Niwas Spinning Mills Ltd Directors Report.

To the Members,

Your Directors have pleasure in presenting their 32nd Annual Report on the business and operations of the Company and the accounts for the financial year ended March 31st, 2016.

1. FINANCIAL SUMMARY /PERFORMANCE OF THE COMPANY:

The sale during the year under report is 509.27 Lacs, the profit before interest, depreciation is decreased compared to previous year. It is due to shortage of working capital, adverse impact of uncertain government policies, export policies and international market un-certainty. So also, sudden steady upward / downward revision in cotton prices, disturbed the overall situation of textile industry. However, due to corrective measures taken by the management, the company succeeded to minimize its losses.

Financial Highlights :

(Amt. in Lacs)

Current Period 2015-16 Previous Period 2014-15
Sales 509.27 409.89
Other Income 13.72 14.17
Total Income 522.99 424.06
Profit / (Loss) before interest, depreciation, exceptional item & tax (84.83) (8.41)
Less :
• Financial Cost 43.02 95.05
• Depreciation 68.45 74.08
Profit / (Loss) before exceptional items & taxes (196.33) (177.54)
Less : Exceptional items (Net) Nil Nil
Profit/(Loss) before tax (A) (196.33) (177.54)
Tax Provision Nil Nil
Profit / (Loss) after tax (196.33) (177.54)
Profit/(Loss) from discontinuing operations 733.21 --
Tax expense of discontinuing operations -- --
Profit/(Loss) from Discontinuing operations (B) 733.21 --
Net Profit/(Loss) for the period (C) = (A)+(B) 536.88 (177.54)

• Debt Restructuring:

The major debts of the Company are crystallized and settled. Over the year the Company has paid large amount towards past debt liabilities and remaining debts are being paid in accordance with the restructured terms.

2, DIVIDEND:

In view of the accumulated losses and loss for the year, the Board decided not to recommend any dividend for the year under review.

3 RESERVES:

In view of the accumulated losses and loss for the year, your Company do not transfer any amount to the Reserves.

4. BRIEF DISCRETION OF COMPANY’S WORKING:

Company operates in one segment i.e. Textiles. There is no division of the Company.

• Industry Structure and Business Overview:

The textile industry plays a crucial role in the Indian economy. It has a significant weight in the industrial production. The Company enjoys the excellent relationship with its customers, which has been built over the years by strictly adhering to delivery schedules maintaining consistent quality and providing prompt after sales service.

• Risk Management:

The Company has laid down procedures to inform the members of the Board about the risk assessment and minimization procedures which is periodically reviewed by the Board.

• Segment-wise Performance:

The Company is having only one segment i.e. Textile.

• Financial Performance:

The sale during the year under report is 509.27 Lacs, the profit before interest, depreciation is decreased compared to previous year. It is due to shortage of working capital, adverse impact of uncertain government policies, export policies and international market un-certainty. So also, sudden steady upward / downward revision in cotton prices, disturbed the overall situation of textile industry. However, due to corrective measures taken by the management, the company succeeded to minimize its losses.

• Human Resources:

The Company continues to lay emphasis on developing and facilitating optimum human performance.

• Health & Safety:

Your Company provides and maintains, so far as practicable equipment, systems and working conditions which are safe and without risk to the health of all employees, visitors, contractors and public. Management has maintained its strong commitment to a safe environment in its operations throughout the year. The Company is well aware of the relation-ship between the textile production and related environment issues.

• Cautionary Statement:

This annual report and accounts contains certain statements with respect to the financial condition, results, operations and businesses. These statements involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future.

• Reference to BIFR and it’s registration:

The Company is registered with BIFR. Hon’ble Board has declared the Company as a Sick Industrial Company in terms of section 3(1) (o) of SICA and appointed Bank of India as the Operating Agency. Preparation of Draft Rehabilitation Scheme (DRS) is under process. Company has filed an appeal before appellate authority against the order passed by Hon’ble BIFR. The appeal is still pending.

5. NUMBER OF MEETINGS OF THE BOARD:

During the year, Five Board Meetings were convened and held on 30/04/2015, 30/05/2015, 30/07/2015, 30/10/2015 and 30/01/2016. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

6. MATERIAL CHANGES & COMMITMENTS. IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHTCH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

In terms of the information required under Sub-section (3)(1) of Section 134 of the act it is to be noted that no material Changes and commitments affecting the financial position of the company have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report.

7. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE:

There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status and the Company’s future operations.

8. DETAILS ABOUT DIRECTORS AND KMPs WHO WERE APPOINTED/RESIGNED DURING THE FINANCIAL YEAR:

During the year under review, none of the Directors and KMPs were appointed/resigned.

9. INTERNAL CONTROLS SYSTEM AND THE ADEQUACY:

In order to attain the corporate objectives, strict internal controls systems were implemented across the organisation. The Audit Committee reviews adequacy and effectiveness of the Company’s internal control environment and monitors the implementation of audit recommendations on regular basis. The audit function maintains its independence and objectivity while carrying out assignments. It evaluates on a continuous basis, the adequacy and effectiveness of internal control mechanism. The function also proactively recommends improvement in policies and processes, suggests streamlining of controls against various risks. Your Company has laid down set of standards, processes and structure, which enables it to implement internal financial control across the Company and ensure that the same are adequate and operating effectively.

10. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS

The Company is a Sick Company and it is registered with Board for Industrial and Financial Reconstruction (BIFR). Without BIFR directions, the constitution of Board cannot be changed. Hence the Company has not appointed any Independent Director during the year under review.

11. COMPANY’S POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION:

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178 relating to the remuneration for the Directors, key managerial personnel, and other employees. As required by rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the prescribed details are annexed as Annexure 1 to this report.

12 INFORMATION IN TERMS OF RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL! RULES. 2014:

During the year under review no employee was employed who was in receipt of aggregate remuneration exceeding Rupees One Crore and two Lakh for the year or exceeding Rupees Eight Lakhs and Fifty Thousand per month for any part of the year.

The ratio of the remuneration of each director to the median remuneration of the employees of the Company and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report and is annexed as "Annexure 2" to this Report.

13. PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THU COMPANIES ACT. 2013:

During the year, the Company has not given any loans or guarantees or has made any investments u/s 186 of the Companies Act, 2013

14. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All the Transactions entered with Related Parties for the year under review are strictly done on arm’s length basis and in the ordinary course of business. The Company presents full details of transactions of all related party before the Audit Committee, Specifying the nature, value and terms & conditions of the transactions. Transactions with related parties are conducted in a transparent manner with the interest of the Company and stakeholders as utmost priority.

The details of transaction with Related party in Form AOC-2 is annexed herewith as "Annexure 3"

15. SUBSIDIARY / JOINT VENTURE / ASSOCIATE COMPANY

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

16. RISK MANAGEMENT POLICY:

The Board of Directors of the Company has not designed any Risk Management Policy. However, the Company has in place mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

17. COMPANY’S POLICY FOR PREVENTION OF SEXUAL HARASSMENT:

The Company is committed to provide a safe and conducive work environment to all women employees. During the year under review Company had not received any Complaints in respect of Sexual Harassment

18. CORPORATE SOCIAL RESPONSIBILITY (CSRf INITIATIVES:

The Company has not developed and implemented any Corporate Social Responsibility Policy pursuant to the Provisions of Section 135 of the Companies Act 2013 and relevant Rules framed there under as the said provisions were not applicable to the Company as Company had incurred losses during the relevant period.

19. ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE:

Pursuant to the provisions of the Companies Act, 2013 the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration committee by filling a structured questionnaire.

20. SECRETARIAL AUDIT REPORT:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Suhas Ganpule, Proprietor of M/s SG & Associates, Company Secretaries, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed as "Annexure 4" to this report.

21. EXPLANATION ON REMARKS OR DISCLAIMER MADE BY SECRETARIAL AUDITOR IN HIS REPORT:

Looking at the Company’s BIFR Status and continuous losses for past few years, no one was interested in getting appointed as Internal Auditor, CFO, Company Secretary & Independent Director. Few e forms which were not filed with the Registrar of Companies due to inadvertence, the same are being filed. Further, due to financial crunch & as all shares are held in physical mode, e voting facility was not provided. There was inadvertent delay in informing Stock Exchange about Voting results at the AGM.

22. PUBLIC DEPOSITS:

The Company has not raised any deposits from the public.

23. AUDITORS:

The retiring auditors M/s. B M Gattani & Co., Chartered Accountants, Mumbai, are eligible for reappointment. You are requested to appoint the Auditors of the Company.

As directed by the Audit Branch, Ministry of Law, Justice & Company Affiars, New Delhi vide its order 52/26/CAB/2010 dated 24/01/2012 and in pursuance of clause (d), sub clause (i) of Section 29 of the Companies Act, 1956, M/s T. M. Rathi of Mumbai was appointed as the Cost Auditor to conduct the Cost Audit for the year 2015-16.

24. RESERVATION AND QUALIFICATION ON AUDITORS REPORT:

With regard to Auditors’ observations/remarks, the Board states that the Company is a sick company. The necessary steps / actions are being taken to approve the Rehabilitation Scheme. As the settlements with lenders are already made, no interest is provided on Secured Loans. The Directors are taking appropriate steps for obtaining formal de-listing letters from Ahmedabad & Pune Stock Exchanges. The Company has already made an application to NSDL & CDSL for dematerialization of Company’s listed securities. However CDSL rejected Company’s request for Dematerialization and NSDL did not conveyed their consent or dissent for the same.

The other comments, if any of Auditors are dealt with by the notes on accounts which are selfexplanatory. Wherever required, the explanation is given in the notes on accounts.

25. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS PURSUANT TO SECTION 143(121 OF THE COMPANIES ACT. 2013:

During the year under review there were no incidences of fraud reported by the Auditors.

26. COMMITTIES:

I. Audit Committee:

The Audit Committee of Company consists of two non-executive Directors apart from Managing Director. It consists of all Directors. During the year under review Four (4) meetings were held of the audit committee ) and attended by all.

II. Nomination and Remuneration Committee:

The Nomination and Remuneration Committee of the Company consists of two non-executive Directors apart from Managing Director. It consists of all Directors. During the year under review four meetings were held of the committee held during the year 2015-2016 (the year of implementation of Corporate Governance) and attended by all.

27. VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company has adopted the code of conduct for employee and directors for the highest degree of transparency, integrity, accountability and corporate social responsibility. Any actual or potential violation of the Code would be a matter of serious concern for the Company. The Company also has Whistle Blower Policy to deal with instance of fraud and mismanagement, if any.

Employees of the Company are encouraged to use guidance provided in the Policy for reporting all allegations of suspected improper activities.

28. SHARE CAPITAL:

The paid up equity capital as on March 31, 2016 was Rs. 1408.93 Lakhs. During the year under review, the Company has not raised money by any issues. The company has not issued shares with differential voting rights nor granted stock options nor sweat equity.

29. EXTRACT OF THE ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure 5.

30. CONSERVATION OF ENERGY:

(A) Information pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014,is as follows:

I) CONSERVATION OF ENERGY FORM A Current Year Previous Year
a) POWER & FUEL CONSUMPTION
ELECTRICI
1 TY
(a) Purchased: Unit 5,16,546 3,61,910
Total Amount 67,10,399 54,19,415
Rate / Unit Rs. 12.99 Rs. 14.97
(b) OWN GENERATION
(i) Through Diesel Generator Nil Nil
Units
Units Per Ltr. Of Diesel
Cost / Unit
(ii) Through Steam Turbine/Generator Nil Nil
Units
Units Per Ltr. Of Fuel
Cost / Unit
2 COAL (Specify Quality & where used) Nil Nil
Quantity
Total Cost
Average Rate
3 FURNACE OIL Nil Nil
Quantity
Total Cost
Average Rate
4 OTHER GENERATORS Nil Nil
Quantity
Total Cost
Average Rate

b) CONSUMPTION PER UNIT OF PRODUCTION STANDARDS (IF ANY)

Products (Yarn & Towel) 0.19 Kg 0.44 Kg
Electricity 5,16,546 Units 3,61,910 Units
Furnace Oil - -
Coal - -
Others - -

II) OTHER INFORMATION ABOUT TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO ETC.

a) Technology Absorption : Technology absorption and R & D efforts are not applicable to the Company.

b) Foreign Exchange Earnings and Outgo

1 Foreign Exchange Used
Value of Direct Import on CIF Basis Capital - goods, Store & Spare parts Rs. Nil
Travelling Expenses Rs. Nil
2 Earning in Foreign Exchange
i) Direct Export Rs. Nil
ii) Indirect Export Rs. Nil

31. DIRECTORS:

Mr. Aditya V. Jaju, DIN 02625781, Director of the Company, retires by rotation and being eligible, offers himself for re-appointment.

32. DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, with respect to Directors’ Responsibility Statement, it is hereby confirmed that:

a) in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) 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 loss of the company for that period;

c) The directors had 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 fraud and other irregularities;

d) The directors have prepared the annual accounts on a going concern basis; and

e) 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.

f) 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.

33. CORPORATE GOVERNANCE:

The Report on Corporate Governance and Management’s Discussion & Analysis Report, in terms of Regulation 34(3) and 53(f) of the SEBI (Listing Obligations and Disclosure requirement), Regulations, 2015 are annexed and form part of the Annual Report.

34. INSURANCE:

The Company has taken adequate insurance cover for the assets.

35. ACKNOWLEDGEMENT:

The Directors wish to place on record their sincere appreciation to the Companys employees at all levels for their dedication & hard-work and also to the Bankers/ Institutions who have actively lent their support to the Company. The Director also express their gratitude to the Shareholders for their continued co-operation and support.

For & on behalf of the Board,
PLACE:SOLAPUR
DATED : 30-07-2016 (R. J. Jaju)
Chairman

Annexure 1

COMPANY’S POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION:

APPOINTMENT OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT

The Nomination and Remuneration Committee identifies persons who are qualified to become Directors and who may be appointed as Key Managerial Personnel and Senior Management. The Committee ascertains the qualifications, expertise and experience of the persons to be appointed as Directors, Key Managerial Personnel and Senior Management and recommends their appointment to the Board of Directors.

The Board then takes the final decision based on the said recommendation.

The Committee evaluates the performance of Directors and Senior Management on a yearly basis and recommends their removal, if required.

REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL, SENIOR MANAGEMENT AND OTHER EMPLOYEES

The remuneration payable to the Managing Director shall be as per the provisions of the Companies Act, 2013 and other relevant provisions.

The remuneration payable to Senior Management shall be approved by the Committee on case to case basis.

The increments to the existing remuneration structure:

1. In relation to Board of Directors shall be based on the evaluation of performance.

2. In relation to Key Managerial Personnel and Senior Management the same shall be approved by the Committee based on the recommendation of the Managing Director.

3. In relation to others the same shall be approved by the Managing Director based on the market conditions, performance of the company and other relevant factors from time to time.

REMUNERATION TO NON-EXECUTIVE AND INDEPENDENT DIRECTORS

The Non-Executive and Independent Directors of the Company shall only be paid sitting fees (as determined by the Board from time to time) for attending Board/ Committee meetings apart from reimbursement of expenses incurred for attending the meetings.

Annexure 2

INFORMATION IN TERMS OF UNDER RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL RULES, 2014)

The information relating to managerial remuneration in terms of Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are detailed as under: -

i. the ratio of the remuneration of each director of the Company to the median remuneration of the employees of the Company for the financial year 2015-16;

Ratio of the remuneration of the director of the company to the median remuneration of the employees of the company are,

Name of the Director Category Remuneration Received during the year Median remunerati on of the employees Ratio of Median Remuneration to Director’s Remuneration
Vijay Jaju Managing Director 300000

ii. Percentage increase in remuneration of each whole time director, Chief Financial Officer and the Company Secretary of the Company, during the financial year 2015-16.

- There is no increase in remuneration of each whole time director, CFO.

iii. Percentage increase in the median remuneration of employees of the Company during the financial year;

- There is no increase in the median remuneration of employees of the Company.

iv. Number of permanent employees on the rolls of the Company; - Approx. 40

v. average percentile increase already made in the salaries of employees of the company other than its managerial personnel (viz. whole time directors of the Company) during the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

- Not Applicable

vi. Key parameters for any variable component of remuneration availed by the directors; - Not Applicable

vii. Affirmation the remuneration is as per the remuneration policy of the Company: Yes.

ANNEXURE 3

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars contracts / arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto

1. Details of contracts or arrangements or transactions not at arm’s length basis.

Name(s) of the related party and nature of relationship N.A. N.A. N.A. N.A.
Nature of contracts/arrangements/transactions N.A. N.A. N.A. N.A.
Duration of the contracts / arrangements / transactions N.A. N.A. N.A. N.A.
Salient terms of the contracts or arrangements or transactions including the value, if any N.A. N.A. N.A. N.A.
Justification for entering into such contracts or arrangements or transactions N.A. N.A. N.A. N.A.
Date(s) of approval by the Board N.A. N.A. N.A. N.A.
Amount paid as advances, if any N.A. N.A. N.A. N.A.
Date on which the special resolution was passed in general meeting as required under first proviso to section 188 N.A. N.A. N.A. N.A.

2. Details of material contracts or arrangement or transactions at arm’s length basis

Name(s) of the related party and nature of relationship A. V. Jaju Director Spinomat Textiles Pvt Ltd Promoter holding shares of aforesaid Co. Neeta Textiles Promoter holding shares of aforesaid Co.
Nature of contracts/arrangements/transactio ns Reimbursement of Bank Interest Purchase Reimbursement of Bank Interest
Duration of the contracts / arrangements / transactions 01/04/2015 to 31/03/2016 01/04/2015 to 31/03/2016 01/04/2015 to 31/03/2016
Salient terms of the contracts or arrangements or transactions including the value, if any 5.03 70.89 18.00
Date(s) of approval by the Board, if any -- -- --
Amount paid as advances, if any Nil 53.92 Nil