Winsome Textile Industries Ltd Directors Report.

Dear Shareholders,

Your Directors have pleasure in presenting the 38th Annual Report together with the Audited Financial Statements of the Company for the financial year ended 31st March, 2019.

FinancialHighlights Year ended 31.3.2019 (Rs. in lacs) Year ended 31.3.2018 (Rs. in lacs)
Sales 72418.29 69980.95
Profit before Interest & Depreciation 8643.40 7994.23
Less : Interest 4839.25 4835.22
Profit/(Loss) before Depreciation 3804.15 3159.01
Less : Depreciation 2373.51 2470.75
Profit/(Loss) before Tax 1430.64 688.26
Less : Provision for Taxation - Current Tax/MAT 334.01 153.47
- MAT Credit (40.48) (153.47)
- Deferred Tax Liability/(Assets) (74.75) 422.69
- MAT Credit earlier year/Charged Earlier Year - -
- Tax/MAT for earlier years - (280.46)
- Tax Adjustment for the earlier year 0.02 49.79
Net Profit/ (Loss) after Tax 1211.84 496.24
Add : Surplus brought from previous year 2988.97 9766.38
Less: Adjustments & amounts transferred to General Reserves (1000) (7273.65)
3276.07 2988.97
Appropriations :
Proposed Dividend NIL NIL
Corporate Dividend Tax NIL NIL
Surplus Carried to Balance Sheet 3276.07 2988.97
3276.07 2988.97

PERFORMANCE REVIEW

During the year under review, your Company has achieved a sales turnover of Rs.72418.29 lacs as against sales turnover of Rs. 69980.95 lacs during the previous year showing an increase of 3.48% and a net profit (after tax) of Rs.1211.84 lacs for the year against net profit (after tax) of Rs. 496.24 lacs during the previous year. The exports of the company for the current financial year were of Rs.26543.83 lacs against Rs. 25570.84 lacs for the previous financial year.

The Textile Industry has still not recovered from the effect of demonetization and GST. Beside this other factors like higher price cotton due to lower Indian cotton production has added to already existing factors impacting profitability. Due to higher prices of cotton Indian products became uncompetitive and resulted in lower export exmill realization. Similarly, USA Trade war with China has also damped sentiments of international Trade Growth.

Impact of above factors was comparatively limited in performance in your Company as the compared to the pain being felt in Textile Industry mainly due to our supply of value added yarns including dyed yarn and fabrics to customers in both domestics and international markets.

ACCOLADES AND RECOGNITIONS

We are delighted to inform you that your Company conferred with Silver Trophy by TEXPROCIL for second Highest Exports of Cotton Yarn (Processed Yarns) in the Category II for F.Y. 2016-17. Apart from this your Company is making persistent efforts to maintain its distinguish position in the competitive environment.

HYDRO POWER PROJECT OF COMPANY

The Companys Manuni Hydro electric Power Project (3.5 M.W.) at Dharamshala, Distt. Kangra, Manuni Khad (H.P.) has been synchronized with H.P.S.E.B.L. Grid on 31.03.2017. Further, during the year under review Manuni Hydro electric Project has generated about 110 lacs units against 97 lacs units in the previous year.

MODERNISATION & EXPANSION

During the year under review, the Company has taken several progressive steps for modernization / expansion of plants. Major details are listed below:

(a) New Card (04 nos), state of art machines were purchased, with latest technology having measure such as energy saving spindles and highly energy efficient motors. Besides this reduction in steam consumption is made by process improvements.

(b) Company has installed TEXPART Spindle CS-1 on one Ring Frame having 1200 spindles to enhance power saving & getting better yarn quality.

(c) Company has done conversion on Ring Frame 10 Nos from Flat belt to Timing Belt, to get smart amount of power saving & better performance.

(d) Company has installed Sample Dyeing M/C Model: RVS-10, Make: CUBOTEX, Capacity: 40 Kgs in Dyeing Lab.

(e) Company has installed One Post Winding M/C Make: RESHMI in Dye House.

(f) Company has installed One Yarn Conditioning M/C, Make: SIEGER 1600 kg, dual type heating to enhance the yarn condition capacity in dye House.

SHARE CAPITAL

The paid up Equity Share Capital as at March 31, 2019 was Rs.19,82,00,000/- (comprised of 1,98,20,000 equity shares of Rs.10/- each). During the year under review, the Company has neither issued any shares nor granted stock options or sweat equity, preference shares and also not made any provision for purchase of its own shares by employees or by trustees.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not given any loan or provided any security/guarantee as per section 186 of the Companies Act, 2013 during the year 2018-19. The Investments under section 186 of the Act are given in the Financial Statements forming part of the Annual Report.

PUBLIC DEPOSITS

The Company has not accepted /renewed any deposits from the public during the FY 2018-19.

DIVIDEND & RESERVES

Keeping in view to conserve the resources, your Directors do not recommend any dividend for the FY 201819. The Company has proposed to carry Rs.1000 Lacs from surplus in the P&L account to General reserves.

INVESTOR EDUCATION PROTECTION FUND (IEPF)

Pursuant to Section 124(5) of Companies Act, 2013 read with the IEPF Authority (Accounting, Audit Transfer and Refund) Rules, 2016 ("the IEPF Rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF, established by the government of India, after the completion of seven years. Further according to the rules , the share on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of IEPF Authority. During the year under review, the Company has transferred the unclaimed and unpaid dividend for the Financial Year 2010-11 of Rs. 45,120/- (Rupees Forty Five Thousand One Hundred Twenty Only). Further, 27,684 corresponding equity shares on which dividend were unclaimed for seven consecutive years were also transferred as per the requirement of the IEPF rules.

However, the Shareholders are entitled to claim their shares including all the corporate benefits accruing on such shares, if any, from the IEPF Authority by submitting an online application in Form IEPF-5 and sending a physical copy of the Form IEPF-5 duly signed by all the joint shareholders, if any, as per the specimen signature recorded with the Company along with requisite documents enumerated in the Form IEPF-5, to the Companys RTA. The Rules and Form IEPF-5, as prescribed, for claiming back the shares, are available on the website of the IEPF www.iepf.gov.in. It may please be noted that no claim shall lie against the Company in respect of share(s) transferred to IEPF pursuant to the said Rules.

NUMBER OF MEETINGS HELD

The details of Board and Committee Meetings are given in the Corporate Governance Report.

DIRECTORS/ KEY MANAGERIAL PERSONNEL

Shri Ashish Bagrodia, Chairman & Managing Director (DIN - 00047021) shall be liable to retire by rotation at the ensuing Annual General Meeting, being eligible, he has offered himself for re-appointment. Further, first term of appointment of Sh. Chandra Mohan (DIN - 00017621) and Sh. Satish Girotra (DIN - 01112511), as an Independent Directors of the Company shall expire on 28.09.2019 and being eligible and they have offered themselves for re-appointment for further period of five consecutive years. Further, as on date, Sh. Chandra Mohan and Sh. Satish Girotra have attained the age of Seventy Five years, hence, their reappointment shall be by way of Special Resolutions.

There was a change in the composition of the Board during the F.Y. 2018-19 as Shri Amrit Lal Batra (DIN - 00399728), an Independent/Non-Executive Director has resigned w.e.f. 03.11.2018 citing personal reasons. There was no change in the Key Managerial Personnel during the year.

ANNUAL EVALUATION OF BOARD AND ITS COMMITTEES AND OF INDIVIDUAL DIRECTORS.

As per Companies Act 2013 and Listing Regulations, Board has adopted formal mechanism for evaluating its performance and as well as that of its committees, individual Directors, including the Chairman of the Board in compliance of Companies Act 2013 and Listing Regulations. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board, its committee & members, their experience & competencies, performance of specific duties & obligations, governance. Broadly the performance of Non-Independent/Executive/Whole Time Director(s) was evaluated on the basis of their own performance, expertise, intelligence, their qualitative & quantitative contribution towards operational achievements, organizational performance etc. The performance of Non-Executive Independent Directors were evaluated on the basis of their constructive participations in Board/Committee/General meetings, their informed & balanced decision-making, ability to monitor financial controls, systems & certain allied parameters. The annual performance evaluation of various Board Committees constituted under Companies Act & Listing Regulations was made on the basis of their respective terms of reference, discharge of functions, governance etc.

The separate Meeting of independent Directors was held on 07th February, 2019 to review the performance of Non-Independent directors including the Chairman and the Board as a whole as per Code of Independent Directors under Companies Act 2013 and Listing Regulations. The Independent Directors also reviewed the quality, content and timeliness of follow of information between Management and the Board.

The Performance Evaluation Policy of Board of Directors is uploaded on the Companys website i.e. www. winsometextile.com under corporate policies.

REMUNERATION POLICY

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their Remuneration. The said policy has been uploaded on the website of the Company. The Key provisions of Nomination and Remuneration policy are appended as an Annexure I to the Boards report.

AUDIT COMMITTEE

The company has duly constituted an Audit Committee, the scope of which is quite comprehensive and is in conformity with the provisions of the Companies Act, 2013 and Listing Regulations. The composition of the Audit Committee is given in Corporate Governance Report.

All the recommendations of the Audit Committee were accepted by the Board.

DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has adopted the Whistle Blower Policy/Vigil mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud, or violation of the Companys Code of Conduct and Ethics. Such mechanism/policy is also uploaded on the website of the Company i.e. www. winsometextile.com under the head "corporate policies".

STATUTORY AUDITORS

M/s B. Chhawchharia & Co., Chartered Accountants, were appointed as Statutory Auditors of Company, for a period of five consecutive years at the 36th Annual General Meeting of Company held on 04th September

2017, on a remuneration mutually agreed upon between the Board of Directors and the Statutory Auditors. Their appointment was subject to ratification by the Members at every subsequent AGM held after the AGM held on 04th September 2017. Pursuant to the amendments made to Section 139 of the Companies Act, 2013 by the Companies (Amendment) Act, 2017 effective from May 7, 2018, the requirement of seeking ratification of the Members for the appointment of the Statutory Auditors has been withdrawn and such variation in the terms of appointment have also been approved by the shareholders in the AGM held on 24th September,

2018. Hence the resolution seeking ratification by Members for continuance of their appointment at this

AGM is not being sought.

AUDITORS REPORT

The auditors report is self-explanatory and requires no explanation.

COST AUDIT & AUDITORS

M/s Aggarwal Vimal & Associates, Cost Accountants were appointed as Cost Auditors of your Company for auditing the cost accounts records for the financial year 2018-19 under provisions of Section 148 of the Companies Act, 2013. They are likely to submit Cost Audit Report within the prescribed time limit. Further the Company has made and maintained proper cost records as specified by the central government under sub-section (1) of section 148 of the Companies Act, 2013 for its business activities carried out during the year.

Furthermore, the Board has re-appointed M/s Aggarwal Vimal & Associates, Cost Accountants as Cost Auditors of the Company for the financial year 2019-20 on a remuneration of Rs.75,000/- (Rupees Seventy Five Thousand only) same as in the previous year. The Company has received written confirmation(s) from M/s Aggarwal Vimal & Associates, Cost Accountants, to the effect that their appointment, if made, would be in accordance of provisions of section 148 of Companies Act 2013 and that they are not disqualified for such appointment within the meaning of section 141 of Companies Act, 2013 read with Companies (Audit & Auditors) Rules 2014.

SECRETARIAL AUDIT & AUDITORS

Shri Ramesh Bhatia, Practicing Company Secretary was appointed to conduct the secretarial audit of the Company for the financial year 2018-19 as required under Section 204 of the Companies Act, 2013 and Rules made there under. The secretarial audit report for FY 2018-19 is appended as an Annexure II to the Boards report. The Secretarial auditors report for the year under review contain no adverse remarks, qualifications, hence no comments required.

Furthermore, the Board has re-appointed Shri Ramesh Bhatia, Practicing Company Secretary as secretarial auditor of the Company for the financial year 2019-20.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All Related Party transactions entered during the financial year were on arms length basis and in the ordinary course of business. There were no materially significant related party transactions with the Companys Promoters, Directors Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its review/approval. There was no material contract or arrangement or transactions with Related Party during the year. Thus, disclosure in form AOC-2 is not required.

The Board of Directors of the Company has, on the recommendation of 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 there under and Listing Regulations. This Policy as considered and approved by the Board has been uploaded on the website of the Company at web link http://www.winsometextile.com/files/pdf/68-63-file.pdf.

PARTICULARS OF EMPLOYEES

The information under Section 197 read with Rule 5(1), 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as an Annexure III & Annexure IV to the Board Report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92 of the Act, is annexed as an Annexure V which forms an integral part of this Report and is also available on the Companys website at www.hwinsometextile.com.

INDUSTRIAL RELATIONS

The company maintained healthy, cordial and harmonious industrial relations at all levels.

DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY

The Company has been addressing various risks through well-defined risk management policy/procedures, which in the opinion of the Board may threaten the existence of the Company. The Company has in place a mechanism to inform the Board about the risk assessment and minimization procedures and periodical review to ensure that management controls risk through means of a properly defined framework.

The Company has formulated and adopted Risk Management Policy to prescribe risk assessment, management, reporting and disclosure requirements of the Company. The said policy is available on the website of the Company i.e. www.winsometextile.com.

INTERNAL FINANCIAL CONTROL SYSTEMS

The Company has laid down adequate internal financial controls with reference to financial statements. During the year such controls were tested and no material weakness in their operating effectiveness was observed.

Further, the Company has an adequate system of internal control system in place commensurate with its size and operations. It ensures that all transactions are authorized, recorded and reported correctly. To maintain its objectivity and independence, an in-house Internal Audit Department of Company continuously monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating system, accounting procedures and policies/SOPs at all the location of the Company. Significant audit observation and corrective actions thereon are presented to Audit Committee. The Audit Committee regularly reviews the reports submitted by Internal Audit Department.

ASSOCIATES AND SUBSIDIARIES

The Company has no Associates & Subsidiaries as on March 31, 2019.

OVERSEAS BRANCH

The Company has got approval to open branch office in Poland from the respective authorities in the F.Y. 2017-18. The said branch is in operational since second quarter of F.Y. 2018-19 and catering to textile market in central Europe.

CORPORATE GOVERNANCE AND COMPLIANCE WITH SECRETARIAL STANDARDS

As per the provisions of Listing Regulations, a separate Report on Corporate Governance practices followed by the Company together with a Certificate from the Practicing Company Secretary, confirming compliance forms part of this report. Furthermore, the Company has complied with Secretarial Standards issued by Institute of Company Secretaries of India on Board Meetings and General Meetings.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING AND OUTGO

As required under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 the particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo is appended as an Annexure VI to the Boards Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

It is the Companys intent to establish itself and remain as a responsible corporate entity conscious of its social responsibilities towards its work force, society and environment. Corporate Social Responsibility (CSR) policy is framed under provisions of Section 135 of Companies Act 2013 & rules made there under having following major objectives:

• To identify and formulate projects and areas in response to the needs of society and to implement them with full involvement and commitment in a time bound manner.

• To adopt an approach that aims at achieving a greater balance between social and economic development.

• To implement CSR Activities/CSR programmes primarily in the economic vicinity Companys operations with a view to ensuring the long term sustainability of such interventions.

• Contribution to the society at large by way of socio-economic activities and social awareness ensuring that benefits reach the targeted beneficiaries.

• To comply with the requirements of Companies Act and all other applicable Acts, Rules, Regulations framed by the Government time to time.

The CSR activities are focused not just around units/plants and offices of the Company, but also in other geographies based on the needs of the communities/society. In pursuance to CSR Policy, Company has decided to conduct or undertake all or any of prescribed activities/activity/sub-activity, as mentioned in Schedule VII of the Companies Act 2013 and rules & regulations made there under, (as amended time to time), ether directly or through Winsome Textile Social Trust. Winsome Textile Social Trust established by Company for carrying out CSR activities of the Company including utilization of CSR Funds of Company as per the provisions of section 135 and Schedule VII of the Companies Act, 2013 and rules made there under as amended from time to time and which also fulfills the criteria laid down under Companies (CSR Policy) Rules 2014. The Corporate Social Responsibility (CSR) Committee of Company regularly monitor/review the CSR activities/CSR projects, its mechanism & other prescribed activities/matters. CSR policy is available on website of Company at weblink: http://www.winsometextile.com/files/pdf/68-59-file.pdf.

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY [CSR] ACTIVITIES IS APPENDED AS AN ANNEXURE VII DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE

There were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of section 134(3Xc) and 134(5) of Companies Act, 2013, it is hereby confirmed that:

• in the preparation of annual accounts for the financial year ended 31st March, 2019, the applicable accounting standards have been followed and that there are no material departures;

• the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2019 and of the profit or loss of the Company for the year ended on that date;

• 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;

• the annual accounts have been prepared on a going concern basis;

• the Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively;

• the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequately and operating effectively.

DECLARATION BY INDEPENDENT DIRECTORS

All Independent Directors of the Company have submitted the Declaration of Independence, as required pursuant to provisions of section 149 of Companies Act 2013 and under Listing Regulations, stating that they meet the criteria of independence as provided in said section/relevant regulation.

STATUTORY DISCLOSURES

None of the Directors of Company are disqualified under the provisions of section 164 of Companies Act 2013 & rules made there under. The Directors have made the requisite disclosures, as required under the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ("hereinafter referred to as Listing Regulations").

INTERNAL COMPLAINT COMMITTEE (ICC)

The Company has constituted an internal Complaint Committee (ICC) in all units of the company including corporate office to consider and resolve all sexual harassment complaints reported by any employees of the Company. The constitution of ICC is as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the committee includes external members from NGOs or with relevant experience. Investigation is conducted and decisions made by ICC at respective location, and senior woman employee is the presiding officer over every case. Half of the total members of ICC are women. The details of complaints pertaining to sexual harassment that were filed, disposed of and pending during the financial year are provided in the corporate governance report of this Annual Report.

MATERIAL CHANGES FROM END OF FINANCIAL YEAR TILL DATE OF REPORT

There are no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year to which this financial statements relate and the date of this Report.

DISCLOSURE REGARDING VOTING RIGHT NOT EXERCISED DIRECTLY BY THE EMPLOYEES

During the year under review, there is NIL disclosure as required under provisions of section 67 of Companies Act 2013.

OTHER DISCLOSURES

No disclosure or reporting is made in respect of the following items as there were no transactions during the year under review:

• There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and / or the Board under Section 143(12) of Act and Rules framed thereunder.

• Neither there is revision in the Financial Statements nor there is any change in nature of business. EQUAL OPPORTUNITY EMPLOYER

Company has always provided a congenial atmosphere for work to all employees that is free from discrimination and harassment including sexual harassment. It has provided equal opportunities to all employees, workers without regard to their caste, creed, colour, marital status and sex.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management discussion and analysis report, as required by Listing Regulations, forms part of the Annual Report.

ACKNOWLEDGEMENT

The Directors take this opportunity to express their deep sense of gratitude to the Customers, stakeholders, Central and State Governments for their continued guidance and support. Your Directors wish to place on record their appreciation for the support, dedication and hard work put in by every member of WINSOME Family.

For and on behalf of the Board
Sd/
(Ashish Bagrodia)
Place: Chandigarh Chairman & Managing Director
Date: 21.05.2019 DIN-00047021