To the Members,
Your Directors present the 32nd (Thirty Second) Boards Report together
with the Audited Statement of Accounts for the year ended 31st March 2023.
1. FINANCIAL RESULTS
The financial highlights of your Company for the year ended 31st March 2023 are
summarized as follows: (Rs. In Crores)
|
FY 2022-23 |
FY 2021-22 |
| Revenue from Operations / |
75.19 |
143.56 |
| Other Income |
|
|
| EBITDA |
(7.76) |
19.61 |
| Finance cost |
10.52 |
22.84 |
| Depreciation |
7.16 |
10.14 |
| Profit / (Loss) / before Tax |
(25.44) |
(13.37) |
| Exceptional Items: |
|
|
- VRS, Ex-gratia and Gratuity to employees on settlement |
(6.64) |
- |
| - Profit on sale of undertaking |
13.93 |
- |
| Profit / (Loss) for the year after exceptional items |
(18.15) |
(13.37) |
| Other Comprehensive Income (net of Tax) |
(0.36) |
0.13 |
| Total Comprehensive loss for the year |
(18.51) |
(13.24) |
2. FINANCIAL PERFORMANCE
Continued liquidity stress, delayed implementation of Restructuring / Resolution Plan
(RP) by the Lenders and challenging marketing conditions worldwide on account of geo
political situation have impacted companys performance in FY 2022-23. Pursuant to the
approval obtained from shareholders and lenders as per the RP, the company has sold its
Ponneri, Tamil Nadu undertaking on slump sale basis on 28.10.2022,post that operations are
carried out from the remaining Kanjikode, Palakkad, Kerala Plant. As per terms of RP,
Kanjikode, Kerala plant was to carryout own manufacturing operation from 01.06.2022.
However, on account of delay in implementation of RP and changed market scenario post
implementation of RP on account of : prolonged Ukraine war which impacted major Textiles
markets ( EU and USA), higher inflation, slow-down of global economy, higher raw material
(raw cotton) prices and Finished Goods (Cotton yarn) prices increase was not in tandem
with increase in Raw materials –raw cotton prices
Raising interest rates have caused unprecedented demand challenges and significant drop
/ erosion in margins, of Indian Textiles sector, especially spinning segment. As a result,
company had to continue Contract manufacturing / job work arrangement even post
implementation of RP.
For the aforesaid reasons, Revenue from operations for FY 2022-23 was lower at Rs 75.19
Crores as against Rs 143.56 Crores in the previous financial year. EBITDA level loss was
Rs 7.76 crores as against Rs 19.61 crores of positive EBITDA in the previous year. Finance
cost in FY 2022-23 was lower at Rs 10.52 crores as against Rs 22.84 crores of previous
year due to repayment of Term debt fully as per the cut-off date of 31.3.2022 and
reduction rate of interest by Lenders under RP on WCTL at 9% Form 01.01.2022. Depreciation
was lower in the current year on account of sale of companys Tamil Nadu plant under RP.
Loss before Tax for the current year was higher at Rs 25.44 crores as against Lower Loss
at Rs 13.37 crores in the previous year. After exceptional expenses of Rs 6.64 crores (
VRS to Kerala workmen) and Profit on sale of Ponneri Tamil Nadu undertaking of Rs 13.93
crores, the total Loss for FY 2022-23 was at Rs 18.51 crores as against Rs 13.24 crores of
Loss incurred in the previous year.
3. APPROVED RESOLUTION PLAN (RP)
Companys revised restructuring / resolution proposal pursuant to RBI Prudential
Framework for Resolution of Stressed Assets circular of 7th June 2019, was
approved and implemented by the lenders at their meeting held on 28.9.2022. Pursuant to
approval of shareholders and the approval of lenders under RP, the companys plant at
Ponneri, Tamil Nadu was sold for a net sale consideration of Rs. 105 crores on slump sale
basis on 28.10.2022. From the sale proceeds, the company has (i) fully repaid outstanding
term loans of Rs. 85.73 crores (ii) paid Rs. 4.27 crores towards outstanding working
capital dues and converted the balance working capital dues of Rs. 66.68 crores into
Working Capital Term Loan (WCTL), repayable over 7 years tenure (including initial
moratorium of one year (iii) made VRS and Gratuity payment of Rs 7.20 crores to high cost
permanent workers of remaining Kanjikode, Kerala Unit to reduce labour cost , (iv) made
interest payment on WCTL of Rs 6.30 crores and (v) balance of Rs 1.50 crores were utilized
for Statutory and Power payment of Kanjikode ,Kerala plant.
As per RP sanction terms, Board of Directors have allotted 0.50% 20,51,000
Non-Cumulative Compulsorily Convertible Preference Shares (NCCCPS) of Rs. 100 each to
Lenders and Promoters & its Associates in lieu of their existing Redeemable Preference
Shares, conversion on 31.3.2030. However on 03.08.2023 BSE communicated
"Closure" of the application citing non-submission of required
documents/classifications which BSE has not uploaded in their Listing Centre Portal nor
emailed to the Company in spite of Companys repeated requests. The Company is in
discussion with their lawyers for futher course of action.
4. DIVIDEND
In view of the losses for the financial year ended 31st March 2023, the
Board of Directors regret their inability to recommend any dividend for the year 2022-23.
5. SHARE CAPITAL
During the year under review, the Company has altered its Capital Clause of Memorandum
of Association thereby increased Authorised Share Capital to Rs. 71,00,00,000 (Rupees
Seventy one Crores only) divided into 4,00,00,000 (Four Crore) Equity shares of Rs.
10/-(Rupees ten only) each and 31,00,000 (Thirty one lakhs) Redeemable Preference Shares
of Rs. 100/- (Rupees One hundred only). Pursuant to approved Resolution Plan (RP), the
Board of Directors at their meeting held on 14.10.2022 approved redemption of 20,51,000
Non Convertible Redeemable Preference Shares (NCRPS) of Rs. 100 each and in lieu of the
same, allotted on 14.11.2022 equal number of shares i.e. 0.50% 20,51,000 Non Cumulative
Compulsorily Convertible Preference Shares (NCCCPS) of Rs. 100 each to the Lenders
(10,81,000 NCCCPS) and to Promoters & its Associates (9,70,000 NCCCPS), conversion on
31.3.2030.
The Companys paid-up Equity Share Capital remains same at Rs. 30.92 Crores as on 31st
March, 2023.
6. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report on the operations of the Company, as
required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 (hereinafter referred to as "Listing Regulations") is provided in a
separate section and forms an integral part of this Report.
7. PUBLIC DEPOSITS
The Company does not have "Deposits" as contemplated under Clause V of the
Companies Act 2013. Further, the company has not accepted any such deposits during the
year ended 31st March 2023.
8. CORPORATE GOVERNANCE
The Company has taken the requisite steps to comply with the recommendations concerning
Corporate Governance. A separate statement on Corporate Governance together with a
certificate from the Practicing Company Secretary of the Company regarding compliance of
conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.
9. DIRECTORS AND KEY MANAGERIAL PERSONS
During the year under review, there is no change in the composition of the Board of
Directors and the Key Managerial Personnel during the FY2022-23.
Pursuant to the requirements of the Companies Act, 2013, Shri. B.K Patodia (DIN
00003516), retires by rotation at the ensuing Annual General Meeting and, being eligible,
offers himself for re-appointment. The Board recommends the appointment / re-appointment
of the above Director for approval. The brief details of the Director proposed to be
appointed / re-appointed, as required under Regulation 36 of SEBI Listing Regulations, are
provided in the Notice of Annual General Meeting.
10. KEY MANAGERIAL PERSONNEL
Shri Umang Patodia, Managing Director, Shri T. Ravindran, Chief Financial Officer, and
Ms Veena Vishwanath Bhandary, Deputy Company Secretary and Compliance Officer were the Key
Managerial Personnel of your Company, in accordance with the provisions of Section 203 of
the Companies Act 2013 during the year under review.
11. NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met 5 (Five) times during the financial year 2022-23. The
details of the meetings of the Board of Directors of the Company convened and attended by
the Directors during the financial year 2022-23 are given in the Corporate Governance
Report which forms part of this Annual Report.
12. MEETING OF INDEPENDENT DIRECTORS
The Independent Directors met once during the Financial Year under review. The Meeting
was conducted without the presence of the Non-Independent Directors and members of
management.
13. DIRECTORS RESPONSIBILITY STATEMENT
The Board of Directors acknowledge the responsibility for ensuing compliances with the
provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 in the
preparation of annual accounts for the year ended on 31st March, 2023 and state that: i.
in the preparation of the Annual Accounts, the applicable Indian Accounting Standards have
been followed and there are no material departures from the same; ii. 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 your company as at 31st March 2023 and of the profit or loss of the company
for that period; iii. 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 your company and for preventing and
detecting fraud and other irregularities; iv. the Directors have prepared the Annual
Accounts on a going concern basis v. they have laid down internal financial controls to be
followed by the company and that such internal financial controls are adequate and are
operating effectively; and vi. 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.
14. BOARD EVALUATION
Pursuant to the provisions of Companies Act and Listing Regulations, annual evaluation
of the Board, the Directors individually as well as working of its constituted committees
has been carried out from time to time.
15. FAMILIARISATION PROGRAMME FOR DIRECTORS
At the time of appointing a Director, a formal letter of appointment is given to him,
which interalia explains the role, function, duties and responsibilities expected of him
as a Director of the Company. This is to provide insights into the Company to enable the
Independent Directors to understand its business in depth, to familiarize them with the
process, business and functionaries of the Company and to assist them in performing their
role as Independent Directors of the Company. The Director is also explained in detail the
Compliance required from him under the Companies Act, 2013, SEBI (LODR) Regulations, 2015
and other relevant regulations and affirmation taken with respect to the same. The
Chairman and the Management has also one to one discussion with the Directors to
familiarize with the companys operations
16. AUDITORS
M/s. L.U.Krishnan & Co. (Regn.No.001527S) Chartered Accountants, Chennai were
appointed as the Auditors of the Company for second term of 5 years at the 31st
Annual General Meeting (AGM) held on 30th September, 2022 to hold office till
the conclusion of the 36th AGM of the Company to be held in the year 2027. The
Auditors Report for 2022-23 does not contain any qualifications, reservations or adverse
remarks.
17. SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made
there under, the Company has appointed Shri. MRL Narasimha (C.P No. 799), Practicing
Company Secretary to undertake the Secretarial Audit of the Company.
Secretarial Audit Report issued by Shri. MRL Narasimha, Practicing Company Secretary in
Form MR-3 forms part to this report Annexure I. The said report does not contain
any observation or qualification requiring explanation or adverse remark
18. COST AUDITORS
Pursuant to Section 148 of the Act read with Rule 14 of the Companies (Cost Records and
Audit) Amendment
Rules, 2014, the cost audit records of the Company are required to be audited. The
Directors, on the recommendation of the Audit Committee, appointed M/s. Hareesh K.N and
Associates, Cost Accountants (Firm Reg. No. 101974) Cost Accountants, to audit the cost
accounts of the Company for the FY ending 31st March, 2024, on a remuneration
as mentioned in the Notice convening the 32nd Annual General Meeting for
conducting the audit of the cost records maintained by the company.
19. EXTRACT OF ANNUAL RETURN
Pursuant to provisions of Section 134(3)(a) and Section 92(3) of the Companies Act,
2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the
draft of the Annual Return of the company for the Financial Year 31st March
2023 is uploaded on the website of the company and can be accessed at the www.patspin.com
20. RELATED PARTY TRANSACTIONS
All transactions entered with related parties were on arms length basis and in the
ordinary course of business. There were no materially significant transactions with the
related parties during the financial year and were not in conflict with the interest of
the company. Thus, a disclosure in Form AOC -2 in terms of Section 134 of the Companies
Act 2013 is not required. All related party transactions are placed before the Audit
Committee as also before the Board for approval.
The Board of Directors, as recommended by the Audit Committee, adopted a policy to
regulate transactions between the Company and its Related Parties, in compliance with the
applicable provisions of the Companies Act 2013, the Rules thereunder and the Listing
Regulations. This Policy has been uploaded on the website of the Company.
21. LOANS & INVESTMENTS
Details of loans, guarantees and Investments covered under the provisions of Section
186 of the Companies Act, 2013 are given in the Notes to Financial Statements forming part
of this report.
22. RISK MANAGEMENT
The company has laid down a well-defined risk management mechanism covering the risk
mapping and trend analysis, risk exposure, potential impact and risk mitigation process. A
detailed exercise is being carried out to identify, evaluate, manage and monitor business
risks. The Audit Committee and the Board periodically review the risks and suggest steps
to be taken to manage/ mitigate the same through a properly defined framework.
During the year, a risk analysis and assessment was conducted, and no major risks were
noticed, which may threaten the existence of the company
23. VIGIL MECHANISM / WHISTE BLOWER POLICY
The company has a Vigil Mechanism / Whistle Blower Policy to report genuine concerns or
grievances. The Vigil Mechanism (Whistle Blower Policy) has been posted on the companys
website (www.patspin.com).
24. CORPORATE SOCIAL RESPONSIBILITY (CSR)
As per the provisions of Section 135 read with the Section 198 of the Companies Act
2013, the company do not have CSR obligation for the year 2022-23. Accordingly, there has
been no meeting of CSR Committee held during the year.
Even though the provisions of Section 135 (5) of Companies Act, 2013 regarding
Corporate Social Responsibility are not yet attracted, the company has been, over the
years, pursuing as part of its corporate philosophy, an unwritten CSR policy voluntarily
which goes much beyond mere philanthropic gestures and integrates interest, welfare and
aspirations of the community with those of the Company itself in an environment of
partnership for inclusive development.
25. CREDIT RATING
Lenders have classified account as sub-standard w.e.f 31.3.2021 due to default in debt
servicing and have approved and implemented companys Revised Restructuring / Resolution
proposal under RBI. Prudential Framework for Resolution of Stressed Assets circular of 7th
June 2019, Credit rating Agency CRISIL Ratings Ltd has awarded RP-4 Rating in March 2022
for the Companys Revised Resolution Plan.
26. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under section 134 (3) (m) of the Companies Act, 2013 read with
Rule 8 of the Companies (Accounts) Rules, 2014 is given in the Annexure II forming
part of this report
27. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an effective internal control and risk mitigation system designed to
effectively control the operations at its Head Office, Plants and Depot. The internal
control systems are designed to ensure that the financial and other records are reliable
for the preparation of financial statements and for maintaining assets. The Company has
well designed Standard Operating Procedures. Independent Internal Auditors conduct audit
covering a wide range of operational matters and ensure compliance with specified
standards. Planned periodic reviews are carried out by Internal Audit. The findings of
Internal Audit are reviewed by the top management and by the Audit Committee of the Board
of Directors.
Based on the deliberations with Statutory Auditors to ascertain their views on the
financial statements including the Financial Reporting System and Compliance to Accounting
Policies and Procedures, the Audit Committee was satisfied with the adequacy and
effectiveness of the Internal Controls and Systems followed by the company.
28. NOMINATION & REMUNERATION POLICY
The Board of Directors has framed a policy which lays down a framework in relation to
remuneration of Directors, Key Managerial Personnel and Senior Management of the Company.
This policy also lays down criteria for selection and appointment of Board Members. More
details on the same are given in the Corporate Governance Report.
29. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
In accordance with the applicable provisions of Companies Act, 2013 (hereinafter
referred to as "the Act") read with Investor Education and Protection Fund
(Accounting, Audit, Transfer and Refund) Rules, 2016 (hereinafter referred to as the
"IEPF Rules"), all unclaimed dividends are required to be transferred by the
Company to the IEPF, after completion of seven (7) years. Further, according to IEPF
Rules, the shares on which dividend has not been claimed by the shareholders for seven (7)
consecutive years or more shall be transferred to the demat account of the IEPF Authority.
The details relating to shares on which dividends were unclaimed are provided in the
General Shareholders Information section of Corporate Governance report forming part of
this Annual Report.
30. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place an anti-sexual harassment policy in line with the requirements
of the sexual harassment of women at the workplace (Prevention, Prohibition and Redressal)
Act, 2013. Internal Compliance Committee (ICC) has already been functioned for redressing
complaints received regarding sexual harassment. All employees (permanent, contractual,
temporary, trainees) are covered under this policy. The Company has not received any
complaints under this policy during the year ended 31st March, 2023.
31. PARTICULARS OF EMPLOYEES PURSUANT TO SECTION 134 (3) (q) OF THE COMPANIES ACT, 2013
READ WITH RULE 5 (1) OF THE COMPANIES (APPOINTMENT AND REMUENRATION OF MANAGERIAL
PERSONNEL) RULES, 2014
The information required pursuant to section 134 (3) (q) of the Companies Act, 2013
read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 in respect of employees of the company will be provided upon
request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the
Members and others entitled thereto, excluding the information on employees particulars
which is available for inspection by the Members at the Registered office of the company
during business hours on working days of the company up to the date of the ensuing Annual
General meeting. If any Member is interested in obtaining a copy thereof, such member may
write to the company in this regard.
32. PERSONNEL & INDUSTRIAL RELATIONS
Industrial Relations were cordial and satisfactory. There were no employees whose
particulars are to be given in terms of Section 134(3)(q) of the companies Act,2013 read
with Rule 5(2) and 5(3) of the companies (Appointment and Remuneration of Managerial
personnel) Rules, 2014.
33. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant and material orders passed by the Regulators or Courts or
Tribunals that would impact the going concern status of your Company and its future
operations.
34. GENERAL
There was no issue of equity shares with differential rights as to dividend, voting or
otherwise: and; There was no issue of shares (including sweat equity shares) to the
employees of the company under any scheme.
35. ACKNOWLEDGEMENT
Your Directors place on record their gratitude to Central Bank of India, State Bank of
India, The Karur Vysya Bank Limited and the concerned Departments of the State and Central
Government, valuable customer, Employees and Shareholders for their assistance, support
and co-operation to the Company.
For and on behalf of the Board of Directors
B K PATODIA
Place: Mumbai
Chairman
Date: 14.8.2023 (DIN:00003516)
+91-9892691696
