Nitin Spinners Ltd Directors Report.

To

The Members

Your Directors have pleasure to present the 28th Annual Report on the business and operations of your Company along with the Audited Financial Statements for the year ended 31st March, 2020.

FINANCIAL RESULTS

The Financial Results of the Companys performance for the year under review and those of the previous year are as follows: -

Particulars Current Year 2019-20 Previous Year 2018-19
Revenue from operations 1,438.06 1,242.51
Gross Profit Before Finance Cost, Depreciation & Exceptional item 171.90 180.84
Finance Cost 55.56 28.90
Profit before Depreciation, Exceptional items and Tax 116.34 151.94
Depreciation 80.69 54.64
Exceptional items - -
Profit before Taxation 35.65 97.30
Provision for Taxation- Current Tax (Net of Mat Credit) - 36.41
- Earlier Year (0.44) (1.50)
- Deferred Tax 12.27 (1.72)
Profit after Tax 23.82 64.11
Other Comprehensive Income/(Loss) net of Income Tax (3.85) 1.67
Total Comprehensive Income for the period 19.97 65.78
Transfer to General Reserves - 10.00

OPERATIONAL PERFORMANCE REVENUE FROM OPERATIONS

The revenue from operations during the year under review is at 1,438.06 Crores against 1,242.51 Crores in the previous year, registering an increase of 15.74%. The revenue of Yarn increased by 7.14% during current year from 984.19 Crores to 1,054.51 Crores. The revenue from Yarn constitutes 73.33% of the total Sales. Revenue of Fabric has increased from 178.06 Crores in the previous year to 277.84 Crores during year under review and registered growth of 56.04%. The Fabric revenue constitutes 19.32% of the total revenue from operations. Commencement of commercial production at new unit at Bhanwaria Kalan, Begun resulted into increased turnover and with this the Company has also added new products like Blended yarn, Woven Greige and Finished Fabrics.

EXPORTS

Exports Sales was reduced from 844.06 Crores in the previous year to 783.17 Crores in the current year. Exports constitute 54.46% of the total revenue. Due to lower cotton crop in India during the cotton year 2018-19; cotton prices were very high in domestic market in comparison to international market in the first half of the year under review and consequently exports of yarn became uncompetitive. In the second half of the year the situation improved but due to lock down in view of COVID-19 pandemic across the world in the last quarter of the year exports were further affected.

PROFITABILITY

The Operating Profit (EBIDTA) of the Company has decreased from 180.84 Crores in the previous year to 171.90 Crores in current year in spite of increase in turnover. As percentage to revenue from operations the Operating Profits (EBIDTA) reduced from 14.55% in previous year to 11.95% in current year. Due to lower exports from India there was selling pressure in domestic market as a result of which margins contracted. Further, lower capacity utilisation of Weaving & Processing division of new unit at Begun resulted in higher operating cost. Moreover, lockdown of the operations of the Company from 22nd March, 2020 further affected sales & profitability.

The finance cost for the year under review increased due to borrowings for new unit as such Cash Profit (PBDT) was also reduced from 151.94 Crores in the previous year to 116.34 Crores in current year. The Company has reported Net Profit of 23.82 Crores in the current year against 64.11 Crores in the previous year.

DIVIDEND

Your Directors are pleased to recommend Dividend of 6% i.e. 0.60 per Equity Shares on the fully paid-up Equity Share of 10/- each for the financial year 2019-20 subject to approval of shareholders at the ensuing Annual General Meeting. No interim dividend declared during the reporting period.

IMPACT OF COVID-19 PANDEMIC

The outbreak of COVID-19 globally and resultant lockdown in many countries, including in India, has had impact on the business of the Company. Operations of the Company were completely closed from 22nd March, 2020 to 19th April, 2020 due to lockdown. The operations were partially resumed from 20th April and capacity utilisation is being gradually increased. Due to the lockdown there was reduction in sales and profitability for the quarter ended on 31st March, 2020. The lockdown is partially continuing in 2020-21 and the Company is continuing its operations with current lower demand. Management is expecting that demand will improve once markets stabilize after effect of COVID-19 and lockdown is over.

INSTALLATION OF INTEGRATED TEXTILE UNIT

Your directors in their previous report had informed the members about installation of Integrated Textile Unit at Bhanwaria Kalan, Tehsil Begun in the District of Chittorgarh, Rajasthan. Your Directors are pleased to inform you that the Company has successfully installed the same and commercial production on Spinning & Weaving Unit was commenced with effect from 01st July, 2019 and that on Processing Unit with effect from 01st January, 2020.

CORPORATE SOCIAL RESPONSIBILTY (CSR)

Your Company is committed to make a positive contribution to communities where it operates. Pursuant to Section 135 of the Companies Act, 2013, the Company constituted CSR committee and formulated CSR Policy as guiding principle for undertaking CSR activities. The Companys vision on CSR is that the Company being a responsible Corporate Citizen would continue to make a serious endeavor for improvement in quality of life and betterment of society through its CSR related initiatives.

During the current year, the Company has incurred expenditure of 161.36 Lacs on CSR activities against obligation of 159.52 Lacs. Accordingly, during the year there is no shortfall on CSR expenditure. The disclosures of CSR activities pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 9 of Companies (Corporate Social Responsibility) Rules, 2014 is annexed as Annexure - I hereto and form part of this report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Shri Nitin Nolakha, Director of the Company who retired and being eligible, was re-appointed at the Annual General Meeting of the Company held on 20th September, 2019.

Shri Dinesh Nolkha, Managing Director of the Company was re-appointed for a further period of three years at the Annual General Meeting of the Company held on 20th September, 2019.

Shri Y. R Shah, Smt. Aditi Mehta and Sh. R. Chattopadhyay, Independent Directors were appointed for second term at the Annual General Meeting held on 20th September, 2019 through Special Resolution.

Shri R.L. Nolkha, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, offer himself for re-appointment. The Board recommends his re-appointment for consideration of members of the Company at the ensuing Annual General Meeting.

No other changes have been taken place in composition of Board of Directors and Key Managerial Personnel of the Company during the year under review.

All Independent Directors of the Company have confirmed that they meet criteria of independence as per requirement of Section 149(6) of the Companies Act, 2013 and regulation 16(b) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

All the Directors, Key Managerial Personnel and Senior Managerial Personnel have confirmed compliance of “Code of Conduct for Directors and Senior Management Personnel”. A declaration by Managing Director confirming the receipt of declaration in this regard is enclosed to this Report.

AUDITORS :- STATUTORY AUDITORS

M/s Kalani & Co., Chartered Accountants (FRN 000722C) were appointed Statutory Auditors at the 25th Annual General Meeting held on 04th September, 2017 for five years till the conclusion of 30th Annual General Meeting to be held in the calendar year 2022. Accordingly, they have conducted Statutory Audit for the 2019-20 and shall continue to be Statutory Auditors for the Financial Year 2020-21. They have confirmed their eligibility to continue as Statutory Auditors of the Company for the 2020-21 under section 141 of the Companies Act, 2013 and rules framed there under.

The Audit Report on the Financial Statements for the Financial Year ended on 31st March, 2020, issued by M/s Kalani & Co., Chartered Accountants, do not contain any qualifications, reservations or adverse remarks. The information referred in Auditors Report are self explanatory and hence do not require any further clarification.

SECRETARIAL AUDITORS

The Board of Directors has appointed M/s. V. M & Associates, Company Secretaries (Firm Registration No. P1984RJ039200), to conduct Secretarial Audit for the Financial Year 2019-20 under the provisions of Section 204 of the Companies Act, 2013. Accordingly, they have conducted Secretarial Audit for the Financial Year 2019-20 and Secretarial Audit Report in Form MR-3 is enclosed herewith. The report does not contain any qualification, reservation or adverse remark.

The Board of Directors has re-appointed M/s V. M. & Associates, Company Secretaries (Firm Registration No. P1984RJ039200), being eligible, to conduct Secretarial Audit for the Financial Year 2020-21 under the provisions of Section 204 of the Companies Act, 2013.

COST AUDITORS

The Board of Directors has appointed M/s. Vivek Laddha & Associates, Cost Accountants (FRN 103465) to conduct Cost Audit of the Cost Records maintained by the Company for the Financial Year 2019-20. The Cost Audit Report for the Financial Year ended 31st March, 2020 is under finalisation.

Pursuant to Section 148 of the Companies Act, 2013, your Directors have re-appointed M/s. Vivek Laddha & Associates, Cost Accountants (FRN 103465), being eligible, to conduct Cost Audit of the Cost Records maintained by the Company for the Financial Year 2020-2021.

Further, the Statutory, Secretarial and Cost Auditors have not reported any frauds under section 143(12) of the Companies Act, 2013.

CORPORATE GOVERNANCE

The Company is committed to maintain the high standards of Corporate Governance. Your Directors adhere to the requirements set out in Companies Act, 2013 and the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and have implemented all the prescribed requirements. Pursuant to regulation 34(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Reports on Corporate Governance and Management Discussions & Analysis have been incorporated in the Annual Report and form an integral part of the Board Report. A Certificate from Statutory Auditors confirming compliance to conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of the Annual Report.

AWARDS, RECOGNITION & CERTIFICATIONS

Your Company has been conferred with the following awards and recognition during the year under review: -

1. Texprocils Silver Plaque for second highest exports of cotton yarn above 50 counts for the Financial Year 201819.

2. Certifications:

Your Company continued to hold following certifications from British Standards Institution (BSI): -

(a) Quality Management System - ISO 9001:2015

(b) Environmental Management System - ISO 14001:2015

(c) Energy Management System - ISO 50001:2011

(d) Occupational Health & Safety Management System - OHSAS 18001:2007

(e) Social Accountability System - SA 8000:2014

HUMAN RESOURCE DEVELOPMENT

Industrial relations continued to be cordial during the period under review. Your Company firmly believes that a dedicated work force constitutes the primary source of sustainable competitive advantage. Accordingly, human resource development received focused attention. The Company has in house skill training centre and imparts on the job training to its manpower on continuous basis.

Your Directors wish to place on record their appreciation for the dedicated services rendered by the work force during the year under review.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Directors inform the members that your Company continuously looks out for energy conservation measures in all areas of operations across its both the Units. Similarly, your Company endeavors to lookout for up-gradation and absorption of technology. Your Company also spends continuously on research and development. Your Directors are glad to inform the members that your Company is a net foreign exchange earner. The relevant detail as required to be disclosed with respect to Energy Conservation, 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 are given in Annexure - II and forms integral part of this Report.

NUMBER OF BOARD MEETINGS

During the year 2019-20, the Board of Directors met four times on 25.05.2019, 10.08.2019, 13.11.2019 and 07.02.2020. The details of number of Board Meetings and the attendance of the Directors are provided in the Corporate Governance Report forming part of the Boards Report. The frequency and intervening gap between the meetings was within the period prescribed under the Companies Act, 2013, SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and Secretarial Standards-1 issued by Institute of Company Secretaries of India (ICSI) on Board meetings

COMMITTEES

The Company has constituted Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee of Directors. The details of these committees have been given in the Corporate Governance Report form integral part of the Boards Report

RELATED PARTY TRANSACTIONS

All the related party transactions are entered on arms length basis and in the ordinary course of business. The Company has complied with all the applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 in this regard. There is no materially significant related party transaction with Promoters, Directors or Key Management Personnel and any other related party which may have potential conflict with the interest of the Company at large. During the year, the Company has not entered into any related party transactions under the Section 188 of the Companies Act, 2013 and the particulars of contracts or arrangements with related parties are Nil.

LOANS, GUARATEES OR INVESTMENTS

During the year under review, the Company has not given any Loan, Guarantee or provided security in connection with a loan nor has made any Investments under the Section 186 of the Companies Act, 2013.

PUBLIC DEPOSITS

During the period under review, your Company has not accepted any public deposit within the meaning of provisions of section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and there is no outstanding deposit due for re-payment.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

In pursuance of Section 177 (9) of the Companies Act, 2013 and the regulation 22 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and with the objective of pursuing the business in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behavior and to encourage and protect the employees who wish to raise and report their genuine concerns about any unethical behavior, actual or suspected fraud or violation of Companys Code of Conduct, the Company has adopted a Whistle Blower Policy. The policy has been disclosed on the website of the Company under the link https://nitinspinners.com/wp-content/uploads/2018/06/ VIGIL-MECHANISM.pdf

During the year under review, there was no instance of fraud reported and all the recommendation of the Audit Committee were accepted by the Board. No employee was denied access to the Audit Committee.

NOMINATION, REMUNERATION & EVALUATION POLICY AND EVALUATION

Pursuant to provisions of Section 178 of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board of Directors have approved Nomination, Remuneration & Evaluation Policy prescribing interalia the criteria for appointment, remuneration & evaluation of the Directors. The Board reviewed the performance of Board, its committee and all Individual Directors of the Company and expressed its satisfaction over the performance of them. The Independent Directors in their separate meeting have reviewed the performance of non-independent directors, Chairperson and Board as a whole along with review of quality, quantity and timeliness of flow of information between Board and management and expressed their satisfaction over the same. The Nomination, Remuneration & Evaluation Policy is available under the link http://nitinspinners.com/wp-content/ uploads/2018/06/Nomination-Remuneration-Policy.pdf

RISK MANAGEMENT POLICY

The Company has adopted a Risk Management Policy with the objective of ensuring sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. The detailed Risk Management framework has been provided in the Management Discussion and Analysis Report of the Company.

PARTICULARS OF EMPLOYEES & ANALYSIS OF REMUNERATION

The information about employees and analysis of remuneration as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed as Annexure - III.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return in Form MGT-9 as required under section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration Rules), 2014 is enclosed as Annexure - IV. The same is available on the website of the Company at www.nitinspinners.com.

INTERNAL CONTROL SYSTEM

Your Directors inform the members that your Company has put in place strong internal control systems commensurate with the size of the Company. Further, your Directors take utmost care to ensure that all assets are properly safeguarded and reliable information is provided to the management. Your Directors endeavor to inform the members that all the obligations of the Company are properly adhered to. Your Directors endeavor to continuously improve and monitor the internal control systems.

COMPLIANCE WITH THE PROVISIONS OF SEXUAL HARSSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has duly constituted internal complaints committee in line with the requirements of the Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to redress complaints regarding sexual harassment at workplace. The committee has informed that during the year it has not received any complaint under the Act, no complaint was pending at the beginning of the year and no complaint was pending at the end of year under review.

BUSINESS RESPONSIBILTY REPORT

The Regulation 34(2)(f) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (as amended) requires for top 1000 listed entities based on Market Capitalisation (calculated as on 31st March of every financial) shall contain Business Responsibility Report in its Annual Report. As per list of National Stock Exchange of India Limited for top 1000 listed entities based on Market Capitalisation your company meets this criterion as on 31st March, 2020. Accordingly, the Business Responsibility Statement shall be included in the Annual Report 2020-21.

OTHER DISCLOSURES

There is no material changes and commitments affecting the financial position of the Company which has occurred between the end of the financial year and the date of the report.

The Company has complied with all the applicable Secretarial standards issued by the Institute of Company Secretaries of India.

The Company does not have any subsidiary, joint venture & associate company.

No significant and material order has been passed during the year by the regulators or courts or tribunals which can impact the going concern status and Companys operations in future.

No unclaimed dividend or shares are due for transfer to Investor Education & Protection Fund (IPEF) in terms of provisions of Companies Act, 2013.

The certain disclosures are common under Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and the same are disclosed in the Corporate Governance Report forming part of this Report.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to sub-section 3 (c) of Section 134 of the Companies Act, 2013, the Board of Directors of the Company hereby state and confirm that:

(i) in the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) they 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 or loss of the Company for that period;

(iii) they have 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 frauds and other irregularities,

(iv) they have prepared the Annual Accounts on a going concern basis; and

(v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to thank Customers, Members, Suppliers, Bankers, Business Partners/Associates, Central and State Governments for their consistent support and co-operation extended to the Company. We also acknowledge the significant contribution made by the employees by their dedication and hard work and trust reposed on us. We look forward to have the same support in our endeavor to help the Company to grow faster.

For and on Behalf of the Board of Directors
R. L. NOLKHA
Place : Hamirgarh, Bhilwara Chairman
Date : 19th June, 2020 (DIN - 00060746)