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Directors Report of Winsome Yarns Ltd.

Mar 31, 2015

Dear Members,

We are pleased to present the 25th Annual Report of the Company and the audited statement of accounts for the year ended 31st March, 2015. A summary of the financial results is given below. The performance of the Company during the year has been adversely affected due to higher input costs on the one hand and pressure on selling prices on the other, because of demand recession. Labour relations at all the plants are cordial and an atmosphere of mutual trust and confidence prevails.

SUMMARISED FINANCIAL RESULTS: Year ended Year ended Financial Hilights 31.03.2015* 30.09.2014 (Rs. in lacs) (Rs. in lacs)

Revenue from Operations 20452.49 40660.72

Profit before Interest, Depreciation (3525.83) (1909.55) & Tax

Less: Interest 275.29 6133.15

Profit /(Loss) before Depreciation (3801.12) (8042.70)

Less: Depreciation 873.59 2176.27

Profit/ (Loss) before Taxes (4674.71) (10218.97)

Exceptional items - 944.33

Less : - Current Tax - -

- Previous years Tax - -

- Deferred Tax - -

Net Profit/ (Loss) after Taxes (4674.71) (11163.30)

Add : Surplus brought forward from (19903.09) (8739.79) previous year

Balance Carried to Balance Sheet (24577.80) (19903.09)

* Period from 01.10.2014 to 31.03.2015 (6 months)

OPERATIONS & PERFORMANCE:

During the period under review, the Company's operation remained at near similar levels as previous year. However, due to accumulated losses of earlier years, the Company continued to face a strain on its working capital resources, which in turn impacted the overall profitability and capacity utilization of the plant. Despite the liquidity constraints the Company continued maintaining production activity at all its facilities, and was able to retain its dealings with suppliers and customers.

The overall performance of the Company for the period of 6 months ended 31.03.2015 was a loss of Rs. 4674.71 lacs in comparison to the net loss of Rs. 11163.30 lacs of previous period of 12 months ended 30.09.2014. During the period under review, your Company has achieved a turnover of Rs. 20452.49 lacs against the previous year's (12 months) turnover of Rs.40660.72 lacs.

During the period under review the Company was unable to fulfill its sales commitments to its customers as no financial assistance or utilisation of sanctioned facilities was available to the Company, and that the latter has had to suffer losses and make provisions for loss in value of inventories and was unable to recover full amounts from its several customers outstanding for long. The Company expects that the lenders will accede to its requests and permit dealings to the Company so that business is not lost and operations stabilize at higher levels.

EROSION OF ENTIRE NET WORTH:

Consequent to accumulated losses of the Company exceeding its net worth during the accounting period ended 30th September 2014, and the Company having become a sick industrial company within the meaning of section 3(1) (o) of the Sick Industrial Companies (Special Provisions) Act. 1985, a Reference was filed by the Company before the Hon'ble Board for Industrial and Financial Reconstruction (BIFR).

The Company will be proposing a comprehensive scheme for restructuring of its business and affairs, and is keen that the said scheme is considered and approved by all stakeholders, and sanctioned by the Hon'ble BIFR. The scheme to be proposed by the Company will incorporate the restructuring as may have been sanctioned by lenders and other stakeholders by such time.

OUTLOOK:

The Company's restructuring last carried out in 2009 is no longer under the monitoring of CDR Forum. However the Company has submitted rehabilitation cum settlement proposal to all its lenders and is hopeful of its early consideration.

The Management of the Company is discussing various options for restructuring of debts and its proposal to the lenders is based, inter-alia, on the following:

* Restructuring / realignment / re-sizing of it's the debts in accordance with various Guidelines and precedents, which will help reduce costs on account of interest.

* Improving operational efficiencies, and rationalization of manpower and other costs.

* Continually developing lower cost variants of value added yarns.

* Disposal of noncore assets to generate funds to augment working capital resources.

The Company's proposal to its lenders also envisages that petitions and applications pending before various Courts, amongst others, under Recovery of Debts Due to Banks and Financial Institutions Act, 1993 Securitisaiton and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, will stand compromised with both parties giving up their respective claims and the Company being required to pay restructured amount of debt.

The lenders had appointed a Techno-Economic expert to assess viability of the Company's plant and its operations, which report is awaited, and a decision in the matter may emerge soon thereafter.

SUBSIDIARY COMPANIES:

According to the provisions of Section 129 of Companies Act, 2013, a statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements of the Company.

As required by Accounting Standard - 21 issued by the Institute of Chartered Accountants of India the consolidated financial statements, included in this Annual Report, incorporate the accounts of its subsidiary Companies namely Winsome Yarns (Cyprus) Limited and Winsome Yarns (FZE) (as at 31.03.2015, unaudited, ceased operations, declared defunct effective 01.04.2014).

Pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited/ unaudited accounts in respect of subsidiaries are available on web site of the Company.

The ongoing business recessionary conditions in European Countries, caused negative effects to the three step down subsidiaries of the Company, namely, S.C. Winsome Romania, S.r.l., IMM Winsome Italia S.r.l. and S.C. Textil, S.r.l., which were placed under liquidation, and therefore, their Balance Sheets and other financial statements are not available; accordingly, the instant consolidated financial statements of the Company do not include the financials of the above named three subsidiary Companies

The present status of these three subsidiary companies is given as under:-

Sr. No. Name of Subsidiary Start of liquidation process

1 IMM Winsome Italia S.r.l. 30.09.2008

2 S.C. Winsome Romania S.r.l. 26.11.2008

3 S.C. Textil S.r.l. 09.02.2010

Sr. No. Name of Subsidiary Present status

1 IMM Winsome Italia S.r.l. Under Liquidation.

2 S.C. Winsome Romania S.r.l. Under Liquidation.

3 S.C. Textil S.r.l. Under Liquidation.

ISO 9001/ 2008:

Your Directors are pleased to inform you that your Company continues to be the holder of ISO 9001/2008 certificates.

DIVIDEND:

Your Directors are unable to recommend any dividend on equity shares for the year under review.

SHARE CAPITAL:

During the year the company has not allotted any securities.

DIRECTORS:

(a) Ms. Ishika Aggarwal has been appointed as an Additional Director on 31.03.2015 of the Company for a period of five years pursuant to the provisions of Sections 149, 152 and any other applicable provisions, if any, of the Companies Act, 2013 read with Schedule IV to the Companies Act, 2013, the rules made there under (including any statutory modification(s) or re-enactment thereof for the time being in force). Ms. Ishika Aggarwal is Bachelor of Science and Masters of Business Administration. This had also fulfill the requirement of having a woman Director on the Board of Directors under the Companies Act, 2013.

(b) Shri K. P. Ramakrishnan has been appointed as an Additional Director on 29.11.2014 of the Company for a period of five years pursuant to the provisions of Sections 149, 152 and any other applicable provisions, if any, of the Companies Act, 2013 read with Schedule IV to the Companies Act, 2013, the rules made there under (including any statutory modification(s) or re-enactment thereof for the time being in force). Shri K. P. Ramakrishnan is B.Tech (Metallurgy) from IIT, Chennai. He has around 36 years of experience in Banking Sector and has worked at various levels in different locations in India. He retired as Chief General Manager from IDBI Bank in 2014.

(c) Shri B. M. Padha was nominated as director of the Company by Punjab National Bank and the Board of the Company has appointed w.e.f. 18.10.2014 as Nominee Director of the Company.

(d) Shri Satish Bagrodia, Director, retires by rotation and being eligible, offers himself for re-election.

(e) None of the Directors are disqualified under the provisions of Section 164(2) of the Companies Act, 2013. The Directors have made the requisite disclosures, as required under the provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement.

BOARD EVALUATION:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, the directors individually, as well as the evaluation of the working of its Committees. At the meeting of the Board all the relevant factors that are material for evaluating the performance of individual Directors, the Board and its various committees were discussed in detail. A structured questionnaire each for evaluation of the Board, its various Committees and individual Directors was prepared and recommended to the Board by Nomination & Remuneration Committee for doing the required evaluation after taking into consideration the input received from the Directors covering various aspects of the Board's functioning and its Committees, execution and performance of specific duties, obligations and governance etc.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and non- independent Directors was also carried out by the Independent Directors at their separate meeting. The Directors expressed their satisfaction with the evaluation process.

NO. OF BOARD MEETINGS:

Three board meetings were convened and held during the financial year 2014-15, comprising a period of 6 months from 01.10.2014 to 31.03.2015. The details thereof are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

AUDITORS:

M/s. Lodha & Co., Chartered Accountants (Firm Registration Number: 301051E), who are Statutory Auditors of the Company hold office up to the forthcoming Annual General Meeting and are recommended for re-appointment to audit the accounts of the Company for the Financial Year 2015-16. As required under the provisions of Section 139 of the Companies Act, 2013, the Company has obtained written confirmation from M/s Lodha & Co. that their appointment, if made, would be in conformity with the limits specified in the said Section.

AUDITORS' REPORT:

The Statutory Auditors of the Company have submitted Auditors' Report on the accounts of the Company for the financial year ended March 31, 2015. The explanation/ comments of the Board on every qualification/ reservation or adverse remarks given by the Auditor in its report is annexed herewith as Annexure 'A'.

COST AUDITORS AND COST AUDIT REPORT:

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of various activities are required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. Balwinder and Associates, Cost Accountants, to audit the cost accounts of the Company for 2015-16 on a remuneration to be decided by the Managing Director of the Company in consultation with the Cost Auditor, subject to approval of the shareholders of the company. The Cost Audit of Textile Industry was not required for the financial year 2014-15.

SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Girish Madan & Associates, a firm of Company Secretaries in practice (C.P. No. 3577) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year ended 31st March, 2015 is annexed herewith as 'Annexure 'B' to this Report.

PUBLIC DEPOSIT:

During the year, the Company has not accepted any deposits from the public and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014.

DIRECTORS' RESPONSIBILITY STATEMENT:

The Board of Directors acknowledge the responsibility for ensuring compliance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 in the preparation of annual accounts for the year ended on 31st March, 2015 and state that:

a. in the preparation of the annual accounts, 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 at the end of the financial year 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 this Act 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;

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; and

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.

KEY MANAGERIAL PERSONNEL:

Shri Manish Bagrodia, Managing Director, Shri Anand Balkishan Sharma, President (Corporate Finance) and Chief Financial Officer (CFO) and Shri K. V. Singhal, General Manager (Legal) & Company Secretary of the Company are the Key Managerial Personnel of the Company.

CORPORATE GOVERNANCE:

A separate report on Corporate Governance is enclosed as a part of this Annual Report. A certificate from the Secretarial Auditor of the Company regarding compliance with Corporate Governance norms stipulated under Clause 49 of the Listing Agreement is annexed to the Report on Corporate Governance.

AUDIT COMMITTEE & RISK MANAGEMENT:

The details pertaining to composition of audit committee are included in the Corporate Governance Report.

RISK MANAGEMENT

The Board of the Company has formed a risk management committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for receiving the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee of the Company comprising Shri Pradeep Kumar as Chairman, Shri Satish Bagrodia, Shri K. P. Ramakrishnan and Shri S. K. Singla as its Members, met two times during the year. The Committee formulated Remuneration Policy which is attached as Annexure 'C' and forms a part of this Report of the Directors.

RELATED PARTY TRANSACTIONS:

All transactions entered into with related parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business and on an arm's length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with the related parties during the financial year which were in conflict with the interest of the Company and hence, enclosing of Form AOC-2 is not required. Suitable disclosure as required by the Accounting Standard (AS 18) has been made in the notes to the Financial Statements.

All Related Party Transactions are placed before the Audit Committee. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee for their approval on a quarterly basis.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

DECLARATION BY INDEPENDENT DIRECTORS:

Necessary declarations have been obtained from all the Independent Directors under sub-section (7) of Section 149 of the Companies Act, 2013.

SIGNIFICANT AND MATERIAL ORDER:

During the financial year, there was no significant and material order passed by any Court or any Tribunal against the Company.

INTERNAL FINANCIAL CONTROLS:

The Company has in place internal financial control systems, commensurate with the size and complexity of its operations to ensure proper recording of financial and operational information and compliance of various internal controls and other regulatory and statutory compliances. The internal auditor monitors and evaluates the efficacy and adequacy of internal control systems in the Company. Based on the report of the internal auditor, respective departments undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014, is annexed herewith as Annexure 'D'.

ENVIRONMENT AND POLLUTION CONTROL:

Top priority continues to be given to preservation of the environment by all the units of the Company. To combat pollution and strengthen the area ecology, considerable emphasis is placed on plantation of fragrant and shady trees. We are cautious of preserving water through recycling and rainwater harvesting to the extent possible. All manufacturing facilities possess the required environmental clearance from the respective Pollution Control Boards and do comply with the relevant legislation. The Company is well aware of its responsibility towards a better and clean environment. Our efforts in environment management go well beyond mere compliance with statutory requirements. The Company has always maintained harmony with nature by adopting eco-friendly technologies and upgrading the same from time to time incidental to its growth programmes.

PARTICULARS OF EMPLOYEES:

The prescribed particulars of employees required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 'E' and forms a part of this Report of the Directors.

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return as provided under sub-section (3) of Section 92 of the Companies Act, 2013 is annexed herewith as Annexure 'F'.

CASH FLOW ANALYSIS:

In conformity with the provisions of clause 32 of the Listing Agreement, the Cash Flow Statement for the year ended 31.03.2015 is annexed with financial statements.

CONSOLIDATED ACCOUNTS

In accordance with Accounting Standards AS-21 on Consolidated Financial Statements, your Directors provide the Audited Consolidated Financial Statement of Winsome Yarns Limited, Winsome Yarns (Cyprus) Limited and Winsome Yarns FZE in the Annual Report.

INSURANCE

All the properties of your Company have been adequately insured against fire, flood, earthquake and explosive risks etc.

ACKNOWLEDGEMENTS:

Your Directors thank the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.

Registered Office : On behalf of the Board, SCO 191-192, Sector 34-A Chandigarh - 160022 Manish Bagrodia Pradeep Kumar Dated : 28.05.2015 Managing Director Director




Sep 30, 2014

Dear Members,

The Directors have pleasure in presenting the 24th Annual Report on the affairs of the Company together with the Audited Accounts of the Company for the financial year ended 30th September, 2014.

Financial Highlights Year ended Year ended 30.9.2014 30.9.2013* (Rs. in lacs) (Rs. in lacs)

Revenue from Operations 40660.72 77772.43

Profit before Interest, Depreciation & Tax (1909.55) 8514.99

Less: Interest 6133.15 8010.31

Profit /(Loss) before Depreciation (8042.70) 504.68

Less: Depreciation 2176.27 326797

Profit/ (Loss) before Taxes (10218.97) (2763.29)

Exceptional items 944.33 3483.85

Less : - Current Tax - -

- Previous years Tax - -

- Deferred Tax - 1233.24

Net Profit/ (Loss) after Taxes (11163.30) (7480.38)

Add : Surplus brought forward from previous year (8739.79) (1259.41)

Balance Carried to Balance Sheet (19903.39) (8739.79)

* Period from 01.04.2012 to 30-09-2013.(18 months)

Operations & Performance

During the year in retrospect, the performance of the Company continued to be stressed. The compounded impact of earlier year''s losses as comprehensively highlighted in the last years Report to you, caused further erosion of working capital funds resulting in subdued operations. The several requests to lenders for restructuring & enhancement of need based working capital funds have not been met with.

The current period under review faced additional challenges, like sudden glut in the domestic and international market, with abnormal increased input cost of raw material and power, fluctuating global commodity prices and low demand coupled with high debt, had an adverse financial impact on the Company.

The cumulative effect of all the above mentioned factors took a heavy toll on the overall performance and the Company for the period of 12 months ended 30.09.2014 with a loss of Rs. 11163.30 lacs in comparison to the net loss of Rs. 7480.38 lacs of previous period of 18 months ended on 30.09.2013. During the year under review your Company has achieved a turnover of Rs. 40660.72 lacs against the previous year''s (18 months) turnover of Rs. 77772.43 lacs.

During the year under review, the exceptional increase in losses of the Company is attributed to paucity of working capital funds and exceptional items related to provisions for doubtful debts and advances.

Erosion of Entire Net Worth

As per the audited financial statements as at 30th September 2014, the accumulated losses of the Company have exceeded its entire net worth and the Company has become a Sick Industrial Company under section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act. 1985. Though, the Board of Directors of the Company had sufficient reasons to form an opinion that the Company had become a Sick Industrial Company, on the basis of unaudited financial statements for the period ended June 30, 2014 and accordingly a Reference was filed with Board for Industrial and Financial Reconstruction under section 15(1) of the SICA on October 16, 2014 and registration of the same is awaited.

Outlook:

In order to come out of the difficult situation and explore the current opportunities, the Management of the Company has been working on various options and some of the steps which would have an effect on the overall performance of the Company for consideration of lenders of the Company are listed as under:

- To restructure/ realign / re-size its debts in terms of CDR Guidelines with an aim to reduce costs by increasing efficiencies, rationalization of manpower and other costs.

- To continue with an effort on development of low cost variants of value added yarns.

- To dispose of noncore assets of the Company and the funds so generated will be infused in the working of the Company.

- To explore and develop overseas markets as export of yarn is profitable on account of appreciation of US dollar.

- Govt. of Punjab has fully repaired the canal on which all the five Micro Hydel Projects of the Company are situated. With this the water availability will be much better and Company will be able to generate more electricity. This will reduce the power cost.

- With revival of US economy the demand of yarn will increase, which will result in increase in better margins.

In view of the above developments, the Company has made a proposal to all lenders in April 2014, for deep restructuring with Holding on Operations. The Lenders and CDR EG in its meeting held on 10.06.2014 decided that TEV Study of operation of the Company to be carried out, which was assigned to M/S Dun & Bradstreet, who submitted the Report on 23.072014, endorsing the viability of the Company. However, lenders were not willing to support restructuring proposal and decided for initiating recovery actions under the RDDB & SARFAESI Acts. The recall notices are being suitably replied under the guidance of legal experts with a request to the lenders to withdraw the same in the interest of all stakeholders and long term viability of the Company. The Company is continuously pursuing the lenders to reconsider their decisions and recommend for restructuring as requested. However, the holding on operations was permitted by the lenders to the Company in October 2014.

The Company has raised its claim on the lenders for the amount of losses suffered by the Company to the extent it considers the losses as attributed to the lenders.

The management of the Company is making efforts for restructuring of its business and affairs and expects to revive itself. The current efforts are also targeted towards increasing its sales and profit margins by increased production/ development of value added yarns. The Company is also launching some new products with some major retailers in US as well as Europe and other international markets.

Subsidiary Companies & Overseas Operations

According to the provisions of Section 212 of Companies Act, 1956, the holding Company is required to attach the balance sheet etc. of its subsidiary companies along with its Balance Sheet. However, pursuant to provisions of general circular no. 2/2011 issued by Ministry of Corporate Affairs on 8th February 2011, a general exemption is granted to attach the balance sheet of the subsidiary companies. Accordingly, the annual accounts of Winsome Yarns (Cyprus) Limited and Winsome Yarns FZE have not been attached in this Annual Report, but the same are available for inspection at the registered office of the Company. Further, due to Global recession of which European Countries are the worst affected, the three step down subsidiaries of the Company namely; S.C. Winsome Romania, S.r.l., IMM Winsome Italia S.r.l. and S.C. Textil, S.r.l. are under liquidation and their Balance Sheet etc. is not available.

The exemption from attaching the Balance Sheet etc. of these three subsidiary companies was sought, pursuant to Section 212(8) of Companies Act, 1956, and in response to which, Ministry of Corporate Affairs informed that pursuant to General Circular No. 2/2011 issued by Ministry of Corporate Affairs the approval of Ministry of Corporate Affairs is no more required.

The present status of these three subsidiary companies is given as under:-

Name of Subsidiary Start of liquidation Present status process IMM Winsome Italia S.r.l. 30.09.2008 Liquidation process is going on. S.C. Winsome Romania S.r.l. 26.11.2008 Liquidation process is going on.

S.C. Textil S.r.l. 09.02.2010 Liquidation process is going on.

ISO 9001/ 2008

Your Directors are pleased to inform you that your Company continues to be the holder of ISO 9001/2008 certificates.

Dividend

Your Directors are unable to recommend any dividend on equity shares for the year under review.

Directors

In accordance with the Company''s Articles of Association, Shri Manish Bagrodia, Director, retires by rotation and being eligible, offers himself for re-appointment.

During the year 2013-14, the Punjab National Bank has withdrawn the nomination of Shri Joginder Kumar Gupta from the Board of the Company w.e.f. 14.072014 and nominated Shri Brij Mohan Padha in place of Shri Joginder Kumar Gupta. The Board of Directors of the Company has approved the nomination of Shri Brij Mohan Padha, Dy. General Manager, Punjab National Bank w.e.f. 18.10.2014 as Nominee Director of the Company vide circular resolution dated 20.10.2014.

Shri Rohtash Kumar Kucheria has resigned from directorship of the Company and the Board of Directors has accepted the same w.e.f. 26.09.2014 vide circular resolution dated 06.10.2014.

Further, Shri K. P Ramakrishnan was appointed as Independent Non-executive Director of the Company with effect from 29.11.2014.

Consolidated Accounts

In accordance with Accounting Standards AS-21 on Consolidated Financial Statements, your Directors provide the Audited Consolidated Financial Statement of Winsome Yarns Limited, Winsome Yarns (Cyprus) Limited and Winsome Yarns FZE in the Annual Report.

Insurance

All the properties of your Company have been adequately insured against fire, flood, earthquake and explosive risks etc.

Public Deposit

The Company did not accept any Fixed Deposit during the year.

Auditors

M/s Lodha & Co, Chartered Accountants, Statutory Auditors of the Company, hold office upto the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has obtained a Letter of Eligibility in terms of provisions of Section 139 of the Companies Act 2013 read with Companies (Audit & Auditors) Rules 2014 from M/s Lodha & Co., Chartered Accountants, to the effect that their re-appointment, if made, would be in accordance of provisions of Section 141 of the Companies Act 2013 and Rules made thereunder and that they are not disqualified for such appointment within the meaning of section 141 of the Companies Act, 2013, the Chartered Accountants Act 1949 and Rules & Regulations made thereunder. Therefore, it is proposed to re-appoint M/s Lodha & Co, Chartered Accountants, as Statutory Auditors of the Company, for a period of three years i.e. from the conclusion of this 24th Annual General Meeting of the Company till the conclusion of 27th Annual General Meeting of the Company, subject to the ratification of their appointment by the members in every subsequent Annual General Meeting in accordance with the provisions of Section 139 of the Companies Act 2013 read with Companies (Audit & Auditors) Rules 2014.

Appointment of Key Managerial Persons (KMPs)

Shri Anand Balkishan Sharma, President (Corporate Finance), has been appointed as Chief Financial Officer (CFO) of the Company by the Board of Directors in their meeting held on 13th August, 2014 under the provisions of Section 203 of the Companies Act 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Auditors'' Report

The Statutory Auditors of the Company have submitted Auditors'' Report on the accounts of the Company for the accounting year ended September 30, 2014. This Auditors'' Report is self-explanatory and requires no comments.

Particulars of Employees

None of the employees is covered under section 217(2A) of the Companies Act, 1956 read with Companies (particulars of Employees) Rules, 1975 as amended.

Management''s Discussion and Analysis Report

Management''s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual report.

Statutory Information

(A) Directors'' Responsibility Statement

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibilities Statement, it is hereby confirmed that:

i. in the preparation of the annual accounts for the financial year ended 30th September, 2014, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. the accounting policies are applied consistently and reasonable prudent judgment and estimates are made so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

iii. 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 defecting fraud and other irregularities;

iv. the Directors have prepared the accounts for the financial year ended 30th September, 2014 on a going concern basis.

(B) Conservation of Energy, Technology Absorption and Foreign Exchange earning and outgo.

Information in accordance with the provisions of section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the ANNEXURE ''A'' forming part of this Report.

Corporate Governance

During the financial year, the Company continued its commitment to the principles of good Corporate Governance. The Company believes that best board practices and transparent disclosures are necessary for enhancing shareholders value.

A report on Corporate Governance, along with a Certificate of compliance from the Auditors of the Company is attached as ANNEXURE ''B'' to this report.

Statutory Disclosures

None of the Directors are disqualified under the provisions of Section 164(2) of the Companies Act, 2013. The Directors have made the requisite disclosures, as required under the provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement.

Sexual Harassment

Pursuant to provisions of Section 4 of the Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013, the Board of Directors of the Company have constituted the "Internal Complaint Committees" at the different work places of the Company.

Whistle Blower Policy

Pursuant to provision of section 177(9) of the Companies Act, 2013 and Clause 49(II)(F) of the listing agreement, the Company has adopted the ''Whistle Blower Policy'' and authorized to the Audit Committee of the Board to look after all the matters relating to Whistle Blower Policy and to submit its report to Board at regular intervals, on the receipt of any concerned matter, for appropriate action.

Next financial year of the Company

The last financial year of the Company was closed on 30th September, 2014. The period of next financial year will be decided by the Board of Directors of the Company in times to come.

Acknowledgement

Your Directors wish to place on record their deep appreciation of the timely support provided by the Company''s bankers, all the vendors and the dedication and commitment of the employees at all levels. We are sure, we will continue to dare and reach the pinnacle of our journey called success.

Your Directors convey their grateful thanks to all the Government Authorities and Shareholders for their continued and unstinted assistance, co-operation and patronage.

We also take this opportunity to thank all the valued customers who have appreciated our products and have patronized them.

For and on behalf of the Board Pradeep Kumar Director

Place : Chandigarh Manish Bagrodia Dated : 29.11.2014 Managing Director


Mar 31, 2012

The Directors have pleasure in presenting the 22nd Annual Report together with the audited statement of Accounts of the Company for the financial year ended 31st March, 2012.

Financial Highlights Year ended Year ended 31.3.2012 31.3.2011 (Rs. in lacs) (Rs. in lacs)

Revenue from Operations 43956.05 33337.31

Profit before Interest , Depreciation & Tax 2678.41 7226.46

Less: Interest 4927.09 3922.29

Profit /(Loss) before Depreciation (2248.68) 3304.17

Less: Depreciation 2296.12 2179.58

Profit/ (Loss) before Taxes (4544.80) 1124.59

Less : Current Tax -- --

Previous years Tax -- 46.13

Deferred Tax (1367.66) 467.56

Net Profit/ (Loss) after Taxes (3177.14) 610.90

Add : Surplus brought forward from previous year 1917.73 1306.83

Balance Carried to Balance Sheet (1259.41) 1917.73

Operations & Performance

High cotton prices, coupled with fluctuating inventory, saw Textile and Clothing (T&C) companies post a dip in bottom line by over 100 per cent in many cases over 2011-12, says the Confederation of Indian Textile Industry (Citi).

There is no issue with cotton prices rising, if they do so gradually. However, from October 2010 to March 2011, prices rose from Rs 34,000 per candy (356 kg) to Rs 63,000 per candy. In the next one month, it almost came down to where it (originally) was. Such high fluctuations led to textile mills incurring heavy losses, during the current year.

According to data compiled by the Centre for Monitoring Indian Economy, out of 234 Textile and Clothing (T&C) companies, 74 per cent or 174 companies saw poorer financial results for the first three quarters of 2011-12. And, of these 174, as many as 130 were net loss-making. The Company also suffered losses on account of sale of inventory piled up during the year due to stoppage of export by Government of India.

Your Company has achieved a turnover of Rs. 43956.05 lacs against the previous year's turnover of Rs. 33337.31 lacs i.e registering an increase of 31.85% (approx.). The Company has incurred a net loss (after tax) of Rs. 3177.14 lacs against previous year's net profit after tax of Rs. 610.90 lacs.

Expansion Projects

The management is pleased to inform you that out of five Micro Hydel Power Projects having a total capacity to produce of 3.9 MW of electricity, four Micro Hydel Projects have been commissioned upto 31st March, 2012. The implementation of one Micro Hydel Power Project is at an advanced stage and are expected to be commissioned with in current financial year 2012-2013.

Subsidiary Companies & Overseas Operations

During the year wholly owned subsidiary of the Company, Winsome Yarns (Cyprus) Limited has incorporated a wholly owned subsidiary in UAE namely Winsome Yarns FZE on 11.07.2011. According to the provisions of Section 212 of Companies Act, 1956, the holding company is required to attach the balance sheet etc. of its subsidiary companies along with its balance sheet. However, pursuant to provisions of general circular no. 2/2011 issued by Ministry of Corporate Affairs on 8th February 2011, a general exemption is granted to attach the balance sheet of the subsidiary companies. Accordingly, the annual accounts of Winsome Yarns (Cyprus) Limited and Winsome Yarns FZE have not been attached in this Annual Report, but the same are available for inspection at the registered office of the company. Further due to Global recession of which European Countries are the worst affected, the second, third and fourth step down subsidiaries of the Company namely; S.C. Winsome Romania, S.r.l., IMM Winsome Italia S.r.l. and S.C. Textil, S.r.l. are under liquidation and their balance sheet etc. is not available. The exemption from attaching the balance sheet etc. of these three subsidiary companies was sought, pursuant to Section 212(8) of Companies Act, 1956, and in response to which, Ministry of Corporate Affairs informed that pursuant to General Circular No. 2/2011 issued by Ministry of Corporate Affairs the approval of Ministry of Corporate Affairs is no more required.

The present status of these three subsidiary companies is given as under:-

Sr. No. Name of Subsidiary Start of liquidation process Present status

1 IMM Winsome Italia S.r.l. 30.09.2008 Liquidation process is going on.

2 S.C. Winsome Romania S.r.l. 26.11.2008 Liquidation process is going on.

3 S.C. Textil S.r.l. 09.02.2010 Liquidation process is going on.

Consolidation of equity shares from nominal value of Re. 1/- each to Rs. 10/- each

During the year 2011-12, the company has consolidated the nominal value of equity shares from Re. 1/- each to Rs. 10/- each on 06.08.2011 and issued new equity shares of face value of Rs. 10/- each in place of old equity shares of face value Re. 1/- each on 06.08.2011.

Allotment of equity shares pursuant to conversion of equivalent number of convertible warrants

Out of total number of 2,51,00,000 convertible warrants, the company had allotted 1,30,32,500 equity shares on 30.09.2010 and balance 1,20,67,500 equity shares on 17.08.2011 to Promoter and Strategic Investors pursuant to conversion of equivalent number of convertible warrants. The Company is utilising these funds for purposes as stated in the Extraordinary Statement of General Meeting held on 05.02.2010 vide which approval of members was received for the issue of said allotment.

ISO 9001/ 2008

Your directors are pleased to inform you that your company continue to be the holder of ISO 9001/2008 certificates. Dividend

Your Directors are unable to recommend any dividend on Equity Shares for the year under review.

Directors

In accordance with the Company's Articles of Association, Shri Satish Bagrodia and Shri Brij Mohan Khanna, Directors retire by rotation and being eligible, offer themselves for re-appointment.

During the year 2011-12, the Punjab National Bank has nominated Shri Vinay Kumar, FGM as nominee director of the Company in place of Shri Yashpal Barar. Board of Directors in their meeting held on 13.02.2012 appointed to Shri Vinay Kumar as Nominee Director of the Company.

Consolidated Accounts

In accordance with Accounting Standards AS-21 on Consolidated Financial Statements, your directors provide the Audited Consolidated Financial Statement of Winsome Yarns Limited, Winsome Yarns (Cyprus) Limited and Winsome Yarns FZE in the Annual Report.

Insurance

All the properties of your Company have been adequately insured against fire, flood, earthquake and explosive risks etc.

Public Deposit

The Company did not accept any Fixed Deposit during the year.

Auditors

M/s. Lodha & Co., Chartered Accountants (FRN 301051E), who are Statutory Auditors of the Company hold office up to the forthcoming Annual General Meeting and are recommended for re-appointment to audit the accounts of the Company for the Financial Year 2012-13. As required under the provisions of the Section 224(1B) of the Companies Act, 1956, the Company has obtained written confirmation from M/s. Lodha & Co. that their appointment, if made would be in conformity with the limits specified in the Section.

Cost Audit

The Central Government's Cost Auditor order specified an audit of cost accounting records of the textile Companies every year. This is applicable to the products manufactured by the Company. The Board of Directors, subject to approval of Central Government, appointed M/s Aggarwal Vimal & Associates, Cost Accountants, having its office at SCO 124-125, Sector 34-A, Chandigarh to carryout the audit for the financial year 2012-2013. Further the cost audit report for the financial year 2010-11 had been filed on 20.09.2011 (Due date on 30.09.2011) vide SRN-B20809885. Auditors' Report

Observations made in the Auditors' Report are self-explanatory and therefore do not call for any further explanation. Management's Discussion and Analysis Report

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual report. Corporate Governance

During the financial year, the company has continued its commitment to the principles of good Corporate Governance. The company believes that best board practices and transparent disclosures are necessary for enhancing shareholders value.

A report on Corporate Governance, along with a Certificate of compliance from the Auditors of the Company is attached as ANNEXURE 'B' to this report.

Statutory Information

(A) Directors' Responsibility Statement

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to Directors' Responsibilities Statement, it is hereby confirmed :

i. that in the preparation of the annual accounts for the financial year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. that the accounting policies are applied consistently and reasonable prudent judgment and estimates are made so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for the year under review;

iii. that 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 defecting fraud and other irregularities;

iv. that the directors have prepared the accounts for the financial year ended 31st March, 2012 on a going concern basis.

(B) Conservation of Energy, Technology Absorption and Foreign Exchange earning and outgo.

Information in accordance with the provisions of section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given in the ANNEXURE 'A' forming part of this report.

Statutory Disclosures

None of the Directors are disqualified under the provisions of Section 274(1)(g) of the Companies Act, 1956. The Directors have made the requisite disclosures, as required under the provisions of Companies Act, 1956 and Clause 49 of the Listing Agreement.

Acknowledgement

Your Directors wish to place on record their deep appreciation of the timely support provided by the Company's bankers, all the vendors and the dedication and commitment of the employees at all levels. We are sure we will continue to dare and reach the pinnacle of our journey called success.

Your Directors convey their grateful thanks to all the Government authorities and shareholders for their continued and unstinted assistance, co-operation and patronage.

We also take this opportunity to thank all the valued customers who have appreciated our products and have patronised them.

For and on behalf of the Board

Place : Chandigarh Satish Bagrodia

Dated : 30.05.2012 Chairman

 
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