approvals, re-appointed them for
another term of 3 years w.e.f. 2nd December, 2010.
Brief resume of the Directors proposed to be re-appointed, nature of
their expertise in specific functional areas and names of companies in
which they hold directorship and membership/chairmanships of Board
Committees, as stipulated under Clause 49 of the listing agreement with
stock exchanges in India, is provided in the Report of Corporate
Governance forming part of Annual Report.
AUDITORS
M/s. J C Bhalla, Chartered Accountants who are the Statutory Auditors
of the Company hold office until the conclusion of the ensuing Annual
General Meeting and are eligible for re-appointment. The Company has
received a letter from them to the effect that their re- appointment,
if made, would be in accordance with Section 224(1B) of the Companies
Act, 1956. The Board recommends their re- appointment.
DIRECTORS VIEW ON AUDITORS OBSERVATIONS
Directors response to the various observations of the auditors even
though explained wherever necessary through appropriate notes to
accounts, is reproduced hereunder in compliance with the relevant legal
requirements.
Reference Para 4 of the Auditors Report
Schoeller Litvinov k.s. (SLKS), the Czech step-down subsidiary of the
Company, had registered losses during the year and earlier financial
years due to economic slowdown. This step down subsidiary had submitted
a re-organization plan seeking deferment of payment to Secured
creditors, and proportionate waiver of unsecured liabilities which has
since been approved by the court. The Company believes that the
reorganization plan, considering improvement in the global textile
market, will turn around this subsidiary, so as to make good its losses
in a foreseeable period and will also place this subsidiary in a
position to repay the liabilities in due course. Accounts and other
receivables Rs. 327,965,283 (Previous Year 468,986,120) is due from
SLKS as at March 31, 2011. Accordingly, provision against these
Accounts and other receivables is not considered necessary at this
stage.
In view of developments, Company believes in future with the financial
viability of this subsidiary such amounts would be realized within a
reasonable period of time.
COST AUDITORS
The Central Government had directed an audit of the cost accounts
maintained by the Company in respect of textile business. The Central
Government has approved the appointment of Shri Rajesh Goyal, a Cost
Accountant of M/s. K G Goyal & Associates, Cost Accountants to conduct
the audit of the Cost Accounts of the Company for the financial year
ending 31st March, 2011 for the product ÃTextileÃ.
FIXED DEPOSITS
Your Company has not accepted any deposits during the year within the
meaning of Section 58A of the Companies Act, 1956 and rules made there
under.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 217(2AA) of the Companies Act,
1956, your Directors hereby state and confirm that: i) in preparing the
Annual Accounts for the year ended 31st March 2011 all the applicable
Accounting Standards have been followed,
ii) accounting policies were adopted and applied consistently and made
judgements and estimates that are reasonable and prudent so as to give
a true and fair view of the state of affairs of the Company as at 31st
March 2011,
iii) proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies
Act, 1956 for safeguarding the assets of the Company and for preventing
/ detecting fraud and irregularities has been taken and
iv) the Annual Accounts have been prepared on a "going concern" basis.
PARTICULARS OF EMPLOYEES
In terms of Section 217(2A) of the Companies Act, 1956, read with the
Companies (Particulars of Employees) Rules, 1975, as amended, the names
and other particulars of employees are set out in the Annexure to the
Directors Report. However, as per the provisions of Section 219(1)
(b)(iv) of the Companies Act, 1956 the Annual Report excluding the
aforesaid information is being sent to all the members of the Company
and others entitled thereto. Any member interested in obtaining such
particulars may write to the Company Secretary at the Registered Office
of the Company.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information relating to conservation of energy, technology
absorption and foreign exchange earnings and outgo as required to be
disclosed under Section 217(1)(e) of the Companies Act, 1956 read with
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 are given in Annexure à I to the Directors
Report.
INDUSTRIAL RELATIONS
The industrial relations during the year under review remained
harmonious and cordial. Your Directors wish to place on record their
appreciation for the wholehearted co-operation received from all the
employees at various units/divisions of the Company.
CONCLUSION
Your Company enjoys a leadership position in domestic market with
strong competitive advantage in export segment. The Company now stands
at the cusp of the next phase of growth. We will continue to make
investments and progress to further consolidate our leadership
position.
ACKNOWLEDGEMENTS
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Central and State Governments authorities,
Regulatory authorities, Stock Exchanges, stakeholders, customers and
venders for their continued support and co-operation, and also thank
them for the trust reposed in the Management. Your Director also wishes
to thank all the employees of the Company for their commitment and
contributions.
For and on behalf of Board of Directors
Place: New Delhi Ajay Kumar Choudhary
Dated: May 12, 2011 Chairman
Mar 31, 2010
The Directors have great pleasure in presenting the 18th Annual Report
together with the Audited Accounts for the year ended March 31, 2010.
FINANCIAL RESULTS
The highlights of the financial results are as under:
(in Crores)
Particulars 2009-2010
Consolidated Standalone
Net Sales (Turnover) 1223.38 732.22
Other Income 61.04 47.74
EBIDTA 78.38 81.86
Financial charges 80.19 69.16
Depreciation 75.29 35.04
Exceptional items - -
Extra Ordinary Items 32.04 -
Profit/(Loss) before tax (PBT) (45.06) (22.34)
Provision for current tax - -
Provision for deferred tax - -
Fringe benefit tax 0.02 0.02
Profit/(Loss) after tax (PAT)
but before Minority Int. (45.08) (22.36)
Minority Interest - -
Net Profit/(Loss) (45.08) (22.36)
Particulars Consolidated Standalone
Net Sales
Other Income 26.49 26.56
EBIDTA (44.87) 31.52
Financial charges 97.93 69.23
Depreciation 78.93 39.31
Exceptional items 12.72 -
Extra Ordinary Items - -
Profit/
Provision for current tax 0.07 -
Provision for deferred tax 8.28 -
Fringe benefit tax 0.39 0.37
Profit/
Minority Interest 7.01 -
Net Profit/
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
World economy has shown initial indications of recovery after a severe
spell of recession and is expected to grow by 4.2 percent in 2010 and
projected to maintain the growth momentum in the next 5 years. However,
the consumer confidence in major importing countries like USA and EU
has been lagging behind economic growth projections and may take some
more time before showing any convincing revival. The timely policy
response from the Indian Government and the resilience of the Indian
economy led to a smooth and consistent recovery, in spite of the
uncertainty over sub normal monsoon. The resurgence has been
broad-based with both Services and Manufacturing sector growing at high
rates. All leading indicators including IIP growth, credit growth,
continuous surge in imports and exports since November 2009 and the
growth in all industry groups point towards a sustainable recovery.
Though inflation and currency appreciation may pose challenges in the
short term, RBIs timely monetary initiatives, including the calibrated
exit from the accommodative stance, will ensure that Indias growth
remains unhindered. The year has proved that though the Indian economy
is interlinked with the global economy, its focus on domestic markets
and the Governments prudent policies will help maintain a high growth
trajectory.
The Textile Industry plays a very important role in our Countrys
Economy since it came into existence in India. It contributes about 14
per cent to industrial production, 4 per cent to the countrys gross
domestic product (GDP) and 17 per cent to the countrys export
earnings. Moreover, total textile exports have been increased to US$
18.6 billion during April09-January10, from US$ 17.7 billion during
the corresponding period of the previous year, registering an increase
of 4.95 per cent in rupee terms. Further, the share of textile exports
in total exports has been increased to 12.36 per cent during
April09-January10, according to the Ministry of Textile and is the
second largest employment providers after agriculture i.e. direct
employment to more than 35 million people. The Indian textile industry
is one of the largest in the world with a massive raw materials and
textile-manufacturing base and also currently India has attained the
position of having second highest spindleage in the world after China.
The spun yarn production is expected to increase at about 4200 mn kg in
2009-10 and is likely grow by about 8% to 4500 mn kg in 2010-11. The
domestic deliveries of spun yarn have also been growing consistently
showing increased activities in the entire textile value chain. There
are some areas of concerns also, which need to be stated here.
Along-with recovery, the textile industry is also facing increase in
input prices in sync with the global trends. In addition to
appreciating rupee, free export of cotton followed by withdrawal of
duty refund on cotton yarn are also causing concerns for the sustained
recovery in the textile industry
Spentex has utilized the opportunity offered by the global recession
for introspection to identify areas of improvement i.e. fine tuning
supply chain management and resource optimization to strengthen our
competitiveness by offering more value to customers in terms of high
value added products. It is a matter of pleasure to note that such
initiatives have paid us well, enhanced our learning, strengthen our
resolve and increase our capabilities to overcome such events in
future. We have a firm faith in the bright future of textile industry
in India.
FINANCIAL ANALYSIS AND PERFORMANCE REVIEW
The performance of the Company in fiscal year 2009-10 has significantly
improved as compared to the performance in fiscal 2008- 09. This
significant improvement is attributed to increase in total sales value
and volumes, better fund flow management coupled with successfully
implemented Corporate Debt Restructuring Scheme and Enhanced usage of
ERP - SAP to bring efficiencies in business.
The financial performance of Spentex industries Limited is discussed in
two parts:
(i) Spentex Industries Limited (Standalone) which excludes the
performance of subsidiaries and step-down subsidiaries of Spentex
Industries Limited.
(ii) Spentex Industries Limited (Consolidated) which includes the
performance of subsidiaries and step-down subsidiaries of Spentex
Industries Limited. The Consolidated Financial Statements bring out
comprehensively the performance of Spentex Group of companies and are
more relevant for understanding the overall performance of Spentex
Group.
Your Company has made a strong comeback. It has been able to achieve
much better operational performance in terms of achieving higher sales
value and overall efficient operations which led to reduction in
consolidated net loss from Rs. 236.18 Crores to Rs. 45.11 Crores i.e.
down by 81% and in reduction in standalone net loss from Rs. 77.39
Crores to Rs. 22.36 Crores i.e. down by 71% respectively.
SEGMENT-WISE PERFORMANCE
Yarn Manufacturing
During the year under review, your Company on standalone basis has
manufactured 56,652MT of yarn as compared to 52,255MT of yarn produced
during the previous year and on consolidated basis has manufactured
92,608 MT of yarn as compared to 91,971MT of yarn produced during the
previous year which reflects an increase of 8.41% on standalone basis
and 0.69 % on consolidated basis.
PERFORMANCE OF SUBSIDIARIES
The Company had eight subsidiaries at the beginning of the year. The
turnover and overall performance of material subsidiary companies are
as under:
Amit Spinning Industries Ltd., India: During the year its production of
yarn has been increased by 165.37% and sales turnover increased by 57%
as compared to previous year. The Company has its manufacturing
facilities at Kolhapur, Maharashtra with a capacity of 30,672 spindles.
Spentex Tashkent Toytepa LLC, Uzbekistan: During the year its
production of yarn has been increased by 9.98% and sales turnover
increased by 23.93% as compared to previous year. The Company has two
manufacturing units situated at Tashkent and Toytepa with a capacity of
220,000 spindles and 236 Air jet looms.
Schoeller Litvinov K.S., Czech Republic: During the year its production
of yarn has been decreased by 54.65% and sales turnover decreased by
63.49% as compared to previous year. The Company has manufacturing unit
situated at Czech Republic with a capacity of 59,000 spindles.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Company has appropriate internal control systems for business
processes, with regards to efficiency of operations, financial
reporting and controls, compliance with applicable laws and
regulations, etc. Clearly defined roles and responsibilities down the
line for all managerial positions have also been institutionalized. All
operating parameters are monitored and controlled. Regular internal
audits and checks ensure that responsibilities are executed
effectively. The Audit Committee of the Board of Directors reviews the
adequacy and effectiveness of internal control systems and suggests
improvement for strengthening them, from time to time.
MANAGEMENT PERCEPTION ON OPPORTUNITIES, RISKS, CONCERN & OUTLOOK
One of the major challenges to the textile industry is the continued
appreciation in the Indian rupee against US dollar, which has serious
implication on textile exports. Being highly competitive industry,
increase in the external value of rupee would cripple the
competitiveness of the industry. Another important issue is
availability, quality and the price of power. The availability of good
quality power at reasonable prices is critical for sustainability of
the industry. However, the cost of power has been continuously
increasing, adding to the input cost pressure in the industry. We hope
that power situation will improve in the coming year. The
differentiated treatment for different sectors of textile industry in
government policy is also a serious development. The proposal to
withdraw duty refund on cotton yarn exports can be seen in this
respect. An integrated approach is required for the growth of the
industry in the country. We are making all efforts to cope up with the
challenges through continuous cost reduction, process improvements and
improved customer services to mitigate the growing cost pressure.
On the other side, encouraging factors in favor of spinning sector are
the rise in domestic and export demand which resulted into rise on
volumes over last corresponding period.
In view of these measures and initiatives, it is expected that Indian
textile industry would continue to grow at an impressive rate. The
textile industry is anticipated to generate 12 million new jobs.
HUMAN RESOURCES/INDUSTRIAL RELATIONS
During the period of recession and global turmoil when every company
was in process of laying off their employees to reduce cost, your
company systematically nurtured its greatest resourceÃhuman resource.
Consequently, the employee turnover was negligible. The Company and its
management value the talent, commitment and dedication of its employees
and acknowledge their contribution. Everyone in the Company is working
as a team and is integral part of a family, welcoming the idea of
making Spentex, a globally admired company. Management of your Company
believes that it is the integration of human resources and business
strategy that has culminated in its success. High performance
orientation is the pivot of the HR philosophy of the Company and all
the HR policies and strategies are centered on the same.
Industrial Relations remained cordial and not a single days work was
lost due to any industrial dispute during the year.
SUBSIDIARIES
The Company had eight subsidiaries at the beginning of the year. The
Ministry of Corporate Affairs, Government of India, vide order
No.47/80/2010-CL-III dated March 15th 2010 has granted approval that
the requirement to attach various documents in respect of subsidiary
companies, as set out in sub-section (1) of Section 212 of the
Companies Act, 1956, shall not apply to the Company. Accordingly, the
Balance Sheet and Profit & Loss Account and other documents of
subsidiary companies are not being attached with the Balance Sheet of
the Company. Financial Information of the subsidiary companies, as
required by the said order, is disclosed in the Annual Report. The
Company will make available the Annual Accounts and related details
upon request by any member of the Company. These documents will also be
available for inspection at the registered office of the Company during
business hours. The Consolidated Financial Statements presented by the
Company includes financial results of its subsidiary companies.
CONSOLIDATED FINANCIAL STATEMENT
In accordance with the Accounting Standard AS-21 on Consolidated
Financial Statements read with Accounting Standard AS-23 on accounting
for Investments in Associates, the audited Consolidated Financial
Statements are provided in the Annual Report.
INFORMATION TECHNOLOGY
Information Technology continues to be an integral part of Spentexs
business strategy. The Company is working on SAP platform integrating
all units located at different places, which will integrate business
processes, financial parameters, and customer transactions and people
effectively.
DIVIDEND
During the year the Company has no distributable profits hence your
Directors do not recommend any dividend.
ISSUE OF CONVERTIBLE SHARE WARRANTS
During the year under review, your Company has issued and allotted
1,18,00,000 share warrants at a price of Rs.16.95 (including premium of
Rs. 6.95) to CLC Technologies Private Limited, a promoter group
company. Out of above, the Company has allotted 2,261,000 equity shares
on 31st March, 2010 pursuant to option exercised by the share warrant
holder to convert 2,261,000 share warrants in equal number of fully
paid up equity shares. Accordingly, the paid-up capital of the Company
has been increased from Rs. 714,720,350/- to Rs. 737,330,350/-
consisting 73,733,035 equity shares of Rs. 10/- each.
TRANSFER OF UNPAID/UNCLAIMED DIVIDEND INTO INVESTOR EDUCATION &
PROTECTION FUND
The Company informs herewith all its shareholders whose dividends are
unclaimed for the year 2002-03 (declared by erstwhile Indo Rama
Textiles Limited, which has been amalgamated with the Company) that
pursuant to Section 205A of the Companies Act, 1956, the Company is
required to transfer unpaid and unclaimed dividend to Investor
Education & Protection Fund on completion of 7 years of transferring
into unpaid dividend account and shall ensure that they receive their
rightful dues. Company is taking appropriate steps in this regard.
CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS
As stipulated under Clause 49 of the Listing Agreement entered into
with Stock Exchanges, a report on Corporate Governance is attached
separately as a part of the Annual Report and the Management Discussion
and Analysis (MD & A) is included in this report so that duplication
and overlap between Directors Report and a separate MD & A is avoided
and the entire information is provided in a composite and comprehensive
manner.
DIRECTORS
Shri Ajay Kumar Choudhary, Shri Kapil Choudhary and Shri Sitaram
Parthasarathy retire by rotation in the forthcoming Annual General
Meeting and being eligible offers themselves for re-appointment. During
the year Shri Pankaj Sharma has resigned from the Board of Directors
with effect from close of business on 1st May, 2009, your Directors
would like to record their appreciation of the services rendered by
Shri Sharma.
During the year, the three year term of Shri Amrit Agrawal, Director
Finance ceased on 27th April, 2010. The Remuneration Committee and
Board of Directors, subject to requisite approvals, re-appointed him
for another term of 3 years w.e.f. 28th April, 2010.
In terms of Section 260 of the Companies Act, 1956, Shri Rajeev Kalra
has been appointed as Additional Director, consequent to his nomination
by Citigroup Venture Capital International Growth Partnership Mauritius
Ltd. on the Board w.e.f. 10th June, 2010 in place of Shri Vivek
Chhachhi who has tendered his resignation w.e.f. 12-5-2010. Directors
appreciated the services rendered by Shri Vivek Chhachhi during his
tenure as director of the company.
Brief resume of the Directors proposed to be appointed/re-appointed,
nature of their expertise in specific functional areas and names of
companies in which they hold directorship and membership/chairmanships
of Board Committees, as stipulated under Clause 49 of the listing
agreement with stock exchanges in India, is provided in the Report of
Corporate Governance forming part of Annual Report.
AUDITORS
During the year, the members in their Extra Ordinary General Meeting
held on 19th January, 2010 appointed M/s. J C Bhalla & Company,
Chartered Accountants as Statutory Auditors of the Company for the year
2009-10 in place of M/s. Price Waterhouse, Chartered Accountants, who
have tendered resignation as Statutory Auditors of the Company.
M/s. J C Bhalla & Company, Chartered Accountants who are the Statutory
Auditors of the Company hold office until the conclusion of the ensuing
Annual General Meeting and are eligible for re-appointment. The Company
has received a letter from them to the effect that their
re-appointment, if made, would be in accordance with Section 224(1B) of
the Companies Act, 1956. The Board recommends their re-appointment.
DIRECTORS VIEW ON AUDITORS OBSERVATIONS
Directors response to the various observations of the auditors even
though explained wherever necessary through appropriate notes to
accounts, is reproduced hereunder in compliance with the relevant legal
requirements.
Reference Para 4(a) of the Auditors Report
The Company has an investment of Rs 204,469,921 in Amit Spinning
Industries Limited (ASIL), a subsidiary, as on March 31, 2010. The
accumulated losses in ASIL, at the year end exceeded its net worth.
There is also a reduction in market value of these investments as at
the year end by Rs.162,297,956 (Previous Year Rs. 171,949,252). In the
opinion of the directors, the above diminution in this long term
investment is due to adverse business conditions and is not ultimately
expected to continue in future. Based on recent performance and trends
of ASIL and overall industry outlook, there is an increase in average
selling prices of yarn, consistent increase in production level and
reduction in procurement costs of raw materials. Consequent to such
developments, ASIL has started generating EBIDTA and cash profits.
In view of these developments, directors believes in future financial
viability of this subsidiary and accordingly, provision for the
diminution in the value of this long term investment is not considered
necessary at this stage.
Regarding the loans, advances, and interest due on the loan amounting
to Rs. 440,528,019, Rs. 17,726,208, and Rs.60,414,121 respectively,
amount Rs.170,400,000 related to Loan has been subsequently received
and for remaining balances, directors believe that the such amounts
would be realized within a reasonable period of time . Accordingly, no
provision is considered necessary at this stage. (Note 9(a) of Notes to
Accounts in Schedule XXI of Accounts Annexed).
Reference Para 4(b) of the Auditors Report
Schoeller Litvinov k.s. (SLKS), the Czech step-down subsidiary of the
Company, had registered losses during the year and earlier financial
years due to economic slowdown. This step down subsidiary had submitted
a re-organization plan seeking deferment of payment to Secured
creditors, and proportionate waiver of unsecured liabilities which has
now been approved by the court. The directors believe that the
reorganization plan, considering improvement in the global textile
market, will turn around this subsidiary, so as to make good its losses
in a foreseeable period of time and will also place this subsidiary in
a position to repay the liabilities in due course. Accounts and other
receivables Rs. 468,986,120 is due from SLKS as at March 31, 2010.
Accordingly, provision against these Accounts and other receivables is
not considered necessary at this stage. (Note 9(b) of Notes to Accounts
in Schedule XXI of Accounts Annexed).
Reference Para 4(c) of the Auditors Report
Sundry Debtors and Advances include amounts aggregating Rs. 17,408,913
and Rs. 22,473,335 respectively due from certain customers where
payments are not forthcoming. Of the above, the Company has filed a
suit for recovery of Rs. 17,408,913 against two of the customers.
Further, in respect of the advances of Rs. 22,473,335 the Company is
making efforts to recover the same and expects to reduce them
significantly. Based on outcome of the legal suit coupled with
further negotiations with these parties, the directors are of
the opinion that ultimately there would be no losses against these
old balances and hence no provision is considered necessary at
this stage. (Note 10 of Notes to Accounts in Schedule XXI of Accounts
Annexed).
COST AUDITORS
The Central Government had directed an audit of the cost accounts
maintained by the Company in respect of textile business. The Central
Government has approved the appointment of Shri Rajesh Goyal, Cost
Accountant of M/s. K G Goyal & Associates, Cost Accountants to conduct
the audit of the Cost Accounts of the Company for the financial year
ending 31st March, 2010 for the product ÃTextileÃ.
FIXED DEPOSITS
Your Company has not accepted any deposits during the year within the
meaning of Section 58A of the Companies Act, 1956 and rules made there
under.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 217(2AA) of the Companies Act,
1956, your Directors hereby state and confirm that:
a) in the preparation of the Annual Accounts, the applicable accounting
standards have been followed and there are no material departures;
b) the Directors have selected such accounting policies and applied
them consistently and made judgment 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 Loss of the
Company for that period;
c) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
d) the Directors have prepared the annual accounts on a going concern
basis.
PARTICULARS OF EMPLOYEES
In terms of Section 217(2A) of the Companies Act, 1956, read with the
Companies (Particulars of Employees) Rules, 1975, as amended, the names
and other particulars of employees are set out in the Annexure to the
Directors Report. However, as per the provisions of Section 219(1)
(b)(iv) of the Companies Act, 1956 the Annual Report excluding the
aforesaid information is being sent to all the members of the Company
and others entitled thereto. Any member interested in obtaining such
particulars may write to the Company Secretary at the Registered Office
of the Company.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information relating to conservation of energy, technology
absorption and foreign exchange earnings and outgo as required to be
disclosed under Section 217(1)(e) of the Companies Act, 1956 read with
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 are given in Annexure à I to the Directors
Report.
INDUSTRIAL RELATIONS
The industrial relations during the year under review remained
harmonious and cordial. Your Directors wish to place on record their
appreciation for the wholehearted co-operation received from all the
employees at various units/divisions of the Company.
CONCLUSION
Your Company enjoys a leadership position in domestic market with
strong competitive advantage in export segment. The Company now stands
at the cusp of the next phase of growth. We will continue to make
investments and progress to further consolidate our leadership
position.
ACKNOWLEDGMENTS
Your Directors take this opportunity to thank the Financial
Institutions, Banks, Central and State Governments authorities,
Regulatory authorities, Stock Exchanges, stakeholders, customers and
venders for their continued support and co-operation, and also thank
them for the trust reposed in the Management. Your Director also wishes
to thank all the employees of the Company for their commitment and
contributions.
For and on behalf of Board of Directors
Place: New Delhi Ajay Kumar Choudhary
Dated: August 13, 2010 Chairman
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