Katare Spinning Mills Ltd Management Discussions.

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.

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."

1. Current scenario

For the Textile industry, the Global focus is shifting from China to India due to cost and stability factors. The Governments positive steps are expected to help this shift and if foreign investment in textile retail materialises, the consumption of the textile product in the domestic market should increases in the year to come.

Equally, our Economy is also showing recovery with lower fiscal and current account deficit. The Indian Government in a pro - active manner has set in motion lots of economic initiatives. These initiatives in the long run would sustain positive economic growth which is fundamental for the overall growth and standard of living.

2. Business Segment Textile Industry

The Company achieved a turnover of Rs. 3153.24 lakh against Rs. 3653.94 lakh relating to the previous year. The gross profit/loss of the Company recorded at Rs. -70.12 Lakh before interest and depreciation and net loss for the year is at Rs. 222.66 Lakh as against net profit of Rs. 9.85 Lakh for the previous year. The turnover of the Company is also less as compared to the previous year.


As we all are aware that, in the 2016-17 the Government of India has declared Smart City status to Solapur, so in view of this the prediction of hospitality industry was that the good investment will take place in the Solapur City to develop it and also it will impact on Hotel Industry in good scene. But, due to some policies of government in development of region area was not so good, thats why the results are not getting positive. The lenders, Bank of India, have taken possession of property of Hotel division of the Company on 25th October, 2017 under SARFESAI Act and from that date the Hotel business of the Company is not operating. The Company have referred the matter to debt Recovery Tribunal, Pune. In respect to this, the Board of the Company has given the power of attorney to Mr. K. T. Katare, Director of the Company to discuss and negotiate the matter with Bank of India, Solapur branch for amicable settlement. Due to this the Hotel unit of the Company was closed from that date, so no revenue received from the hotel unit.

Solar Power Project

The Company has already Commissioned Rooftop Solar Power Project at hotel and has getting good benefit by way of reduction in monthly electricity bills. But due to closure of hotel unit for some period of days the Rooftop Solar Power was also closed.

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.

3. Industry Outlook

In general, the performance of the Textile 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.

4. Opportunities

Improving economic conditions would generate more demand, in general, for cotton yarn. The Company by concentrating and focusing on manufacture of specialty cotton yarn has created specific markets for its products, which is on the growth path and has continued good demand.

5. Risks and Concerns

The Government policies and volatile economic environment have a bearing on the overall performance of the company. Continuous Quality Improvement is the need of hour as there are different demand pattern all over the world. Striking a balance between the quality and price of products.

6. The Financial and Operational Performance

The Financial statement given in the report of the Directors for the financial year 2019-20 is not as good as compare to Market situation, as the Company is having losses in the year. It needs to take genuine steps by the management for transparency and best judgement for the estimates made to correctly reflect the true and fair affairs of the Company and the Company is also planning for future years to come a good condition for the Company.

7. Internal control, systems and adequacy

The Company is committed to maintaining adequate internal control systems as a part of efficient corporate governance. The system ensures that all transactions are authorized, recorded and reported correctly to safeguard assets and protect them from any loss due to unauthorized use or disposition. The operating managers make sure that all operations within their area are compliant and safeguarded against all risks whereas on the other, auditors carry out random audits to detect flaws in the system, which makes it effective and efficient. Internal audit reports are prepared to create awareness and to take corrective actions on the respective units or areas, which need rectification. These reports are then reviewed by the management team and the Audit Committee for follow-up action.

8. Human Resources Development

The Company places its utmost value on the human resource and contribution from the employees is always fine-tuned towards to achieve the overall organization performance by constant education, training and various incentive schemes, which are in vogue. A motivated and efficient workforce can help it attain its target in a realistic manner. Taking cognizance of that fact, the Company provides extensive training to its employees in order to develop their skill sets and keep them motivated. The Company appreciates the productive co-operation extended by its employees in the efforts of the management to carry the Company to greater heights.

9. Safety and Environment

The Company ensures high safety and environmental standards in all its operations at all the units. Safety needs are continuously monitored and preventive actions are initiated through departmental safety committees consisting of plant staff and workmen.

10. Cautionary Statement

Certain Statements in this report on Management Discussion may be forward looking statements and which have been issued as required by applicable Securities Laws and Regulations. There are several factors which would be beyond the control of Management and as such, may affect the actual results which could be different from that envisaged.