Katare Spinning Mills Ltd Directors Report.

To the Members,



Pursuant to the orders of Honble National Company Law Tribunal (NCLT), Mumbai, Corporate Insolvency Resolution Process (CIRP) has been initiated in respect of KATARE SPINNING MILLS LIMITED ("the Company") under the provisions of the Insolvency and Bankruptcy Code, 2016 ("the Code") with effect from 17th July, 2020.

Further, "the Company has preferred appeal against the decision of Honble NCLT Mumbai to NCLAT, Delhi (Company Appeal no. 693 of 2020) and is now scheduled for hearing on 4th September, 2020."

In this connection, Mr. Vithal Madhukar Dahake has been appointed as Resolution Professional (RP) to carry out the activities relating to CIRP as per the rules, regulations and guidelines prescribed by the Code.

Since the Company is under Corporate Insolvency Resolution Process (CIRP), as per Section 17 of the Insolvency & Bankruptcy Code, from the date of appointment of the Resolution Professional -

(a) the management of the affairs of the company shall vest in the Resolution Professional.

(b) the powers of the Board of Directors of the company shall stand suspended and be exercised by the Resolution Professional.

(c) the officers and managers of the company shall report to the resolution professional and provide access to such documents and records of the company as may be required by the Resolution Professional.

d) the financial institutions maintaining accounts of the company shall act on the instructions of the Resolution Professional in relating to such accounts furnish all information relating to the company available with them to the Interim Resolution Professional.

1. Financial Highlights:

Certain key aspects of your Companys performance during the Financial Year ended 31st March, 2020 as compared to the previous Financial Year are summarized below:

2019-20 2018-19
Turnover 3153.24 3653.94
Profit Before Interest & Depreciation -70.12 424.03
Less : Interest 63.79 323.82
Loss before depreciation -133.91 100.21
Less : Depreciation 88.75 86.59
Loss after depreciation & before taxation -222.66 13.62
Add : Excess provision in the last year 0 0
Less: Tax expenses relating to previous 0 3.77
Add/Less: Deferred Tax Liability/Assets 0 0
Profit / loss for the period
Profit/ Loss for the period -222.66 9.85
Add : Balance carried from previous
year -430.13 -439.98
Profit/Loss carried forward -652.79 -430.13


During the year under review, your Company recorded a total income of Rs. 3153.24 (in Lakhs) as compared to last years income of Rs. 3653.94 (in Lakhs) and net loss of Rs. 222.66 (in Lakhs) as compared to last years net profit of Rs. 9.85 (in Lakhs). For further information, kindly refer to Management Discussion and Analysis Report, forming a part of this Annual Report.

The Bank of India filed an application before Honble NCLT, Mumbai under Section 7 of Insolvency and Bankruptcy Code, 2016 ("IBC, 2016") for initiating Corporate Insolvency Resolution Process ("CIRP") of KATARE SPINNING MILLS LIMITED. The application was admitted vide Honble NCLT, Mumbai Order dated 17.07.2020 and Mr. Vithal Madhukar Dahake, Insolvency Professional, having (IP Registration No.: IBBI/IPA-003/ IP-N-000117/2017-18/11296), was appointed as Resolution Professional ("RP").

As per the Insolvency and Bankruptcy Code, 2016 public announcement were made inviting the claims from the creditors and during the Corporate Insolvency Resolution Process ("CIRP") Expression of Interest ("EOI") were invited for submitting the Resolution Plan for KATARE SPINNING MILLS LIMITED.


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.

Unclaimed Dividend Amount

The Company has declared dividend in the year of 2013, out of that total dividend corpus, dividend of Rs. 206,853/- was unclaimed from the shareholders till the date in the separate bank account maintained by the Company. Further, the Company wishes to inform to the shareholders that, as per the regulations of Investor Education and Protection fund (IEPF), such unpaid dividend amount will be transferred to IEPF account after conclusion of the ensuring AGM.


In general, the performance of the cotton yarn industry depends upon the swings of demand by the market forces which closely track the economic trend. The exception to this rule is, the demand for specialty cotton yarn which is consistent and growing. On bouncing of economic conditions, the demand trend is expected to be more positive for the current year even for normal segment of cotton yarn and that would drive more demand for specialty cotton yarn.


Considering the involvement of power part in the cost of finished goods, the Company has set up 1 MW power project for captive consumption and accordingly, pleased to inform you that the Company has successfully commissioned 1 MW Solar Power plant for captive consumption in the month of April, 2015. This is the first net metering installation in the Maharashtra. During the financial year total 13,22,312 electricity units have been generated and it helps the Company to save in electricity bill substantially.


Pursuant to the provisions of Sections 134(3)(a) and 92(3) of the Companies Act, 2013 ("the Act") read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as on March 31, 2020, in prescribed Form No. MGT-9 is given to this Report.


Six meetings of the Board of Directors were held during the financial year 2019-20 and the gap between two consecutive board meetings was within 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.


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, Directors term, retirement age and Committees of the Board. It also covers aspects relating to nomination, appointment, induction and development of Directors, Directors Remuneration, Code of Conduct, Board Effectiveness Review and mandates of Board Committees.


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.


The 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 Companys businesses.

Additional Positive Attributes:

> The Directors should not have any other pecuniary relationship with the Company and the Companys promoters, except as provided under law.

> The Directors should maintain an arms 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.


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 Companys 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/Companys operations and the Companys 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/ Companys operations and the Companys 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 MD/ 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 MD/ EDs would be based on performance as evaluated by the NRC and approved by the Board.

It is affirmed that the remuneration paid to Directors and all other employees is as per the Remuneration Policy of the Company.


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 Companys operations.

Further, The Bank of India filed an application before Honble NCLT, Mumbai under Section 7 of Insolvency and Bankruptcy Code, 2016 ("IBC, 2016") for initiating Corporate Insolvency Resolution Process ("CIRP") of KATARE SPINNING MILLS LIMITED. The application was admitted vide Honble NCLT, Mumbai Order dated 17.07.2020 and Mr. Vithal Madhukar Dahake, Insolvency Professional, having (IP Registration No.: IBBI/IPA-003/ IP-N-000117/2017-

18/11296), was appointed as Resolution Professional ("IRP").

As per the Insolvency and Bankruptcy Code, 2016 public announcement were made inviting the claims from the creditors and during the Corporate Insolvency Resolution Process ("CIRP") Expression of Interest ("EOI") were invited for submitting the Resolution Plan for KATARE SPINNING MILLS LIMITED.


Details pertaining to the composition of Audit Committee are included in the Corporate Governance Report, which forms part of the Annual Report.


As per the provisions of Section 152 of the Act, Mrs. Vidyavati K. Katare (DIN 01443784), who retires by rotation at this meeting and being eligible offered herself for re-appointment, the matter is placed before member of the Company for approval.

Also, the Board of Directors of the Company has appointed new Two Independent Directors in the Company on 11th April, 2019 i.e. Mr. Prakash Venkappa Joti (DIN 08419933) and Mr. Vilas Ramakant Shendge (DIN 08419934. The Board of directors had appointed them as an additional directors of the Company with the recommendation of nomination and Remuneration committee of the Company and also the resolutions for confirming them as a directors (Non-Executive and independent Directors) was placed before the Members for their approval and got approved.

Also, the Existing independent Directors of the Company i.e. Mr. Suresh Bapuji Inamdar and Mr. Yadgiri Narayan Konda have completed their tenure in the Company and resigned from the Company from 11th April, 2019.

The Company has also appointed Key managerial personnel i.e. Mr. Kamal Katare as a Chief Financial Officer and Mrs. Arati Bandi as a Company Secretary cum Compliance officer as respectively in the Company from 11th April, 2019.

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.


The members may 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.


Pursuant to the provisions of Section 139, 142 and other applicable provisions, if any, of the Act, read with Rule 6 of Companies (Audit and Auditors) Rules, 2014 and pursuant to the recommendation of the Audit Committee, M/s N. R. Waghchaure & Associates, Chartered Accountants, (Firm Registration Number 114999W), was appointed as a Statutory Auditors of the Company and the appointment of the Statutory Auditors of the Company along with a confirmation that, their appointment, made by the members, in the year 2018 was within the limits prescribed under the Act.

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.


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.

The Company has incurred losses in the past years and charging of deferred interest to profit & Loss account would further increase the loss. Therefore, the Company is trying for betterment of future of it and also anticipates good results in ensuring year in which situation the entire amount is proposed to be written off.


Pursuant to the provisions of the Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/S. Nikhil Sawant & Co. Company Secretaries, Pune, as Secretarial Auditor to undertake the Secretarial Audit of the Company for the financial year 2019-20. The Report is Self-explanatory annexed herewith however; the Company has initiated necessary steps to comply with queries and/or noncompliances mentioned under the Secretarial Audit Report as per the provisions of the Act and the SEBI (LODR), 2015.


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.


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.


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.


All Related Party Transactions (RPTs) that were entered into during the financial year were on an arms 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.


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 Companys 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.


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.


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.


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.


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.


The Independent Directors of the Company have submitted the declaration of Independence as required under Section 149(7) of the Act, confirming that they meet the criteria of independence under Section 149(6) of the Act and Regulation 16 (1) (b) of the SEBI (LODR), 2015.

The Independent Directors were fully kept informed of the Companys activities in all its spheres. During the year under review, a separate meeting of Independent Directors was held on 14th November, 2019 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 Companys 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.


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.


Managements 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.


All Directors on the Board of the Company have not incurred any disqualification on account of non-compliance with any of the provisions of the Act.


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, 2020 and state that:

1. In the preparation of the annual accounts for Financial Year ended 31st March, 2020, the applicable accounting standards have been followed along with proper explanation relating to material departures;

2. 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 31st March, 2020 and of the profit of the Company for that period.

3. 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.

4. The Directors have prepared the annual accounts for Financial Year ended 31st March, 2020 on a ‘going concern basis.

5. 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

6. The Directors have devised proper systems to ensure compliance with provisions of all applicable laws and that such systems were adequate and operating effectively.


The Company does not having any subsidiaries or joint ventures within the meaning of this clause and hence no details are required to be given.


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.


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.

By Order of the Board of Directors KATARE SPINNING MILLS LIMITED

SD/- SD/-
Managing Director Resolution Professional
(DIN- 00645013) Reg. IBBI/IPA-003/IP-N-00017/ 2017-18/11296
Place: Solapur Date: 31st August, 2020