S EPORTING ATE Soma Textiles & Industries Ltd. ... Soma Textiles & Industries Limited is a textile conglomerate

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    Stakeholders’ Education | Corporate Governance Research | Corporate Governance Score | Proxy Advisory

    STAKEHOLDERS EMPOWERMENT SERVICES

    1 | P A G E

    SECTOR: TEXTILES REPORTING DATE: 14TH AUGUST, 2017

    SOMA TEXTILES & INDUSTRIES LTD. www.somatextiles.com

    Soma Textiles & Industries Ltd. NSE Code - SOMATEX TABLE 1 - MARKET DATA (STANDALONE) (AS ON 10TH AUGUST 2017)

    Sector - Textiles NSE Market Price (`) 11.00 NSE Market Cap. (₹ Cr.) 37.29

    Face Value (`) 10.00 Equity (` Cr.) 33.03

    Business Group - Somani H L 52 week High/Low (₹) 17.05/6.55 Net worth (₹ Cr.)* 8.55

    Year of Incorporation - 1940 TTM P/E (TTM) N.A. Traded Volume (Shares) 9,745

    TTM P/BV N.A. Traded Volume (lacs) 1.07

    Registered Office - Source - Capitaline, TTM - Trailing Twelve Months, N.A. – Not applicable * as on 30th September 2016

    2 Red Cross Place, COMPANY BACKGROUND

    Kolkata, West Bengal - 700 001 Soma Textiles & Industries Limited is a textile conglomerate. The Company is primarily

    engaged in the business of manufacturing of cotton yarn and textiles. The Company offers

    denim fabrics, shirtings and garments. The Company's business verticals include denim fabric

    business vertical, piece dyed business vertical and jeans wear business vertical. The

    Company's products consist of denim fabrics, including pearl collection, vintage denim and

    authentic collection, and piece-dyed fabrics. The Company's vintage denim and authentic

    collections include stretch and non-stretch types. The Company's plant is located on Rakhial

    Road, Ahmedabad.

    Company Website:

    www.somatextiles.com

    Revenue and Profit Performance

    The revenue of the Company decreased from ₹43.97 crores to

    ₹40.3 crores from quarter ending Sep’15 to quarter ending

    Sep’16. The Company made a loss of ₹4.8 crores in quarter

    ending Sep’16 vis-a-vis making a loss of ₹4.29 crores in quarter

    ending Sep’15.

    Source: Money Control

    Performance vis-à-vis Market

    Source - Capitaline

    TABLE 2- Returns

    1-m 3-m 6-m 12-m

    Soma Textiles &

    Industries Ltd -26.42% -22.27% -3.51% 52.78%

    Nifty -0.72% 3.82% 11.69% 13.63%

    -

    0.50

    1.00

    1.50

    2.00

    2.50

    Aug 16

    Sep 16

    Oct 16

    Nov 16

    Dec 16

    Jan 17

    Feb 17

    Mar 17

    Apr 17

    May 17

    Jun 17

    Jul 17

    Soma Textiles & Industries Ltd NIFTY

    40.3 44.94 43.97

    -4.8

    1.52

    -4.29

    -20

    0

    20

    40

    60

    Sep'16 Mar'16 Sep'15

    Quarterly revenue and Profit (₹ CRORE)

    Revenue Profit

    http://www.somatextiles.com/

  • .

    Stakeholders’ Education | Corporate Governance Research | Corporate Governance Score | Proxy Advisory

    STAKEHOLDERS EMPOWERMENT SERVICES

    2 | P A G E

    SECTOR: TEXTILES REPORTING DATE: 14TH AUGUST, 2017

    SOMA TEXTILES & INDUSTRIES LTD. www.somatextiles.com

    TABLE 3 - FINANCIALS

    (₹ Cr.) Sep’16 Mar’16 Sep’15 % Change

    Sep ’16 vs Mar’16 Mar’16 vs Sep’15

    Net Worth 8.55 12.43 17.11 -31.21% -27.35%

    Current Assets 36.44 60.84 57.3 -40.11% 6.18%

    Non-Current Assets 172.6 169.30 169.84 1.95% -0.32%

    Total Assets 209.04 230.14 227.14 -9.17% 1.32%

    Investments 6.09 0.34 0.34 1,691.18% 0.00%

    Finance Cost 5.36 5.88 5.54 -8.84% 6.14%

    Long Term Liabilities 135.62 157.63 21.21 -13.96% 643.19%

    Current Liabilities 64.87 60.08 188.82 7.97% -68.18%

    Turnover 40.23 44.76 43.83 -10.12% 2.12%

    Profit After Tax (PAT) -4.8 1.52 -4.29 -415.79% N.A.

    EPS (₹) -0.59 0.46 -1.30 -228.26% N.A.

    Source - Money Control/Stock exchange filling

    AUDIT QUALIFICATIONS

    Audit Qualifications in last 3 years: No Audit Qualifications have been issued in last 3 financial years ivz. FY 2013-14 to FY

    2015-16. However, the Statutory Auditory has drawn attention on following matters:

    Emphasis of Matters for the financial year 2015-16 (Standalone)

    Without qualifying our opinion, we draw attention to the following matters:

    (a) With immediate effect on 14th May 2016, the Company closed down the spinning and winding unit/department at

    Ahmedabad because of its high operative cost and other adverse factors. Following are the details of the block of spinning

    unit assets, which have been re-classified as current assets (earlier classified as fixed assets) under the head ‘Assets Held for

    Sale’ at as 31st March, 2016. The above events have occurred after the balance sheet date, however, the event being

    adjusting in nature, have been shown by the company has Held for Sale as per AS-10 as at 31st March, 2016. Quantification

    of fluctuation for difference of book value of such block & market value is not available and hence not made as at 31st

    March, 2016.

    (b) The Company has defaulted in repayment of dues to banks and financial institutions and credit accounts with The State

    Bank of India, Dena Bank, ICICI Bank, IDBI Bank and EXIM Bank banks have been classified as NPAs. Hence, under The

    Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, The State Bank of India,

    Dena Bank and ICICI Bank and assigned their respective outstanding loans together with underlying securities thereto along

    with all rights towards such loan to Invent Assets Securitisation & Reconstruction Private Limited (Invent ARC) during the

    financial year 2015-16. Whereas IDBI Bank and EXIM Bank assigned their respective outstanding loans along with all rights

    towards such loan to Invent ARC on 29th April, 2016.

    (c) As per the provisions of Section 23 of SICA Act, 1985 the Accumulated Losses of the company as at 31st March 2016 have

    resulted in erosion of more than 50% of its peak net worth during the four financial years immediately preceding the

    financial year ended on 31st March 2016. Consequent upon the Company had become a “Potentially Sick Company” under

    the said provision since FY 2013-14.

    Emphasis of Matters for the financial year 2015-16 (Consolidated)

    (a) We did not Audit the financial statements of the Associate ‘Soma Textiles FZC’ for which separate local UAE based auditors

    were appointed. We draw attention to Note in the Director’s Reports of SOMA TEXTILE FZC relating to account receivables,

    an Associates Enterprise of the Company, whereby the debtors have requested the Company for a cooling period of two

    years i.e. till March, 2016. However, their financial position still not improved, they have once again requested for a period

    of five years ending on 31-3-2021. Total outstanding of all debtors which are after making some part payments from the

    specific debtors is AED 6.20 crore. After several rounds of deliberations SOMA TEXTILES FZC has accepted their offer and

    approved for a cooling period of five years. The Independent Auditor of SOMA TEXTILES FZC does not comment on this

    http://www.somatextiles.com/

  • .

    Stakeholders’ Education | Corporate Governance Research | Corporate Governance Score | Proxy Advisory

    STAKEHOLDERS EMPOWERMENT SERVICES

    3 | P A G E

    SECTOR: TEXTILES REPORTING DATE: 14TH AUGUST, 2017

    SOMA TEXTILES & INDUSTRIES LTD. www.somatextiles.com

    matter.

    (b) The Company had advanced a loan to the tune of ₹104.44 Cr. (previous year ₹98.52 Cr.) to Soma Textiles FZC (UAE) out of

    GDR proceeds, classified as long term loan. This loan has been advanced by the Company as quasi-equity in addition to the

    capital contribution to Soma Textiles FZC. When the said loan was given, the said company was a wholly owned subsidiary,

    however with effect from 31-03-2010, the Company’s holding in this company has diluted from 100% to 40%. In the

    financial statement of Soma Textiles FZC ended as at 31-03-2016 the accumulated loss reflects at AED 5,53,238 as against

    total capital of AED 9,00,000 (Including statutory reserve). Also, Soma Textiles FZC was registered in Hamriyah Free Trade

    Zone - Sharjah, which now has been transferred to Soma Textiles FZC – Umm Al Quwain Free Trade Zone, which is a

    different free trade zone. Our opinion is not qualified in this matter.

    Emphasis of Matter for the financial year 2014-15

    (a) We draw attention to Note 12.2 to the Financial Statement, relating to Account Receivables of Soma Textiles FZC, an

    associate enterprise of the company, whereby the debtors have requested the company for 2 years 59 SOMA TEXTILES &

    INDUSTRIES LIMITED cooling period i.e. till March 2016. The amount of such debtors is AED 6.26 crore. We are unable to

    comment on said receivables of Soma Textiles FZC, which are deemed to be good by Independent Auditor of Soma Textiles

    FZC-’Business Management World Auditors & Business Consultants’. The company has shown a loan am