To the Members,
KATARE SPINNING MILLS LIMITED
Your directors have pleasure in presenting the Forty Fourth (44th) Directors' Report of your Company along with the financial statements for the Financial Year ended 31st March 2024.
1. FINANCIAL HIGHLIGHTS:
Certain key aspects of your Company's performance during the Financial Year ended 31st March 2024 as compared to the previous Financial Year are summarized below:
(Rs. In Thousand)
2. OVERVIEW OF OPERATIONS:
During the year under review, your Company recorded a total income of Rs. 40,047.01 (in thousand) as compared to last year's income of Rs. 70,739.28 (in thousand) and net Loss of Rs. 18,730.14 (in thousand) as compared to last year's net loss of Rs. 15,118.55 (in thousand). For further information, kindly refer to Management Discussion and Analysis Report, forming a part of this Annual Report.
The Board of Directors have taken measures to adopt new technologies and industry standards to cope up with competition in the industry and advance towards achieving its goal.
3. DIVIDEND AND RESERVE:
Your directors do not recommend any dividend for the year under review. The details of reserves and surplus are provided in Note No. 15 of the notes to the standalone financial statement.
4. STATE OF AFFAIRS OF THE COMPANY/BUSINESS OVERVIEW:
SPINNING MILL INDUSTRY:
The performance of the spinning industry in India during the financial year 2023-24 was mixed. On the one hand, there was strong export demand for cotton yarn, the domestic market was sluggish due to high cotton prices.
The Company has generated a revenue of Rs. 40,047.01 (in thousand) during the reporting year from spinning segment as compared to Rs. 70,739.28 (in thousand) for the previous financial year. The reason for decline in revenue is the average cotton price in India during the 2023-24 season was around INR 58,000 per candy (356 kg), which was significantly higher than the previous season. This led to a decline in cotton yarn production and consumption in the domestic market.
SOLAR POWER PROJECT:
Considering the involvement of power part in the cost of finished goods, The Company had installed 1MW solar plant for captive consumption under net metering system. The generation of energy is consuming for day to day working and exports to grid. On modernization of the plant, Company will get good returns on consumption of self-power consumption. This is the first net metering installation in the Maharashtra. During the financial year total 13,11,265 electricity units have been generated and it helps the Company to reduce the cost of productions and move ahead towards goal of sustainable growth.
5. ANNUAL RETURN:
Pursuant to the provisions of the Companies Act, 2013 (“the Act”), an extract of the Annual Return as on March 31, 2023, in prescribed Form No. MGT-9 is given to this Report.
6. BOARD MEETINGS:
Five Meetings of the Board of Directors were held during the financial year 2023-24 and the gap between two consecutive board meetings was in accordance with the statutory limit. The details of the number of meetings held and attended by each Director are provided in the Corporate Governance Report, which forms part of this Report.
7. BOARD EFFECTIVENESS:
The Company has adopted the Governance guidelines which, inter alia, cover aspects related to composition and role of the Board, Chairman and Directors, Board diversity, definition of independence, Director's term, retirement age and Committees of the Board. It also covers aspects relating to nomination, appointment, induction and development of Directors, Director's Remuneration, Code of Conduct, Board Effectiveness Review and mandates of Board Committees.
A. BOARD EVALUATION:
The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to the provisions of the Act and the corporate governance requirement as prescribed by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [“SEBI (LODR), 2015”].
The performance of the Board was evaluated by the Board after seeking inputs from the Directors on the basis of the criteria such as the Board Composition and structures, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.
The Board and the Nomination and Remuneration Committee (NRC) reviewed the performance of the individual Directors on the basis of the criteria such as the contribution of the individual Director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspect of his role.
B. APPOINTMENT OF DIRECTORS AND CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE ATTRIBUTES, INDEPENDENCE OF A DIRECTOR:
The Nomination and Remuneration Committee (NRC) is responsible for developing competency requirements for the Board based on the industry and strategy of the Company. The NRC reviews and meets potential candidates, prior to recommending their nomination to the Board. At the time of appointment, specific requirements for the position, including expert knowledge expected, is communicated to the appointee.
The NRC has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178 (3) of the Act and SEBI (LODR), 2015:
Independence: A Director will be considered as an ‘Independent Director' if he/ she meets with the criteria for ‘Independence' as laid down in the Act and SEBI (LODR), 2015.
Competency: A transparent Board nomination process is in place that encourages diversity of thought, experience, knowledge, perspective, age and gender. It is ensured that the Board has a mix of members with different educational qualifications, knowledge and with adequate experience in banking and finance, accounting and taxation, legal and regulatory matters, hospitality sector and other disciplines related to the Company's businesses.
Additional Positive Attributes:
The Directors should not have any other pecuniary relationship with the Company and the Company's promoters, except as provided under law. The Directors should maintain an arm's length relationship between themselves and the employees of the Company, as also with the Directors and promoters, stakeholders for whom the relationship with these entities is material. The Directors should not be the subject of proved allegations of illegal or unethical behavior, in their private or professional lives. The Directors should have the ability to devote sufficient time to the affairs of the Company.
C. REMUNERATION POLICY:
The Company had adopted a Remuneration Policy for the Directors, KMP and other employees, pursuant to the provisions of the Act and SEBI (LODR), 2015. The key principles governing the Company's Remuneration Policy are as follows:
Independent Directors (ID) may be paid sitting fees for attending the meetings of the Board and of Committees of which they may be members, and receive commission within regulatory limits, as recommended by the NRC and approved by the Board.
Overall remuneration should be reasonable and sufficient to attract, retain and motivate Directors aligned to the requirements of the Company, taking into consideration the challenges faced by the Company and its future growth imperatives.
Remuneration paid should be reflective of the size of the Company, complexity of the sector/ industry/Company's operations and the Company's capacity to pay the remuneration and be consistent with recognized best practices.
Remuneration for Managing Director (MD)/ Executive Directors (ED)/ rest of the Employees
The extent of overall remuneration should be sufficient to attract and retain talented and qualified individuals suitable for every role. Hence remuneration should be market competitive, driven by the role played by the individual, reflective of the size of the Company, complexity of the sector/ industry/ Company's operations and the Company's capacity to pay, consistent with recognized best practices and aligned to any regulatory requirements.
Basic/ fixed salary is provided to all employees to ensure that there is a steady income in line with their skills and experience. In addition, the Company provides employees with certain perquisites, allowances and benefits to enable a certain level of lifestyle and to offer scope for savings. In addition to the basic / fixed salary, benefits, perquisites and allowances as provided above, the Company provides EDs such remuneration by way of commission, calculated with reference to the net profits of the Company in a particular financial year, as may be determined by the Board, subject to the overall ceilings stipulated in Section 197 of the Act. The specific amount payable to the EDs would be based on performance as evaluated by the NRC and approved by the Board and the Managing Director (MD) was appointed on non-remuneration basis in the Company.
It is affirmed that the remuneration paid to Directors and all other employees is as per the Remuneration Policy of the Company.
8. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS:
During the Financial year under review, no significant material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations.
9. AUDIT COMMITTEE:
Details pertaining to the composition of Audit Committee are included in the Corporate Governance Report, which forms part of the Annual Report.
10. DIRECTORS AND KMP:
As per the provisions of Section 152 of the Act, Mr. Umakant Mahindrakar (DIN 01233305), is liable to retires by rotation at the ensuing annual general meeting and being eligible offered himself for re-appointment, the matter will be placed before member of the Company for approval.
The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed both under Section 149 (6) of the Act and SEBI (LODR), 2015.
11. CORPORATE GOVERNANCE:
The members please note that the provisions relating to Corporate Governance i.e. Regulation 27 of SEBI (LODR), 2015 are not applicable to the Company and accordingly, the Company is not required to submit the Corporate Governance Report with this Annual Report. However, keeping in view the objective of encouraging the use of better practices through voluntary adoption, the Company has decided to adopt and disseminate voluntary disclosure of Corporate Governance which not only serve as a benchmark for the corporate sector but also help the Company in achieving the highest standard of corporate governance.
Accordingly, a voluntary disclosure i.e. the report on Corporate Governance as stipulated under regulation 34(3) read with Schedule V of the SEBI (LODR), 2015 is annexed herewith and forms a part of this report.
As such the Members may note that any omission of any corporate governance provisions shall not be construed as non-compliance of the above-mentioned regulations.
12. AUDITORS & THEIR REPORTS:
Pursuant to the provisions of section 139, 142 and other applicable provisions, if any, of Companies Act, 2013, read with Rule 6 of Companies (Audit and Auditors) Rules, 2014 and pursuant to the recommendation of the Audit Committee, M/s. G M Pawle and Associates, Chartered Accountant, Solapur (M.No.032561), was appointed as a Statutory Auditors of the Company and the Board have conveyed his consent to be appointed as the Statutory Auditors of the Company along with a confirmation that, his appointment is within the limits prescribed under the Companies Act, 2013.
The report of the Statutory Auditors along with the notes to Schedules is enclosed to this report and also the report contains qualification, reservation or adverse remark or disclaimer for the financial year under review.
13. RESPONSE TO AUDITORS QUALIFICATION:
The Board of the Company has discussed the points as mentioned in the Auditors report for period under review, in respect to this management is taking the necessary steps towards it.
Comments of the Board of Directors on the observations pointed out in the Independent Audit Report;
14. SECRETARIAL AUDIT:
Pursuant to the provisions of the Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. Nikhil Sawant & Co. Company Secretaries, Pune, as Secretarial Auditor to undertake the Secretarial Audit of the Company for the financial year 2023-24. The report is self-explanatory annexed herewith; however, the Company has initiated necessary steps to comply with queries and/or non-compliances mentioned under the Secretarial Audit Report as per the provisions of the Act and the SEBI (LODR), 2015.
15. INTERNAL FINANCIAL CONTROL:
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 there on are presented to the Audit Committee of the Board.
16. 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 Act read with Rule 8(3) of The Companies (Accounts) Rules, 2014, is annexed herewith separately.
17. DEPOSITS:
The Company has not accepted or renewed any deposits from the public during the year under review in terms of the Companies (Acceptance of Deposits) Rule, 2014.
18. RELATED PARTY TRANSACTIONS:
All Related Party Transactions (RPTs) that were entered into during the financial year were on an arm's length basis and in the ordinary course of business. Accordingly, detailed information given in Form AOC-2 which is annexed herewith separately.
There were no materially significant RPTs entered into by the Company during the year.
19. RISK MANAGEMENT:
The Company has adopted a Risk Management Policy, pursuant to the provisions of Section 134 of the Act, which has a robust Risk Management framework to identify and evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on business objectives and enhance the Company's competitive advantage.
The risk framework defines, the risk management approach across the enterprise at various levels including documentation and reporting.
The framework enables risks to be appropriately rated and graded in accordance with their potential impact and likelihood. The two key components of risks are the probability (likelihood) of occurrence and the impact (consequence) of occurrence, if the risk occurs. Risk is analyzed by combining estimates of probability and impact in the context of existing control measures.
20. LOANS, GUARANTEES AND INVESTMENTS:
During the year, the Company has not made any investments or given any loans or guarantees or provided any security in connection with a loan to any person or body corporate, covered under Section 186 of the Act.
21. CORPORATE SOCIAL RESPONSIBILITY INITIATIVE:
As the net worth of the Company is less than Rs. Five hundred crores, further the turnover of the Company is less than Rs. One thousand crores and net profit of the Company does not exceed Rs. Five crore or more at any point during the financial year, therefore the Company is not obliged to form Corporate Social Responsibility committee as per terms of section 135 (1) of the Act.
22. PARTICULARS OF EMPLOYEES:
There are no employee drawing remuneration exceeding the limits prescribed under Section 134(3) (q) of the Act read with Rule 5 of Rules 2014 and hence no details are required to be annexed to this report.
23. VIGIL MECHANISMS/WHISTLE BLOWER POLICY:
The Company has established a vigil mechanism named as ‘Whistle Blower Policy' within the Company in compliance with the provisions of Section 177(10) of the Act and Regulation 22 of the SEBI (LODR), 2015.
The policy of such mechanism has been circulated to all employees within the Company, which provides a framework to the employees for guided & proper utilization of the mechanism.
24. SEPARATE MEETING OF INDEPENDENT DIRECTORS:
The Independent Directors were fully kept informed of the Company's activities in all its spheres. During the year under review, a separate meeting of Independent Directors was held on 18th December, 2023 and the Independent Directors reviewed the performance of (i) non-Independent directors and (ii) the board as whole.
They also assessed the quality, quantity and timelines of flow of information between the Company's Management and the Board that are necessary for the Board to effectively and reasonably perform their duties. All the Independent Directors were present at the meeting.
25. SAFETY MEASURES:
i. Insurance:
Your Company continued to cover all assets mainly, plant & machinery, building, materials, stock, furniture & fixtures against possible risks like fire, flood, terrorism and earthquake.
ii. Industrial Relations:
The industrial relations at the plants of the Company during the year under review continued to be cordial throughout the year.
26. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT:
Management's Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 read with Schedule V to the SEBI (LODR), 2015, is presented in a separate section forming part of the Annual Report.
27. DISQUALIFICATION OF DIRECTORS:
None of Director on the Board of the Company has incurred any disqualification on account of non-compliance with any of the provisions of the Act.
28. DIRECTOR'S RESPOSIBILITY 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 Act in the preparation of annual accounts for the year ended on 31st March, 2024 and state that:
i. In the preparation of the annual accounts for Financial Year ended 31st March, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures;
ii. The Directors 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 profit of the Company for that period.
iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.
iv. The Directors have prepared the annual accounts for Financial Year ended 31st March, 2024 on a ‘going concern' basis.
v. The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and have been operating efficiently, and
vi. The Directors have devised proper systems to ensure compliance with provisions of all applicable laws and that such systems were adequate and operating effectively.
29. DETAILS OF SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES:
The Company does not have any subsidiary or joint venture within the meaning of this clause and hence no details are required to be given.
30. DISCLOSURES AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:
The Company has zero tolerance for sexual harassment at its workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace.
31. DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016)
Your Company neither made any application nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016 during the year.
32. THE DETAILS OF DIFFERENCE BETWEEN AMOUNT OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAKING LOAN FROM THE BANKS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF
Your Company has not obtained any one-time settlement of loan from the Banks or Financial Institutions during the year.
33. APPRECIATION:
Your Directors would like to place on record their appreciation for the co-operation and assistance received from the banks, for the utmost confidence reposed in the management by the shareholders and customers during the year under review. Your Directors wish to thank for the services of the executive, staff and workers of the Company at all levels for their dedication, devotion, determination and discipline. The Directors express their profound thanks to the shareholders for their continued support and goodwill and they look forward to the future with confidence.