Your Directors hereby present the Fifty Sixth Annual Report and the Audited Financial Statements of the Company for the Financial Year ended 31st March 2019. The salient highlights (in the Ind AS format) are provided in the table below:
(Rs. in Million)
|For the period ended|
|31st March 2019||31stMarch 2018 |
|Sales and other operational income||3.26||22.54|
|Gross Profit / (Loss) from continuing Operations||83.79||27.26|
|Less : Depreciation||92.25||91.67|
|Interest /Finance Charges||48.66||(0.50)|
|Net Profit / (Loss) for the year from continuing operations||(57.12)||(63.91)|
|Provision /(withdrawal) for Income Tax / Deferred Tax||-||-|
|Net Profit /(Loss) for the year after Tax from continuing operations||(57.12)||(63.91)|
|Net Profit/(Loss) for the year after Tax from discontinued operations||(2184.34)||383.77|
|Net Profit/(Loss) for the year after Tax||(2241.46)||319.86|
|Profit / (Loss) brought forward from the previous year||(2105.68)||(2425.54)|
|Other Comprehensive Income/(Loss) arising from discontinued operations||-||-|
|Surplus/(Deficit)/ carried to Balance Sheet||(4347.14)||(2105.68)|
1. Results of our operations
During the year under review production remained suspended in the Chennai (till 29.11.2018) and Vizag plants. The Insulator business unit generated miscellaneous sale of Rs. 3.26 million. Howeverthere was no sales effected in the Turnkey Projects division due to lack of working capital facilities.
During the year under review the Board had decided that the factory situated at 108 Mount Poonamallee Road Porur Chennai-600116 be closed with effect from close of business hours of 29th November 2018 consequent to the continuing suspension of production and settlement of the workforce.
The major elements under the provision for loss arising from discontinued operations are:
1. The resolution of dispute with Mantri entities and perfecting the title of land on 10.08 acres at Porur Chennai and compensation thereon resulted in a charge of Rs. 1718.62 millions.
2. Interest cost arising from the settlements made under various agreements with Edelweiss entities State Bank of India and Mantri entities resulted in a charge of Rs. 138.89 millions.
3. Profit arising from waiver of principal on outstanding of Edelweiss entities and SBI Rs 309.67 millions and Loss on transfer of Series A Debentures Rs. 559.91 millions.
No dividend has been proposed on the Equity shares.
The Directors also regret their inability to recommend any payment of contracted dividend on Preference Share Capital.
Since the Company has suffered losses no transfer to reserve is provided for.
4. Particulars of loans guarantees or investments
Loans guarantees and investments covered under Section 186 of the Companies Act 2013 form part of the notes to the Financial Statements provided in this Annual Report.
5. Transfer of unpaid Dividend to Investor Education and Protection Fund
In terms of Investor Education and Protection Fund Authority (Accounting Audit Transfer and Refund) Amendment Rules 2017 there is no obligation to transfer the unpaid/ unclaimed shares to the Investor Education and Protection Fund.
6. Fixed Deposits
Your Company has not accepted any deposits from public in terms of provisions of Companies Act 2013.
7. Corporate Governance
A separate report on Corporate Governance along with a Certificate of Compliance forms part of this report vide Annexure 1.
During the period under review your Board of Directors have reviewed the Financial Statements of W.S. T&D Limited (wholly owned subsidiary upto 27th March 2019) and Vidagara Tech Park Private Limited (100% wholly owned subsidiary with effect from 12th March 2019).
Your Company has in accordance with Section 129 (3) of the Companies Act 2013 prepared the Consolidated Financial Statements for the Financial Year ended 31st March 2019 which forms part of the Annual Report. Further the statement containing the salient features of the Financials of the subsidiaries in the Form AOC 1 is attached as Annexure 2 to this Report.
In accordance with Section 136 of the Companies Act 2013 the audited consolidated and standalone financial statements are available on our website www.wsindustries.in/KYC.
9. Related Party Transactions.
All related party transactions that were entered into during the financial year were on arm's length basis and were in the ordinary course of the business. There are no materially significant related party transactions during the year which in the opinion of the Board may have potential conflicts with the larger interests of the Company. The details of transactions with related parties have been disclosed in form AOC-2 as Annexure 3 and form part of this Annual Report.
The policy on related party transactions is available on the Company's website.
10. Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
Since production activity was suspended in both the plants we are unable to report on the particulars prescribed under Section 134 of the Companies Act 2013 read with rule 8 (3) of the Companies (Accounts) Rules 2014 relating to conservation of energy and technology absorption.
Foreign Exchange Earnings:
Foreign Exchange Inward : NIL
Foreign Exchange Outward : NIL
11. Extract of Annual Return
As provided under section 92 (3) of the Companies Act 2013 read with Rule 12 of the Companies (Management and Administration) Rules 2014 the extract of Annual Return of the Company is annexed herewith as Annexure 4 in the prescribed Form MGT 9 which forms part of this Report.
12. Material changes and commitment affecting financial position between the Financial Year ended 31st March 2019 and the date of this Report
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future.
Material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of this report are as follows:
The conversion of Series B Debentures allotted by the Company's subsidiary M/s.W.S. T&D Limited to M/s. Abhishaya Infrastructure Private Limited into equity shares on 10th June 2019 resulted in the cessation of control of the company in M/s. W.S. T&D Limited. This will have an impact in FY 2019-2020 on the treatment in the books of the Company under Ind AS110 in Consolidated Financial Statements.
13. Risk Management Policy
The Board had established Risk Management policy which formalizes the Company's approach to overview and manage material business risks.
14. Corporate Social Responsibility
Section 135 of the Companies Act 2013 pertaining to Corporate Social Responsibility is not applicable in our case.
15. Internal Financial Controls
Your Company has internal financial controls commensurate with its position at the current juncture with respect to financial reporting.
16. Directors and Key Managerial Personnel (KMP)
Mrs. Suguna Raghavan has been appointed as an Additional Director by the Board through Circular resolution dated 30th January 2019 who shall hold office upto the date of ensuing Annual General Meeting of the Company. She has now been appointed by the shareholders through postal ballot (and the results have been declared on 8th June 2019) as an Independent Director who shall hold office for the first term of three years with effect from 14.02.2019 till 13.02.2022 and whose office shall not be liable to retire by rotation.
Mr.B. Swaminathan who is Chief Financial officer and Compliance Officer of the Company has also been appointed as Company Secretary of the company with effect from 14th February 2019. Mr.K.Rajasekar Non-Independent Non-executive Director of the company has been designated by the shareholders of the company through postal ballot (and the results have been declared on 8th June 2019) as Whole Time Director who shall hold office for a period of 3 years with effect from 25.03.2019 on rotational basis.
No employee draws remuneration in excess of the limits prescribed under Rule 5(2) of Chapter XIII the Companies (Appointment and Remuneration of Managerial Personnel Rules 2014. Remuneration drawn by KMP have been disclosed in Annexure-4 to Board's report. Therefore details pertaining to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 have not been provided.
17. Declaration by Independent Directors:
The Company has received necessary declarations from each Independent Director under Section 149(7) of the Companies Act 2013 that he/she meets the criteria of Independence laid down in and Section 149(6) of the Companies Act 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
18. Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Boards' performance and performance of the Non-independent Director were considered/evaluated by the independent directors at their meeting without the participation of the non-independent director and key managerial personnel. The Board has carried out an annual appropriate evaluation of its own performance the directors individually and the working of its various committees.
19. Meetings of the Board
The details of the number of meetings of the Board held during the Financial Year 2018-19 along with attendance details of each director forms part of the Corporate Governance Report of this Annual Report.
The details regarding Committees of Board of Directors of the Company are given in the Corporate Governance Report of this Annual Report.
M/s. S B S B and Associates Chartered Accountants Chennai (Firm Registration No.012192S) were appointed as Statutory Auditors of the Company for a period of five years from the Conclusion of 54th Annual General Meeting till the conclusion of 59th Annual General Meeting. With reference to the Auditor's Report issued by SBSB & Associates Chartered Accountants the explanation/comments against their qualified opinion is annexed herewith as Annexure 5
Pursuant to the requirements of Section 204 (1) of the companies Act 2013 read with rules made thereunder Ms.Lakshmmi Subramanian (Membership No. 3534 CP No. 1087) Partner M/s.Lakshmmi Subramanian & Associates was appointed as the Secretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year 2018-19. The Report of the Secretarial Auditor is enclosed as Annexure 6 to this Report.
With reference to the Secretarial Auditor's Report issued by M/s.Lakshmmi Subramanian & Associates Company Secretaries the explanation/comments against their observations is annexed herewith as Annexure 6A
Consequent to the approvals and regulatory clearances from shareholders (by means of special resolutions passed through postal ballot) and other statutory authorities 16.40 acres of land at Chennai has been transferred on 22nd March 2019 to its subsidiary M/s. W.S. T&D Limited for a total consideration of Rs. 3160.00 millions comprising of take over of loan of Rs.3124.67 millions withhold of TDS Rs.31.60 millions and balance payment received.
The Shareholders has passed a resolution through Postal Ballot Notice dated 17th September 2018 for increase in Authorised Share Capital from the present Rs.500000000 (Rupees fifty crore) divided into 35000000 (three crores fifty lakhs) equity shares of the face value of Rs.10/- (Rupees ten) each and 1500000 (fifteen lakhs) cumulative redeemable preference shares of the face value of Rs.100/- (Rupees one hundred) each toRs.650000000 (Rupees sixty five crores) divided into 50000000 (five crore) equity shares of the face value of Rs.10/- (Rupees ten) each and 1500000 (fifteen lakhs) cumulative redeemable preference shares of the face value of Rs.100/- (Rupees one hundred) each. However the Board subsequently was advised that such increase of authorized share capital of the Company would not be immediately required and therefore decided that the resolution be rescinded and this was consequently approved by the shareholders of the company through postal ballot notice dated 26th April 2019.
The Company has made a payment of Rs.0.10 milliions towards the acquisition of 10000 equity shares having face value of Rs.10 each fully paid of M/s. Vidagara Tech Park Private Limited which has become 100% wholly owned subsidiary of the Company. The same has been approved by the shareholders by means of special resolution through postal ballot Notice dated 17thSeptember 2018.
The Company has in accordance with generally accepted accounting practice disclosed the impact of pending litigations on its financial position in its financial statements.
23. Sexual Harassment of Women at Workplace (Prevention Prohibition & Redressal) Act 2013
During the year under review there were no complaints under this Act.
24. Management Discussion and Analysis Report.
As highlighted in the previous year the Company faced multiple challenges caused by steep rise in the price of raw material coupled with reduction in sales volume arising from higher imports greater competition in the industry dumping by foreign competitors and economic slowdown all of which resulted in increased losses culminating in a liquidity crunch. Due to mounting losses lack of working capital and other support company had no option but to suspend manufacturing operations at Vizag plant and close manufacturing operation at Chennai plant.
The status regarding trespass in part of the premises of the factory at Chennai remains unchanged; continuing complaints to the appropriate authorities are being filed and the situation carefully monitored. The Company is pursuing all legal remedies.
As disclosed on 14th August 2018 in Q1 results the Company has executed various agreements with Edelweiss Asset Reconstruction Company Limited Allium Finance Ltd and Debenture holders of the Company for the settlement of dues (with an initial payment of Rs. 2000 millions) over a specified period of time along with an specified amount to continue as Restructured Debt secured by plant and machinery and all other assets and properties of the Vizag Unit on a paripassu basis and for the withdrawal of all disputes and proceedings before various forums between the Company and the above parties. As part of the initial payment the company has partly redeemed Non Convertible Debentures on face value basis to the extent of Rs.220 millions along with agreed interest thereon. However these agreements could not be fulfilled in full due to the continuing litigation arising from the trespass. The Company is in discussions with Allium Finance Private Limited IDBI Trusteeship Services Limited and Edelweiss Asset Reconstruction Company Limited to find a resolution to the outstanding loan liabilities with them and arising from the non-completion of the settlement agreements signed with them on 12th April 2018 and to arrive at a suitable resolution plan for the Company.
The Company has completed the resolution of dispute with Comfortable Abode Private Limited (formerly Mantri Premier Homes Private Limited) and Mantri Developers Private Limited which included cancellation of all the agreements entered into with them and for the withdrawal of all disputes and proceedings before various forums between the Company and the aforesaid entities.
The Company has entered into a one-time settlement with State Bank of India for settling the outstanding amount of Rs. 167.05 millions at a reduced amount of Rs.125.29 millions.
The Company has availed financing facility of Rs.3124.67 millions (Loans) to finance the various settlement amounts as indicated above and secured by mortgage on 16.4 acres of its land. During the year this loan and the liability arising thereon has been assigned to its subsidiary M/s. W.S. T&D Limited as a part of sale consideration of 16.40 acres of land at Chennai.
The 925000 Non-convertible Redeemable and cumulative Preference Shares of Rs.100/- each fully paid up with coupon rate of 5% / 7.5% subscribed by Vensunar Holdings (P) Ltd. and due for redemption on 30th Sept. 2018 has been extended by the above shareholder for a further period of 12 months i.e. upto 30th Sept. 2019.
350000 Non-convertible Redeemable and cumulative Preference Shares Rs. 100/- each fully paid up with a coupon rate of 10% subscribed by Vensunar (P) Ltd. which are due for redemption on 28th Feb. 2019 has been extended by the above shareholder for a further period of 18 months i.e. upto 31st Aug. 2020.
The Share Capital of the company has increased to Rs.262.61 millions consequent to allotment of 5120818 Equity Shares on preferential basis to the respective trusts of Edelweiss Asset Reconstruction Company Limited.
The Company has implemented settlements with the workers / executives both at Chennai and Vizag plants.
During the year the existing loan/ receivable of Rs.560.41 millions due from the subsidiary viz. W.S.T & D Limited has been converted into Compulsorily Convertible Debentures which has subsequently been disposed.
During the year the subsidiary M/s.W.S. T&D Limited has allotted 48135 equity shares of Rs.10/- each constituting 49% of its equity share capital to M/s.Abhishaya Infrastructure Private Limited.
M/s.Vidagara Tech Park Private Limited which became a wholly owned subsidiary of M/s. W.S.Industries (India) Limited with effect from 12.03.2019 was incorporated 29th October 2018. The main business of the Company is to establish infrastructure for use by IT / IT enabled services to develop integrated IT solutions to establish infrastructure solutions for industrial / other applications.
Since it is the first year of operations after incorporation on 29th October 2018 there were no activities and consequently no income during the year.
Your Company has an adequate Risk Management Policy which would help in identifying and mitigating enterprise risks. The ongoing litigation and the non-availability of capital to revive the operations continue to remain the primary concerns for your Company.
Your Company has adequate internal control systems as necessary with the requirements of the Companies Act 2013.
25. Director's Responsibility Statement
In terms of Section 134 (5) of the Companies Act 2013 the directors would like to state that:
a. In the preparation of the annual accounts the applicable accounting standards have been followed. In accordance with the notification issued by the Ministry of Corporate Affairs the Company has adopted Indian Accounting Standards (referred to as Ind AS) notified under the Companies (Indian Accounting Standards) Rules 2015 with effect from April 1 2017.
b. The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company for the financial year ended 31st March 2019 and of the profit or loss of the Company for the period under review.
c. The directors 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 fraud and other irregularities.
d. The directors have prepared the annual accounts on a going concern basis.
e. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively taking into consideration the current circumstances and
f. The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively taking into consideration the current circumstances.
26. Listing of Shares:
The equity shares of the Company are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The listing fee for the Financial Year 2019- 20 has already been paid to the credit of both the Stock Exchanges.
Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institution Government authorities other stakeholders and members during the year under review. Your Directors also wish to place on record their acknowledgement and gratitude for the commitment shown by the Company's personnel who have been functioning under very trying circumstances.
|For and on behalf of the Board|
|Chennai||R. Karthik||J. Sridharan|
|5thAugust 2019 ||Director ||Director |