Mohota Industries Ltd Directors Report.
Your Directors are pleased to present the (72nd) Seventy- Second Annual Report on the business and operation of the Company together with the Audited Financial Statement for the year ended March 31st 2019. A summary of the Financial Results is given below. The Management discussion and analysis is also included in this report.
|( Rs in Lakhs)|
|FINANCIAL RESULTS||For the year ended 31st March, 2019||For the year ended 31st March, 2018|
|Gross Profit (before interest, depreciation & tax)||1393.56||1,900.95|
|Profit before tax & extraordinary Item||53.54||613.66|
|Less: Provision for tax|
|Net Profit for the year||43.38||373.51|
|Total Other Comprehensive Income||(78.24)||7.73|
|Total Comprehensive Income for the period||(34.86)||380.82|
|Transfer to Reserve & Surplus||-||-|
|Surplus/(Deficit) in the Statement of Profit & Loss Account||43.38||373.51|
1. CORPORATE OVERVIEW
Mohota Industries Limited (Formerly- The Rai Saheb Rekhchand Mohota Spg. & Wvg. Mills Ltd.) ("The Company") is one of the oldest Composite Textile Mill in Vidarbha region of Maharashtra. The Company has its Corporate Head Office at Hinganghat, Dist Wardha, Maharashtra.
2. FINANCIAL PERFORMANCE AND DEVELOPMENT
Your company reported a reduction of 14.82% in top-line over the previous year. The Gross Revenue stood at Rs 30,458.69 Lakhs compared with Rs 35,759.19 Lakhs in the previous year. The Profit before tax stood at Rs 53.54 Lakhs as against Rs 613.66 Lakhs in the previous year. Profit before tax decreased by 91.11% as compared to previous year. The Net Profit for the year stood at Rs 43.38 Lakhs against Rs 373.51 Lakhs in the previous year. Total Comprehensive Income for the period stood at Rs -34.86 lakhs compared with Rs 380.82 lakhs in previous year.
The Company had ventured into real estate development business, the company had entered JV agreement with Armors Developers Pvt. Ltd for the development of the multiple projects, however due to poor market conditions and clearances issues from the authorities and other issues JV partner is unable to perform its obligation therefore Board decided to withdraw from the agreements with the JV Partner.
Further looking at the current market scenario, Company also proposed to Disinvestment its share in the M/s. KC Mohunta & Brother, Nagpur subject to the approval of Members at the ensuing Annual General Meeting.
Company has also decided to close its Process Department, as company is facing poor demand and not able to run process house to its full capacity. Further due to high labor cost, old obsolete machineries and cost of environmental protection, company is facing continuous losses in the process division. Therefore board thinks its prudent to seek closure of the process division subject to the approval and clearances from the respective authorities.
3. DIVIDENDAND RESERVE
In view of the planned business growth, the board of directors of your company deems it proper to preserve the resources of the Company for its business activities and therefore, has decided, not to recommend any Dividend for the period under review.
The Board of Directors of your company, has decided not to transfer any amount to the Reserves for the year under review
4. SHARE CAPITAL
The paid-up Equity Share Capital as on March 31, 2019 stood at Rs 1470.71 Lakhs. During the period under review Company has issued and allotted 1,17,647 Equity shares at Rs 425/- per shares (including a premium of Rs 415/- per share) to Shri Vinod Kumar Mohota, Promoter of the Company in its meeting held on 07th July, 2018 on preferential basis. During the year under review, the Company has not issued any Sweat Equity shares, Bonus shares or provided any Stock Option Scheme to the employees. None of the Directors of the Company hold instruments convertible into equity shares of the Company. Company has not bought back any of its securities.
5. Performance Highlights
During the year under report, the companys total sales registered declined of 14.82% to Rs 30458.19 Lakhs from Rs 35759.19 Lakhs in the previous financial year. The Gross Operating Profit for the current financial year stood at Rs 1393.56 Lakhs as compared to Rs 1900.95 Lakhs for previous financial year and Net Profit after tax stood at Rs 43.38 Lakhs as compared to Rs 373.51 Lakhs in the previous financial year. Further the Total Comprehensive Income for the period stood at Rs -34.86 lakhs compare with Rs 380.82 lakhs in previous year.
The fundamental strength of the textile industry is its strong production base of wide range of fibre and yarns from natural fibres like cotton, jute, silk and wool to synthetic and manmade fibres such as polyester, viscose, nylon and acrylic. The challenge here is the fluctuation in prices of the raw materials like polyester & Cotton and increase in fuel prices which increase the input costs.
Company has a large retail network spread all over the country. It has more than thirty agents and over two thousand retailers who help the Company to sell its goods across the country.
During the year under review company had allotted 117647 Equity shares at Rs 425/- per shares (including a premium of Rs 415/- per share) to Shri Vinod Kumar Mohota, Promoter Director of the company on preferential basis.
During the year under review, the Rating agency BRICKWORK has upgraded the rating from "BBB" to "BBB+" for the Companys long term borrowings and upgraded from A3+ to A2 for the Companys short term borrowings.
As mandated by the Ministry of Corporate Affairs, the financial statements for the year ended on March 31, 2019 has been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 as amended from time to time. The estimates and judgements relating to the Financial Statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of transactions and reasonably present the Companys state of affairs, profits and cash flows for the year ended March 31, 2019. The Notes to the Financial Statements adequately cover the Standalone Audited Statements and form an integral part of this Report.
7. CORPORATE GOVERNANCE
As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance practices followed by the Company, together with a certificate from the Companys Auditors confirming compliance, forms an integral part of this report as Annexure-G.
8. EXTRACT OF ANNUAL RETURN
The details as required under section 92(3) of the Companies Act 2013, read with rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in form MGT-9 is enclosed herewith as Annexure A and forms an integral part of this Directors report.
In accordance with the provisions of section 152 of the Companies Act, 2013 and the Companys Articles of Association, Shri Vinod Kumar Mohota (DIN: 00247348), director of the Company, retire by rotation at the forthcoming Annual General Meeting being eligible, offer himself for re-appointment.
Board of Directors in its Board meeting held on 14th February, 2019 on the recommendation of Nomination and Remuneration committee and subject to the approval of shareholders, reappointed Shri Vinod Kumar Mohota, Chairman & Managing Director and Shri Vinay Kumar Mohota, Whole Time Director for the further period of 3 years i.e. from 01.04.2019 to 31.03.2022. The Board recommends their re-appointment for the consideration of the members of the Company at the ensuing Annual General Meeting.
The Directors express their grief for the untimely death of Shri Ranchhoddas Mathuradas Mohota, (DIN:00247357) Non-Executive Non-Independent Chairman of the Company on September 5, 2018. The Directors place on record their deep appreciation for his valuable guidance and assistance received during the tenure as Chairman and Director/ Member of various committees of the Board of Directors of the Company.
Shri Girdharlal Singhee (DIN: 01479800), Shri Suresh Rathi (Din: 00474117), Independent Directors and Shri Shantilal Binjraj Singhavi (DIN: 00247332), Executive Director were ceased to be the directors on the Board w.e.f. 31.03.2019 on the completion of their tenure.
The Board has appointed Shri Santosh Kumar Rajpuria (DIN 03106216) as an Additional Director with effect from February 14, 2019. In terms of Section 161 of the Act, Shri Santosh Kumar Rajpuria holds office up to the date of ensuing Annual General Meeting. The Company has received requisite notice in writing from a member proposing his name for the office of Director. Board recommends his appointment as Whole Time Director on the Board of Directors of the Company in accordance with Section 196 of the Act, to hold office for a term of 3 (three) years for the consideration of the members at the ensuing General Meeting.
The Board of Directors on recommendation of the Nomination and Remuneration Committee appointed Shri Likhit Masram (DIN: 07979917) and Shri Ravindra Raghunandan Paliwal (DIN: 02336166) as additional directors in the category of Independent Director w.e.f. February 14, 2019 and March 30, 2019 respectively. The Company has received requisite notices in writing from the members proposing their names for the office of Directors. Board recommends their appointment as an Independent Directors on the Board of Directors of the Company in accordance with Section 149(4) of the Act, to hold office for a term of 5 (five) consecutive years for the consideration of the members at the ensuing General Meeting.
Smt. Ritu Kabra (DIN: 07402599), Independent Woman Director has resigned from the Board w.e.f. 18 June, 2019 due to personal reasons.
All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16 (1) (b) of the Listing Regulations, 2015, they also confirm that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence and that they are independent of the management.
In the opinion of the Board, the Independent Directors, fulfill the conditions of independence specified in Section 149(6) of the Act and Regulation 16(1) (b) of the Listing Regulations. The Independent Directors have also confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV to the Act and also Code of Conduct for directors and senior management personnel, Brief profile of the appointing directors has been provided in the Notice convening Annual General Meeting.
10. KEY MANAGEMENT PERSONNEL
Company has following Key Managerial Personnel pursuant to section 203 of the Companies Act, 2013
|Sr. No. Name of the Person||Designation|
|i Shri Vinod Kumar Mohota||Chairman & Managing Director|
|ii Shri Vinay Kumar Mohota||Whole-time Director|
|iii Shri Mukesh B. Mahajan||Chief Financial Officer|
|iv Shri Sachin N. Kanojiya||Company Secretary|
Remuneration and other details of Key Managerial Personnel for the year ended March 31, 2019 are provided in the Extract of Annual Return is attached as " Annexure A" .
11. BOARD EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a structured questionnaire was prepared and reviewed based on the evaluation policy after taking into consideration the various aspects of the Boards functioning, composition of the Board and its committees, culture, execution and performance of specific duties, obligations and governance.
The Company has received necessary declarations from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 and Regulation 16 (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6).
The performance evaluation of the independent Directors, Board as whole and individual Directors was completed. The performance evaluation of the Chairman and the Non-Independent Directors were carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.
12. NUMBER OF MEETINGS OF THE BOARD
During the year under consideration, 5 (Five) Board Meetings were convened and held, The details of the meetings of the Board and other Committees held during the Financial Year 2018-19 forms part of the Corporate Governance Report.
13. COMMITTEES OF THE BOARD
The Board of Directors have the following Committees:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee)
4. Corporate Social Responsibility Committee.
5. Risk Management Committee
6. Executive Committee of the Board
The details of the Committees along with their composition, number of meetings and attendance at the meetings are provided in the Corporate Governance Report.
14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY COMPANY
Details of loan, Guarantee or Investments made by the Company under Section 186 of the Companies Act, 2013, are given in the notes to Financial Statements.
15. VIGIL MECHANISM/ WHISTLE-BLOWER POLICY
The Company has a Whistle-blower policy & Vigil Mechanism pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013 and as per Listing Regulation for their Directors and Employees to report their genuine concerns or grievances. The policy has been posted on the website of the Company at www.mohotaindustries.com .
16. NOMINATION AND REMUNERATION POLICY
The Board of Directors has formulated the Nomination & Remuneration policy for its Directors, key managerial personnel and senior employees keeping in view the following: the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the company successfully; relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals:
This policy also lays down criteria for selection and appointment of Board Members. Details of this policy can be accessed at Companys web-site at www.mohotaindustries.com .
17. RISK MANAGEMENT POLICY
Company has developed and implements Risk Management Policy including identification of elements of risk which in the opinion of the Board may threaten to the existence of the Company. Board and Audit Committee periodically reviewed/evaluates the risk management framework so that the future risk can be minimized.
18. RELATED PARTY TRANSACTION
All transactions entered with Related Parties for the year under review were on arms length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. Further, there are no Material Related Party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel. The disclosure in form AOC-2 is attached as Annexure-B. The Company has developed a Related Party Transactions framework through Standard Operating Procedures for the purpose of identification and monitoring of such transactions.
All Related Party Transactions are placed before the Audit Committee and also to the Board for approval. Transactions which are of repetitive nature are reviewed on a quarterly basis and a statement giving details of all Related Party Transactions was placed before the Audit Committee and the Board for review and approval.
The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web-link of the same has been provided in the Corporate Governance Report.
19. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company and its future operations.
20. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Companies Act, 2013 the Board of Directors, to the best of knowledge and ability, hereby confirm: (i) That in the preparation of the Annual Accounts for the year ended March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(ii) That 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 as at March 31, 2019 and of the profit of the Company for the year ended on that date;
(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, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) That the directors have prepared the annual accounts on a going concern basis;
(v) That the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(vi) That the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
21. AUDITORS REPORT AND STATUTORY AUDIT
M/s M.M. Parikh & Co., Chartered Accountants (Firm Registration Number: 107557W) have tendered their resignation from the position of Statutory Auditors due to health issues, resulting into a Casual vacancy in the office of Statutory Auditors of the Company as envisaged by section 139(8) of the Companies Act, 2013. Casual vacancy caused by the resignation of auditor can be filled by the shareholders in General Meeting within three months from the date of recommendation of the Board of Directors of the Company.
The Board of Directors in its board meeting held on August 14, 2019 recommended the appointment of M/s. Harshil Shah & Company, Chartered Accountants, (ICAI Registration no. 141779W), Mumbai be appointed as Statutory Auditors of the Company to fill the casual vacancy caused by the resignation of M/s M.M. Parikh & Co., Chartered Accountants, Mumbai and M/s. Harshil Shah & Company shall hold the office as the Statutory Auditors of the Company from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting. Appointment of the Statutory Auditor is being sought from the members at the ensuing Annual General Meeting.
The Company has received consent and written confirmation from M/s. Harshil Shah & Company that their appointment, if made, would be in conformity with limit specified in the said section.
Auditor express following opinion on the financial results during the year under review:
1. The Company has invested Rs 11 Crore in a partnership firm. The financial statement of the said partnership firm for the year ended 31st March, 2019, were not available, hence the impact on the profit and corresponding impact on the carrying amount of investment is not ascertainable.
The observations made in the Auditors Report are dealt with separately in the Notes to the Statement of Profit and Loss and the Balance Sheet in Note No. 29 to 39 of the Accounts. These are self-explanatory and do not call for any further comments.
22. COST AUDITORS
As per the requirement of Central Government and pursuant to Section 148(3) of the Companies Act, 2013 and Rules 6(2) read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, the Company has been carrying out audit of cost records every year.
The Board of Directors, on the recommendation of the Audit Committee, has re-appointed M/s Khanuja Patra & associates, Cost Accountants (Firm Registration No.: 000214) as Cost Auditor to audit the cost records of the Company for the Financial Year 2019-20. As required under the Companies Act, 2013, a resolution seeking members approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting for their ratification.
23. SECRETARIAL AUDIT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed M/s DM & Associates Company secretaries LLP Company Secretary, (ICSI unique Code: L2017MH003500) to undertake the Secretarial Audit of the Company for Financial Year 2019-20. The Secretarial Audit Report for Financial Year 2018-19 is included as Annexure C and forms an integral part of this Report.
There is no audit qualification by the Secretarial Auditor for the year under review.
24. SAFETY AND POLLUTION CONTROL
The Company accords priority to the health and safety of its employees and surroundings. It has been taking proper care in complying with all the statutory requirements relating to safety, environment and pollution control: following are the measures taken by the company.
1. Company has taken the services of professional ETP Technician from time to time to control all pollution and environment related issues of ETP plant of the Company. However, company does not have the proper equipments as per the requirement of pollution control board and company requested for the further time period to comply the same, as it requires heavy capital expenditure.
2. The company planted Trees across the plant sites at Hinganghat and Burkoni.
3. The Company has organised various in-plant safety training sessions for its workers and staff members.
25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure D to this Report.
26. PARTICULARS OF EMPLOYEES
The information required under Section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is furnished In Annexure- E and forming part of the Directors Report for the year ended March 31, 2019.
The Company at present does not have any employee drawing salary in excess of the limit specified under section 197 of CompaniesAct, 2013.
The Company does not have any subsidiary/subsidiaries within the meaning of Companies Act, 2013.
The Company has not accepted any deposits from public. Therefore, the requirement of Chapter V of the Companies Act, 2013 is not applicable to it.
29. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The company has a policy on Corporate Social Responsibility and the same has been posted on the website of the company at www.mohotaindustries.com The Annual Report on CSR Activities in terms of the requirements of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure- F, which forms part of this report.
30. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION &
The Company laid down an Anti Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (prevention, prohibition and redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received in this regard. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No sexual harassment complaints were received during the year 2018-19.
31. CAUTIONARY STATEMENT
Statement in this Directors Report including Management Discussion and Analysis describing the Companys objective, projections, estimates, expectations or predictions may be "Forward Looking Statements" within the meaning of applicable securities laws & regulation. Actual results might differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand/supply and price conditions in the market in which the company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.
The Directors wish to place on record, their appreciation and gratitude for all the co-operation extended by Government Agencies, Bankers, Financial Institutions and Shareholders. The Directors also record their sense of appreciation for the sincere services rendered by all the Executives and Staff of the company and for their valuable contribution in the working of the company.
|On Behalf of the Board|
|Place: HINGANGHAT||Vinod Kumar Mohota|
|Date: 14/08/2019||Chairman & Managing Director|