yarns limited...chandigarh -160022 india cin : l17115ch1990plc010566 phones : +91-172-2603966,...
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WYL/SECT/ 30.07.2020
winsome Yarns Limited
Regd. Office: 5C0 #191-192. Sector 34-A, Chandigarh -160022 INDIA
CIN : L17115CH1990pLC010566 Phones : +91-172-2603966, 4612000, 4613000
Fax : +91-172-4614000 e-mail: exports@winsomegroup.com
website: www wlnsomeqroup.com
BSE Limited Dept. of Corporate Service 1st Floor, New Trading Ring Rotunda Building, P. J. Towers Dalal Street, Fort, MUMBAI-400001
National Stock Exchange of India Ltd Listing Department "Exchange Plaza" Bandra-Kurla Complex Bandra (E), MUMBAI - 400051
Script Code : 514348
Symbol: WINSOME
Sub: Outcome of Board Meeting under Regulation 30 of SEBI (LODR). (Audited Financial Results for the year 2019-20)
Dear Sir/Madam,
Pursuant to Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed herewith following documents/ information duly approved by the Board of Directors of the Company in their meeting held on July 30, 2020.
1. Audited Financial Results of the Company for the Quarter and year ended March 31, 2020.
2. Statement of Assets and Liabilities for the half year ended March 31, 2020. 3. Cash flow statement on standalone and consolidated basis, pursuant to Regulation
33(3)(g) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
4. Auditors Report and Statement of Impact of audit qualifications on the basis of standalone and consolidated financials for the year 31.03.2020.
The meeting of the Board of Directors of the Company commenced at 12.45 P.M. and concluded at 7.30 P.M.
This is for your information and records please.
Thanking you,
Yours faithfully, For WINSOME YA S LIMITED
(RAJPA O Dy. Manager (Legal & Secretarial) Mobile No. 9855601267 Email csharewinsomeqroup.com
Works : Village Kurawala, Barwala Road, Derabassi-1 40507, Distt. Mohali (Pb.) Phones :01762-280236, 280936, 280638 Fax: 01762-280237
Ludhiana: Office No. 3, MD Complex, Near Samrala Chowk, Ludhiana - U1008, e-mail: ludhiana@winsomegroup.com
Delhi: #3, Ground FLoor, Rajendra Bhawan, Rajendra Palace, New Delhi - 110 008, e-mail: delhiIJwinsomegroup.com Tiruour: D. No. 3(1)1 4A, Mullal Nagar, Karumarampalayam, Mannarai, Tirupur -641607, e-mail: tirupurwinsomegroup.com
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Winsome Yarns Limited
Regd. Office: SCO 191-192, Sector 34-A, Chandigarh -160022
STATEMENT OF STANDALONE CASH FLOW FOR THE YEAR ENDED ON MARCH 31, 2020
(Rs., Lakhs) Particulars Year Ended Year Ended
March 31, 2020 March 31, 2019 A. CASH FLOW FROM OPERATIONS
Loss before tax (4,756.61) (11487.01) Adjustment for:
Depreciation 1,525.26 1,609.55 Amortisation of lease hold land 3.31 3.31 Prorata capital subsidy (9.23) (9.23) (Profit)/Loss on sale of fixed assets - -
Interest expense 595 26.27 Interest income (27.03) (25.09)
Operating profit before working capital changes (3,258.34) (9,882.20) • Adjustment for working capital changes:
Increase/(Decrease) in financial liabilities
Trade payables (697.23) (1,341.47) Revenue received in advance (123.92) (37.59) Other payables 583.56 (173.71) Increase/(Decrease) in other current liabilities 130.82 15.41 Increase/(Decrease) in provisions (47.13) 16.20 (Increase)/Decrease in financial assets
Trade and other receivables 216.47 10,449.70 Loans (13.39) (5.61) Investment - 110.93 Interest accrued but not due -
Other loan Other loan 1,012.34 34.75 (Increase)/Decrease in other current assets 254.43 141.72 (Increase)/Decrease in other non current assets 251.76 (597.91) (lncrease)/Decrease)in inventories 1,710.08 1,368.86
19.44 99.08 Current tax liabilities (Net) (12.06) (9.98)
Net cash flow from operating activities (A) 7.38 89.10
B. CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (13.80) (55.89)
Reductions to property, plant and equipment - -
Interest receipts 27.03 25.09
Net cash used in investing activities (B) 13.23 (30.80)
C. CASH FLOW FROM FINANCING ACTIVITIES
Interest paid (5.95) (26.27)
Increase/(Decrease) in financial liabilities
Proceeds from borrowings - (70.88)
Repayment of borrowings - -
Net cash used in financing activities (C) (5.95) (97.15)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) 14.66 (38.84)
Cash and cash equivalents - Opening balance 202.14 240.98
Cash and cash equivalents - Closing balance 216.80 202.14
(Figures in bracket represents cash outflow)
For WINSOME YARNS UMFI
MANISH BAG ODA Chairman and Managing Director DIN 00046944
Winsome Yarns Limited Regd. Office: SCO 191 -1 92, Sector 34-A, Chandigarh -160022
STATEMENT OF CONSOLIDTED CASH FLOW FOR THE YEAR ENDED ON MARCH 31, 2020
(Rs., Lakhs) Particulars Year Ended Year Ended
March 31, 2020 March 31, 2019 A. CASH FLOW FROM OPERATIONS
Loss before tax (4,762.84) (11,493.16) Adjustment for:
Depreciation 1525.26 1,609.55 Amortisation of lease hold land 3.31 3.31 Prorata capital subsidy (9.23) (9.23) (Profit)/Loss on sale of fixed assets - -
Interest expense 5.95 26.27 Interest income (27.03) (25.09)
Operating profit before working capital changes (3,264.58) (9,888.35) Adjustment for working capital changes:
Increase/(Decrease) in financial liabilities Trade payables (696.69) (1,341 .74) Revenue received in advance (123.92) (37.59) Other payables 591.80 (167.63) Increase/(Decrease) in other current liabilities 130.82 15.41 Increase/(Decrease) in provisions (47.13) 16.20 (Increase)/Decrease in financial assets
Trade and other receivables 213.73 10,447.23 Loans (13.39) (5.61) Investment - 110.93 Interest accrued but not due - -
Other loan Other loan 1,012.34 35.35 (lncrease)/Decrease in other current assets 254.43 141.73 (lncrease)/Decrease in other non current assets 251.75 (597.92) (Increase)/Decrease)in inventories 1,710.08 1,368.86
19.24 96.87 Current tax liabilities (Net) (12.06) (9.98)
Net cash flow from operating activities (A) 7.18 86.89
B. CASH FLOW FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (13.80) (55.89) Reductions to property, plant and equipment - -
Interest receipts 27.03 25.09 Net cash used in investing activities (B) 13.23 (30.80)
C. CASH FLOW FROM FINANCING ACTIVITIES
Interest paid (5.95) (26.27) Increase/(Decrease) in financial liabilities
Proceeds from borrowings (0.00) (70.87) Repayment of borrowings - -
Net cash used in financing activities (C) (5.95) (97.14)
D. CHANGE IN CURRENCY TRANSLATION RESERVE
ARISING ON CONSOLIDATION Effect of currency translation on bank balance (D)
NET INCREASEI(DECREASE) IN CASH AND CASH EQUIVALENT(A+B+C+D) 15.08
Cash and cash equivalents - Opening balance 208.41
Cash and cash equivalents - Closing balance 223.49
(Figures in bracket represents cash outflow)
For WINSOME YARNS LIMITED
MANISHB Chairman and M.naging Director :DIN: 00046944
(38.47) 246.88 208.41
STATEMENT OF IMPACT OF AUDIT QUALIFICATIONS (FOR AUDIT REPORT WITH MODIFIED OPINION) SUBMITTED ALONG-WITH ANNUAL AUDITED FINANCIAL RESULTS - STANDALONE BASIS - WINSOME YARNS LIMITED
Statement of Impact of Audit Qualifications for the Financial Year ended March 31, 2020 [See Regulation 33/52 of the SEBI (LODR) (Amendment) Regulations 20161
(Rs. in Lakhs) 1. SI. Particulars Audited Figure (as Adjusted Figures
No. reported before (audited figures adjusting for after adjusting for qualifications) qualifications)*
absence of impact of aforesaid assumptions having been un-ascertained, we are unable to comment thereon
(ii) The results for the quarter ended on March 31, 2020 and the year ended on March 31, 2020 are understated due to: (a) Non provisioning of interest expenses on
borrowings of Rs. 3384.63 Lakhs for the quarter ended and Rs. 12890.29 Lakhs for the year ended on March 31, 2020 (Rs. 2905.99 Lakhs for the quarter ended and Rs. 11168.88 Lakhs for the year ended on March 31, 2019, and Rs. 52703.28 Lakhs being aggregate amount of interest unprovided till the year ended March 31, 2020 (Rs. 39813.00 Lakhs till the year ended March 31, 2019), and further amount towards penal interest, penalty, etc. as may be charged by the lenders. (In the absence of statement of account, the above amount has been arrived at as per estimates of the Company, and the aggregate unprovided amount in books of account of the Company is not ascertainable with accuracy).
(b) Non provisioning against long outstanding receivables of Rs. 521.57 Lakhs (Rs. 492.12 Lakhs as at March 31, 2019) including of overseas overdue trade receivables .Further the accounting for exchange fluctuation in respect of overseas trade receivables and export advances is not in line with Ind AS-21 "The Effects of Changes in Foreign Exchange Rates" and accordingly, we are unable to comment its impact on financial statement.
(iii) Non provisioning against loans and advances (including other current assets) Nil (Rs. 1331.29 Lakhs as at March 31, 2019).
(iv) As stated in note no. 10 of standalone financial statement, investment in money market USD 48,19,980 in Arise Money Market Fund. As per
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//,
information given to us, the balance above is as per rate of exchange prevailing at the time of investment, and is subject to adjustment in rate of foreign exchange and accruals on money market investments. In respect of its realisability/receipt, we are unable to comment. The non-accounting of investment at fair value and non-recognition of exchange fluctuation in respect thereto is not in line with Ind AS 109 "Financial Instruments" and Ind AS-21 "The Effects of Changes in Foreign Exchange Rates" respectively, which has the effect of understatement of investment by Rs. 1078.39 lakhs as at March 31st 2020 (Rs. 793.73 lakhs as at March 31st 2019) overstatement of losses by Rs. 284.65 lakhs for the year ended March 31" 2020. (Rs. 199.63 lakhs as at March 31st 2019)
(v) Regarding provisions in case of investments in subsidiaries, written off/written back and adjustment/set off of payment of receivables/payable from/to overseas parties/suppliers, which is pending necessary approval of the competent authority.
(vi) The Internal Control Systems need to be further strengthened in order that they are commensurate with the size of the Company and the nature of its business, more particularly in areas of, purchases and consumption of materials, charging of expenses, set-off of balances, and invoicing of sale of goods and services.
(vii) Confirmation of balances and reconciliation thereof with respective parties are pending, which include balances pertaining to, accounts receivable and payable (including Associate Company/ies), bank balances, secured loans, other liabilities, loans and advances recoverable, and contingent liabilities. All balances have been certified by the management of the Company. In the absence of the Company having aforementioned details, thpact
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thereof is unascertainable, and therefore, not being commented. Further strengthening of internal controls by the Company will provide greater reliability
(viii) As per the audit report of previous auditors for the year ended 31st March 2018, they noticed and found fraud in the nature of shortage/misappropriation of goods stored at its Ludhiana Branch during the financial year 2017- 18 by its employee/s against which the management took action by lodging F.I.R. with the concerned Police Station and investigation in the matter is pending. The misappropriation of goods has been valued at Rs. 70.00 Lakhs against which some of the parties to whom goods were sold by the concerned employees have confirmed having received the goods and also confirmed to the Company as having made payment against the same. The Company also filed its claim to insurance company under Employee Fidelity Insurance, effect whereof has been accounted in the books of account of the Company, considering the ongoing recovery process of its claims. As per information given to us by management of the Company the matter is still pending and its status is same as it in previous financial year.
(b) Type of Audit Qualified Opinion Qualification
(c) Frequency of • In case of point no (i), (iv) and (v) Appeared since Qualification F.Y. 20 14-15
• In case of point no (ii)(a) - Appeared since F.Y. 2013-14 (However, there is change in amount)
• In case of point no (ii)(b) and (ii)(c) - Appeared since F.Y. 2003-04 (However, there is change in amount)
• In case of point no (iii) - Appeared since F.Y. 2013- 14
• In case of point no (vi) - Appeared since F.Y. 2003- 04
• In case of point no. (vii)—Appeared in F.Y. 2017-
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18
(d) For Audit With regard to Auditors Qualification No. (ii)(a), Qualification(s) where (ii)(b), (iii), (iv) and (viii):- the impact is quantified by the Auditor, (ii)(a) Regarding non-provision of interest expenses, Management views penal interest, penalty, etc. in respect of
borrowings of the Company from banks - As stated in Note No. 3.24 of the Audited Financial Statement, due to continuous losses and financial tightness, the Company has not been able to fully pay due installments & interest on term loan on due dates, which resulted into classification of credit facilities as Non-Performing Assets couple with recall of facilities by lenders of the Company & certain overdue amount is continuing/ unpaid till date (as detailed in note no. 3.24 of audited financial statement for the year ended March 31, 2020). Interest on term loans and working capital including overdue amount, penal interest etc. (amount unascertained) has not been provided and as the same will be provided ! accounted for as and when paid/settled as the company is in process of discussion/applying for getting loans to be restructured by the lenders/ARC. Six of banks have assigned and transferred the total debts due from the Company along with the underlying rights, title and interests in financial assistances granted to the Company, to an Asset Reconstruction Company (ARC).
a) (ii)(b) Regarding non-provision against long outstanding receivables-As also explained in Note No. 3.8(a) of Audited Financial Statements, management view is that the receivables for period over one year of Rs 521.57 Lakhs till 31.03.2020 (Rs. .492.12 Lakhs till 31.03.2019), including of overseas overdue trade receivables. Further the accounting for exchange fluctuation in respect of overseas trade receivables and export advances is not in line with Ind AS-21 'The Effects of
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(
Changes in Foreign Exchange Rates" and accordingly, we are unable to comment its impact on financial statement.
(iii) Regarding non accounting of investment at fair value and non-recognition of exchange fluctuation in respect thereto, the management is of view that the money lying outside India is part of GDRs proceeds of the Company and is earmarked for utilization for setting up a Yarn Dying Plant, which could not be implemented for want of support of lenders. The Management of the Company is engaged in firming an active plan for implementation of its proposal for setting up of a Yarn Dying Plant, and upon its finalization, the aforesaid amount will be utilized for investment and on that date effect of any gain shall be accounted in the books of account of the Company.
(vii) In previous year with regard to noticed fraud in the nature of shortage and misappropriation of goods stored at its Ludhiana Branch by the employee/s of the Company, the effect whereof has been accounted in the books of account of the Company, considering the ongoing recovery process and its claim.
(e) For Audit Qualification(s) where the impact is not quantified by the Auditor:
(i) Management's Not ascertainable estimation on the impact of audit qualification
(ii) if management is unable With regard to Auditors Qualification No. (i), (iii), to estimate the impact, (iv), (v) and (vi)-:- reasons for the same
(i) Regarding net worth of the Company becoming negative and preparation of financial statements on going concern basis - Consequent to erosion of entire net worth, the Company filed Reference before the Hon'ble Board for Industrial and
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Financial Reconstruction (BIFR) under Sick Industrial Company (Special Provisions) Act, 1985 (SICA), which was registered. The Company was in discussions with its lenders for evolving a scheme of rehabilitation of its financial debts, which continued during the period when the reference of the Company was under consideration before BIFR and also presently after the SICA has been repealed. Considering the proposed rehabilitation and future business plans of the Company, present business scenario, stable government policies for the business and expected cash flow in the near future as assessed by the Management, accounts of the Company are prepared on 'Going Concern' basis.
(iii) Regarding pending receipt of part money out of GDR issue - As also explained in Note no. 3.3 of the of the Audited Financial Statements that out of the proceeds of GDRs raised in F.Y. 2010- 2011, an amount of USD 7,164,490 (INR 3873.75 Lakhs) stood remitted to India, which had been utilised for augmentation of working capital needs of the Company and a balance amount of USD 48,19,980 (1INR 2568.41 Lakhs) continues to remain invested in an overseas Money Market Fund outside India as on 31.03.2020, pending utilization of such proceeds. The Company is filing all due returns regularly with RBI. Also the Depository of GDR issue had resigned w.e.f. 29.10.2014 and terminated the agreement w.e.f. 15-06-2015. The GDR had been de-listed from LuxSE w.e.f. 16.06.2015. The Company is in process to appoint new depository and seek relisting of GDR on LuxSE or any other overseas stock Exchange.
(iv) Regarding provisions in case of investments in subsidiaries, written off/written back and adjustment/set off of payment of receivables/payable from/to overseas parties/suppliers, which is pending necessary approval of the competent authority. The management is in the process of obtaining necessary approvals from the competent authority
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((
(v) Regarding further strengthening the system of internal controls - Necessary steps have been initiated by the Company to further strengthen the system of internal controls w.r.t. purchases and consumption of inventory, booking of expenses, set off of balances, for the sale of goods and services, etc.
(vi) Regarding pending confirmation / reconciliation of balances of certain receivables (including overseas overdue receivables), bank balances, payable (including of an Associate Company/ies), secured loans, other liabilities, loans and advances etc; and contingent liability -
The management is of the opinion that adjustment, if any, arising out of such reconciliation would not be material. Further, necessary steps have been initiated to further strengthen system of internal controls w.r.t. accounting of expenses, accounting of income (including sale of licenses and provision written back), payroll payments and of balance reconciliation/confirmation.
Auditors' comments on Refer details of audit qualification [para 11(a) above] (i) or (ii) above
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Audited Figure (as reported before adjusting for qualifications)
10,805
14,219
(4,807)
(6.80)
28,436
63,163
(34,727)
(Rs. in Lakhs) Adjusted Figures (audited figures after adjusting for qualifications) *
10,805
27,630
(18,219)
(25.77)
27,915 115,867
(87,952)
STATEMENT OF IMPACT OF AUDIT QUALIFICATIONS (FOR AUDIT REPORT WITH MODIFIED OPINION) SUBMITTED ALONG-WITH ANNUAL AUDITED FINANCIAL RESULTS - CONSOLIDTED BASIS - WINSOME YARNS LIMITED
Statement of Impact of Audit Qualifications for the Financial Year ended March 31,2020 [See Regulation 33/52 of the SEBI (LODR) (Amendment) Regulations 20161
I
II.
Si. Particulars No.
Turnover! Total income
2 Total Expenditure
3 Net Profit/(Loss)
4 Earnings Per Share
5 Total Assets
6 Total Liabilities
7 Net Worth 8 Any other financial item(s) (as felt
appropriate by the management) * all adjustments are without tax effect.
Audit Qualifications (a) Details of Audit Reference is invited to Para (4) of Independent
qualification
Auditor's Report on Consolidated audited financial results: (i) In view of accumulated losses of the Company
as at the end of March 31, 2020, the net worth of the Company as at that date being negative, the decision of management of the Company to prepare the accounts of the Company on going concern basis for reasons that, (a) proposed rehabilitation plan of the Company is under discussions with majority of lenders, and (b) future business plans of the Company and expected cash flows therefrom will suffice to service restructured debts of the Company, there would arise a need to adjust the realizable value of assets and liabilities in the event of failure of assumptions as to going concern, andAJ
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absence of impact of aforesaid assumptions having been un-ascertained, we are unable to comment thereon
(ii) The results for the quarter ended on March 31, 2020 and the year ended on March 31, 2020 are understated due to: (a) Non provisioning of interest expenses on borrowings of Rs. 3384.63 Lakhs for the quarter ended and Rs. 12890.29 Lakhs for the year ended on March 31, 2020 (Rs. 2905.99 Lakhs for the quarter ended and Rs. 11168.88 Lakhs for the year ended on March 31, 2019), and Rs. 52703.28 Lakhs being aggregate amount of interest unprovided till the year ended March 31, 2020 (Rs. 39813.00 Lakhs till the year ended March 31, 2019), and further amount towards penal interest, penalty, etc. as may be charged by the lenders. (In the absence of statement of account, the above amount has been arrived at as per estimates. of the Company, and the aggregate unprovided amount in books of account of the Company is not ascertainable with accuracy).
(b) Non provisioning against long outstanding receivables of Rs. 521.57 Lakhs (Rs. 492.12 Lakhs as at March 31, 2019) including of overseas overdue trade receivables. Further the accounting for exchange fluctuation in respect of overseas trade receivables and export advances is not in line with Ind AS-21 "The Effects of Changes in Foreign Exchange Rates" and accordingly, we are unable to comment its impact on financial statement.
(c) Non provisioning against loans and advances (including other current assets) Nil (Rs. 1331.29 Lakhs as at March 31, 2019).
(iii) Part amount of USD 48,19,980 (Rs. 2568.41 Lakhs) out of GDR's issued by the Company, which funds had been raised for setting up of Yarn Dying Plant are invested in money market instruments outside India. As the funds were
raised for earmarked purposes, the availability thereof to the Company and utilization of the same is subject to Company's undertaking active plans for implementation of the proposed investment. The balance above is as per rate of exchange prevailing at the time of investment, and is subject to adjustment in rate of foreign exchange and accruals on money market investments. In respect of its realisability/ receipt, we are unable to comment. The non- accounting of investment at fair value and non- recognition of exchange fluctuation in respect thereto is not in line with Ind AS 109 "Financial Instruments" and Ind AS-21 "The Effects of Changes in Foreign Exchange Rates" respectively, which has the effect of understatement of investment by Rs. 1078.39 Lakhs as at March 31, 2020 (Rs. 793.73 Iakhs as at March 31st 2019) overstatement of losses by Rs. 284.65 lakhs for the year ended March 31st 2020. (Rs. 199.63 lakhs as at March 3lSt2019)
(iv) Regarding provisions in case of investments in subsidiaries, written off/written back and adjustment/set off of payment of receivables/payable from/to overseas parties/suppliers, which is pending necessary approval of the competent authority.
(v) The Internal Control Systems need to be further strengthened in order that they are commensurate with the size of the Company and the nature of its business, more particularly in areas of, purchases and consumption of materials, charging of expenses, set-off of balances, and invoicing of sale of goods and services.
(vi) Confirmation of balances and reconciliation thereof with respective parties are pending, which include balances pertaining to, accounts receivable and payable (including Associate Company/ies), bank balances, secured loans, other liabilities, loans and advances recoverable, and contingent liabilities. All balances iç5
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been certified by the management of the Company. In the absence of the Company having aforementioned details, the impact thereof is unascertainable, and therefore, not being commented. Further strengthening of internal controls by the Company will provide greater reliability
(vii) As per the audit report of previous auditors for the year ended 31" March 2018, they noticed and found fraud in the nature of shortage/misappropriation of goods stored at its Ludhiana Branch during the financial year 2017- 18 by its employee/s against which the management took action by lodging F.I.R. with the concerned Police Station and investigation in the matter is pending. The misappropriation of goods has been valued at Rs. 70.00 Lakhs against which some of the parties to whom goods were sold by the concerned employees have confirmed having received the goods and also confirmed to the Company as having made payment against the same. The Company also filed its claim to insurance company under Employee Fidelity Insurance, effect whereof has been accounted in the books of account of the Company, considering the ongoing recovery process of its claims. As per information given to us by management of the Company the matter is still pending and its status is same as it in previous financial year.
(b) Type of Audit Qualified Opinion Qualification
(c) Frequency of • In case of point no (i), (iv) and (v) Appeared since Qualification F.Y. 2014-15
• In case of point no (ii)(a) - Appeared since F.Y. 2013-14 (However, there is change in amount)
• In case of point no (ii)(b) and (ii)(c) - Appeared since F.Y. 2003-04 (However, there is change in amount)
• In case of point no (iii) - Appeared since F.Y. 2013- 14
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• In case of point no (vi) - Appeared since F.Y. 2003-04
• In case of point no. (vii)—Appeared in F.Y. 2017-18
(d) For Audit With regard to Auditors Qualification No. (ii)(a), Qualification(s) where (ii)(b), (iii), (iv) and (viii):- the impact is quantified by the Auditor, (ii)(a) Regarding non-provision of interest expenses, Management views penal interest, penalty, etc. in respect of
borrowings of the Company from banks - As stated in Note No. 3.23 of the Consolidated Audited Financial Statement, due to continuous
• losses and financial tightness, the Company has not been able to fully pay due installments & interest on term loan on due dates, which resulted into classification of credit facilities as Non- Performing Assets couple with recall of facilities by lenders of the Company & certain overdue amount is continuing/ unpaid till date (as detailed in note no. 3.23 of Consolidated Audited Financial Statement for the year ended March 31, 2020). Interest on term loans and working capital including overdue amount, penal interest etc. (amount unascertained) has not been provided and as the same will be provided / accounted for as and when paid/settled as the company is in process of discussion/applying for getting loans to be restructured by the lenders/ARC. Six of banks have assigned and transferred the total debts due from the Company along with the underlying rights, title and interests in financial assistances granted to the Company to an Asset Reconstruction Company (ARC).
(ii)(b)Regarding non-provision against long outstanding receivables-As also explained in Note No. 3.8(a) of Audited Financial Statements, management view is that the receivables for period over one year of Rs 521.57 Lakhs till 31.03.2020 (Rs. 492.12 Lakhs till 31.03.2019), including of overseas overdue trade receivables. Further the accounting for exchange fluctuation in respect Of overseas trade receivables and export
Page 5 of 9
advances is not in line with Ind AS -21 "The Effects of Changes in Foreign Exchange Rates " and accordingly, we are unable to comment its impact on financial statement.
(ii)(c) Regarding overdue amount of Loans and Advances read with Note No. 3.11 (including Other Current Assets) Nil (Rs.133 1.29 Lakhs as at March 31, 2019).
(iii) Regarding non accounting of investment at fair value and non-recognition of exchange fluctuation in respect thereto, the management is of view that the money lying outside India is part of GDRs proceeds of the Company and is earmarked for utilization for setting up a Yarn Dying Plant, which could not be implemented for want of support of lenders. The Management of the Company is engaged in firming an active plan for implementation of its proposal for setting up of a Yarn Dying Plant, and upon its finalization, the aforesaid amount will be utilized for investment and on that date effect of any gain shall be accounted in the books of account of the Company.
(Ai)With regard to noticed fraud in the nature of shortage and misappropriation of goods stored at its Ludhiana Branch by the employee/s of the Company, the effect whereof has been accounted in the books of account of the Company, considering the ongoing recovery process and its claim.
(e) For Audit Qualification(s) where the impact is not quantified by the Auditor:
(I) Management's Not ascertainable estimation on the impact of audit qualification
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I management is unable With regard to Auditors Qualification No. (i), (iii), I to estimate the impact, (iv), (v) and (vi):-
reasons for the same (i) Regarding net worth of the Company becoming
negative and preparation of financial statements on going concern basis - Consequent to erosion of entire net worth, the Company filed Reference before the Hon'ble Board for Industrial and Financial Reconstruction (BIFR) under Sick Industrial Company (Special Provisions) Act, 1985 (SICA), which was registered. The Company was in discussions with its lenders for evolving a scheme of rehabilitation of its financial debts, which continued during the period when the reference of the Company was under consideration before BIFR and also presently after the SICA has been repealed. Considering the proposed rehabilitation and future business plans of the Company, present business scenario, stable government policies for the business and expected cash flow in the near future as assessed by the Management, accounts of the Company are prepared on 'Going Concern' basis.
(iii) Regarding pending receipt of part money out of GDR issue - As also explained in Note no. 3.3 of the of the Audited Financial Statements that out of the proceeds of GDRs raised in F.Y. 2010-2011, an amount of USD 7,164,490 (INR 3873.75 Lakhs) stood remitted to India, which had been utilized for augmentation of working capital needs of the Company and a balance amount of USD 48,19,980 (INR 2568.41 Lakhs) continues to remain invested in an overseas Money Market Fund outside India as on 31.03.2020, pending utilization of such proceeds. The Company is filing all due returns regularly with RBI. Also the Depository of GDR issue had resigned w.e.f. 29.10.2014 and terminated the agreement w.e.f. 15-06-2015. The GDR had been de-listed from LuxSE w.e.f. 16.06.2015. The Company is in process to appoint new depository and seek relisting of GDR on LuxSE or any other overseas stock Exchange.
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(iv) Regarding provisions in case of investments in subsidiaries, written off/written back and adjustment/set off of payment of receivables/payable from/to overseas parties/suppliers, which is pending necessary approval of the competent authority. The management is in the process of obtaining necessary approvals from the competent authority
(v) Regarding further strengthening the system of internal controls - Necessary steps have been initiated by the Company to further strengthen the system of internal controls w.r.t. purchases and consumption of inventory, booking of expenses, set off of balances, for the sale of goods and services, etc.
(vi) Regarding pending confirmation / reconciliation of balances of certain receivables (including overseas overdue receivables), bank balances, payable (including of an Associate Company/ies), secured loans, other liabilities, loans and advances etc; and contingent liability - The management is of the opinion that adjustment, if any, arising out of such reconciliation would not be material. Further, necessary steps have been initiated to further strengthen system of internal controls w.r.t.. accounting of expenses, accounting of income (including sale of licenses and provision written back), payroll payments and of balance reconciliation/confirmation.
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