Bedmutha Industries Ltd Directors Report.

BEDMUTHA INDUSTRIES LIMITED

To the Members

BEDMUTHA INDUSTRIES LIMITED

The Board of Directors presents the 30th Annual Report together with the Audited Financial Statements (Standalone and Consolidated) for the Financial Year ended March 31, 2020.

HIGHLIGHTS OF FINANCIAL PERFORMANCE:

The financial performance of the Company for the Financial Year ended on March 31, 2020 is summarized as under:

Standalone

Consolidated

Particulars
2019-20 2018-19 2019-20 2018-19
Income from Operations 35,978.14 49,051.28 36,079.68 49,114.75
Add : Other Income 2,730.81 2,908.83 2,727.67 2,916.58
Profit before Interest, Depreciation and Taxes 2,608.03 2,800.38 2,645.71 2,855.23
Less : Finance Cost 6,433.00 6,546.97 6,433.37 6,548.78
Profit/ (Loss) before Depreciation and Taxes (3,824.97) (3,746.59) (3,787.66) (3,693.55)
Less : Depreciation 3,308.50 3,339.57 3,314.74 3,348.27
Profit/ (Loss) Before Taxes (7,133.46) (7,086.17) (7,102.40) (7,041.82)
Less : Provision for Current Taxation - - 9.38 12.20
Less: Provision for Deferred Taxation - - (1.32) (0.59)
Less: Taxes in respect of earlier years - - - -
Profit/ (Loss) after Taxes (7,133.46) (7,086.17) (7,110.46) (7,053.43)
less: Minority Interest - - 9.58 14.81
add: Share in Profit / (Loss) of Associates - - (0.85) 17.88
Profit / (Loss) for the year (7,133.46) (7,086.17) (7,120.88) (7,050.37)

SUMMARY OF OPERATIONS/STATE OF THE COMPANYS AFFAIRS:

During the financial year 2019-20, the Standalone, Income from operations of your Company decreased by 26.65%, from Rs.490.51 Crores to Rs.359.78 Crores. The company has earned profit of Rs.26.08 crores before interest, depreciation and taxes but incurred loss of Rs.71.33 Crores after taxes as compared to the loss of Rs.70.86 crores incurred for the previous year.

During the financial year 2019-20, the Consolidated, Income from operations of your Company decreased by 26.54%, from Rs.491.15 Crores to Rs.360.80 Crores. The company has earned profit of Rs.26.45 crores before interest, depreciation and taxes but incurred loss of Rs.71.21 Crores after taxes as compared to the loss of Rs.70.50 crores incurred for the previous year.

FINANCIAL PERFORMANCE OF SUBSIDIARY:

Our Company has one subsidiary i.e. Kamalasha Infrastructure and Engineering Private Limited

(CIN: U45200MH2007PTC167532). The financial performance of the subsidiary is as under:

Particulars 2019-20 2018-19
Income from Operations 345.65 3,352.66
Add : Other Income (3.14) 7.10
Profit before Interest, Depreciation and Taxes 37.67 54.85
Less : Finance Cost 0.37 1.81
Profit/ (Loss) before Depreciation and Taxes 37.31 53.05
Less : Depreciation 8.09 8.70
Profit/ (Loss) Before Taxes 29.22 44.34
Less : Provision for Current Taxation 9.38 12.20
Less: Provision for Deferred Taxation (1.32) (0.59)
Less: Taxes in respect of earlier years - -
Profit/ (Loss) after Taxes 21.16 32.73

During the Financial Year 2019-20, Income from operations of your Company decreased by 89.69%, from Rs.33.53

Crores to Rs.3.46 Crores. The Company has earned profit of Rs.0.38 crores before interest, depreciation and taxes and profit Rs.0.21 Crores after taxes as compared to previous year profit of Rs.0.53 crores and Rs.0.33 croresrespectively.

Pursuant to restructuring, the Board of Directors disinvested the entire investment of 5,42,000 Equity Shares in the subsidiary on 22nd September, 2020, consequently, Kamalasha Infrastructure and Engineering Private Limited, ceased to be the Companys subsidiary.

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with the Companies Act, 2013 ("the Act") and IND AS 23 on Consolidated Financial Statements read with

IND AS 28 on Investment in Associates and Joint Ventures, the audited consolidated financial statement is provided in the Annual Report. The summarized consolidated results are given alongside the financial results of your Company.

AMOUNT CARRIED FORWARD TO RESERVES:

Your Company has not transferred any amount to its reserves.

DIVIDEND:

Your Directors do not recommend any dividend for the financial year 2019-20on account of loss incurred by the company.

BUSINESS REVIEW:

In continuation of Restructuring Process by the Lenders, in spite of the lead Banks Sanction of the Restructuring Plan (RP), other consortium Banks have awarded Sanction in phased manner, out of the Five members banks, Sanction from all have been received at different times on account of Covid-19 outbreak. The last sanction came of Andhra Bank (Previously known as Union Bank) came in the month of May 2020, because of the delayed sanction on account of Banks merger and Covid-19 issues, at various Consortium Bank, the implementation of RP has been delayed a lot and now expect to implement by December 2020.

In spite of the financialcrunch, the Management has tried to maintain the functioning of factory and maintain the EBIDTA to last year level. Further, all steps have been taken to retain the customer and suppliers credit.

In line with the requirements of the restructuring, the Board of Directors has approved the following Preferential Issues of Equity & Preference Shares of the Company:

a) Issue of not exceeding in aggregate 68,23,182 Equity Shares of Rs.10/- each for cash @Rs.55/ per Equity (including a premium of Rs.45/- per Equity Share) aggregating to Rs.37,52,75,05/- to 3 Corporate belonging to Non-

Promoter category; b) Issue of not exceeding 9,09,091 Equity Shares of Rs. 10/- each for cash @ Rs. 55/- per Equity Share a premium of Rs. 45/- per Equity Share) aggregating to Rs.5,00,00,005/- to K.R. Bedmutha Techno Associates

Private Limited, Promoter Group category; and c) Issue of not exceeding 23,01,500, in aggregate, 1% Non-Convertible Cumulative Redeemable Preference Shares ("CRPS") having a face value of Rs.10/- each, at Rs.1000/-, aggregating to Rs. 230,15,00,000/-, to Punjab National Bank, Bank of Baroda, Bank of India, Exim Bank and Andhra Bank (now Union Bank), as per the Loan Restructuring scheme.

CHANGES IN THE NATURE OF BUSINESS:

There has been no change(s) of business of the Company or in the nature of business carried on by the Company during the financial year under review.

SHARE CAPITAL:

The paid-up Equity Share Capital of the Company as on March 31, 2020 was Rs.24,53,16,110. The Company has neither issued shares with differential voting rights nor granted stock options or sweat equity.

Considering the proposed increase of the Share Capital of the company, the Board has proposed, subject to the approval of the Members of the Company to increase the Authorised Share Capital from Rs.30,00,00,000/- (Rupees

Thirty Crores only) divided into 3,00,00,000 (Three Crores) Equity Shares of Rs. 10/-(Rupees Ten only) to Rs.

37,50,00,000/- (Rupees Thirty Seven Crores Fifty Lakhs only) divided into 3,50,00,000 (Three Crores Fifty Lakhs)

Equity Shares of Rs. 10/- (Rupees Ten only) each and 25,00,000 (Twenty Five Lakhs) Preference Shares of Rs.

10/- (Rupees Ten only) each.

The Board of Directors has also proposed to implement Employee Stock Options Scheme (ESOP), subject to the approval of the Members of the Company at the ensuing Annual General Meeting

DEPOSITS:

During the year 2019-20, the Company has not accepted any deposit from public within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

INDUSTRY SCENARIO:

Indian metal market growth in 2019 witnessed global, macroeconomic and industrial factors, such as trade wars, an increase in industry consolidation, plant closures, and restricted imports. The industrys main objective remained cost optimization, raw material sustainability, and process efficiency.

The Indian Governments flagship programs - Make in India, National Capital Goods Policy, Development of 100 Smart Cities, Power for All - are all set to improve metal consumption within thenextfiveyears. To achieve targeted domestic steel capacity of 300 MTPA by 2030, India needs to invest $156.08 billion during the 2030-2031 time period. Industry consolidation is anticipated to support this objective.The Steel Scrap Recycling Policy (SSRP), drafted and circulated in July 2019, is intended to facilitate and provide a framework for the functioning of metal scrap centers.

Indias finishedsteel consumption grew at a CAGR of 5.2 per cent during FY16-FY20 to reach 100 MT. Indias crude steel and finished steel production increased to 108.5 MT and 101.03 MT in FY20P, respectively. Export and import of finished steel stood at 8.24 MT and 6.69 MT, respectively, in FY20P.

But considering the Covid-19 pandemic all over the world, the forecast for the metal industry will certainly affect for the current Financial Year 2020-21.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is given in Annexure 1forming part of the Annual Report.

PARTICULARS OF EMPLOYEES:

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the details of top ten employees and the names of other employees drawing the remuneration in excess of the limits set out in the said rules are provided in Annexure 2 of thisBoards Report.

The Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with

Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are also provided in Annexure 2 of the Boards Report.

MANAGERIAL REMUNERATION:

In accordance with Section 178 and other applicable provisions, if any, of the Companies Act, 2013 read with Rule 6 of the Companies (Meetings of Board and its Powers) Rules, 2014 issued thereunder and Regulation 19 of the SEBI (LODR) Regulations, 2015, the Board of Directors at their meeting held on February 12, 2015 formulated the Nomination and Remuneration Policy of your Company on the recommendations of the Nomination and Remuneration Committee. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors and other matters have been outlined in the Corporate Governance Report which forms part of this Report.

The information required under Section 197 of the Companies Act, 2013 read with the Companies (Appointment and

Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/employees of your Company is set out in Form MGT – 9 which also forms part of this Report and is also available on the website of your Company www.bedmutha. com.

SUBSIDIARIES, JOINT VENTURE OR ASSOCIATES COMPANIES DURING THE YEAR:

Pursuant to Section 129(3) of the Companies Act, 2013, the Balance sheet as on March 31, 2020 and the Statement of

Profit and Loss for the year ended on that date of Subsidiary Company,M/s. Kamalasha Infrastructure and Engineering

Private Limited is attached to this report. However, the financial information of Subsidiary Company is disclosed in the Annual Report in compliance with this section. The consolidated financial statements presented by the Company include the financial result of its Subsidiary Company.

Pursuant to restructuring, the Board of Directors disinvested the entire investment of 5,42,000 Equity Shares in the subsidiary on 22nd September, 2020, consequently, Kamalasha Infrastructure and Engineering Private Limited, ceased to be the Companys subsidiary.

The company has one associate company named as "Ashoka Pre-con Pvt. Ltd."

The Statement in form AOC-1 containing salient features of the financial statements of Companys Subsidiaries and associates is attached as Annexure 3 to the financial statements of the Company.

In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the

Company. Further, as per fourth proviso of the said section, audited annual accounts of each of the subsidiary company have also been placed on the website of the Company, www.bedmutha.com. Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary company may write to the Company Secretary at the Companys registered office address.

SIGNIFICANT AND MATERIAL ORDER PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

During the year under review, no order has been passed by the regulators or courts or tribunals against the Company or any Directors, Key Managerial Personnel of the Company.

PARTICULARS OF CONTRACTS OR ARRANGMENTS WITH RELATED PARTIES:

All contracts/ arrangements/ transactions entered by the Company during the financialyear 2019-20 with related parties are in compliance with the applicable provisions of the Act, Rules issued thereunder and Regulation 23 of the SEBI

(Listing Obligations and Disclosure Requirements) Regulations, 2015.

During the year under review, the Company had not entered into anymateriallysignificantrelated party transactions with

Promoters, Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interest of the Company at large. None of the Directors has any pecuniary relationships or transactions vis--vis the Company.

All Related Party Transactions are placed before the Audit Committee and the Board of Directors for their approval. The policy on Related Party Transactions as approved by the Board may be accessed on the Companys website (www. bedmutha.com).

The particulars of contracts or arrangements entered into by the Company with related parties are appended in Annexure 4 to the Boards Report.

CORPORATE GOVERNANCE:

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate

Governance requirements set out by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The

Company has also implemented several best Corporate Governance practices as prevalent throughout the country. The Report on Corporate Governance as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015 is presented in a separate section forming part of the Annual Report. The requisite of the Company confirming compliance with the conditions of Corporate Governance is certificate attached to the report on Corporate Governance.

BOARD OF DIRECTORS& KEY MANAGERIAL PERSONNEL:

As on March 31, 2020, the Company has 5 (Five) Directors consisting of 3 (Three) Independent Directors, and 2 (Two) Executive Directors.

Mr. Vijay KachardasVedmutha (DIN:00716056), Managing Director of the Company, retires by rotation at the ensuing Annual General Meeting pursuant to the provisions of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of the Company and being eligible, offered himself for re-appointment. Your Directors recommend his re-appointment.

Mr. Shreekrishna Marathe (DIN:08691908) has been appointed as Additional Director (Non-Executive Independent) w.e.f. April 01, 2020, who shall hold office upto the date of ensuing Annual General Meeting of the Company and the approval of the Members of the Company sought in the ensuing General Meeting as an Independent Director of the

Company for a period of 5 (Five) consecutive years, not liable to retire by rotation i.e., till March 31, 2025.

On the basis of the recommendation of the Nomination and Remuneration Committee and the Board of Directors, members accorded their approval at the 29thAnnual General Meeting of the Company for continuation of appointment of Mr. Vasant Joshi, (DIN 07348931) who has attained the age of 80 years, the re-appointment of Mr. Narayan M. Kadu (DIN 02807124) as an Independent Director of the Company, for the second term of 5 (Five) consecutive Years commencing from April 01, 2019 to March 31, 2024, and for the second term of Ms. Vandhana Sonwaney (DIN06955363) as Independent Director(s) of the Company for 5 (Five) consecutive Years commencing from December 30, 2019 to December 29, 2024.

On the basis of the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company seeks the appointment of Mr. Vasant Joshi, (DIN 07348931), as an Independent Director for the second term on the Board of Directors of the Company with effect from 26th November, 2020 till 25th November, 2025, subject to approval of members at the ensuing Annual General Meeting.

The brief resume of the Director(s) seeking appointment or re-appointment and other related information under Regulation 36 of the SEBI (LODR) Regulations, 2015 and Secretarial Standard-2 (SS-2) has been provided in the Notice convening 30th Annual General Meeting.

Presently, Mr. Vijay Vedmutha -Chairman and Managing Director, Mr. Ajay Vedmutha–Managing Director and Chief

Financial Officer, Mrs. Vinita Ajay Vedmutha - Chief Executive Officer and Mr. Ajay Topale - Company Secretary are the Key Managerial Personnel of your Company in accordance with the provisions of Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

DECLARATION BY INDEPENDENT DIRECTORS:

The Independent Directors of the company are not associated with the Company in any manner as stipulated under section 149(6) of Companies Act, 2013 and at the same time possess relevant expertise and experience that are additive to the Board of the company for delivering higher growth and higher values. Further, the Company has received declarations from all the Independent Directors confirming that they meet the criteria of Independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015.

ANNUAL EVALUATION OF BOARDS PERFORMANCE:

According to Regulations 25(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a meeting of the Independent Directors is required to be held to evaluate the performance of the Non-Independent

Directors. Accordingly, a meeting of Independent Directors was held on November 12, 2019 wherein the performance of the Non-Independent Directors, including the Chairman, was evaluated.

Pursuant to the provisions of the Companies Act, 2013 and Regulation 25(4) of SEBI (Listing Obligations and Disclosure

Requirements) 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of the members of Audit, Nomination and Remuneration and other Compliance Committees. The manner, in which the evaluation is carried out, has been explained in the Corporate Governance Report.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS:

Every new Independent Director of the Board attends an orientation program. To familiarize the new Independent Director with the strategy, operations and functions of our Company, the Executive Directors/ Senior Managerial Personnel make presentations to the new Independent Director about the companys strategy, operations, product and service and offerings, markets, organization structure, human resources, technology quality, facilities and risk management.

NUMBER OF BOARD MEETINGS:

The meeting of the Board of Directors was held 4 (Four) times during the Financial Year 2019-20 and the intervening gap between any two succeeding meetings was not more than 120 days as prescribed under Section 173 of the Companies Act, 2013. Your Company has complied with the provisions of Chapter XII – Meetings of Board and its Powers, of the Companies Act, 2013 with respect to meetings of the Board. The details regarding the Board meetings and the attendance of the Directors present in such meetingsare provided in the Corporate Governance report.

COMMITTEES OF THE COMPANY: Audit Committee:

The Board has properly constituted the Audit Committee in compliance with Section 177 of Companies Act, 2013 and

Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which consists of the following members viz.:

Name of Member Designation Category
Mr. Narayan Kadu Chairman Independent Director
Mrs. Vandana Sonwaney Member Independent Director
Mr. Vijay Vedmutha Member Executive Director (Chairman &Managing Director)
Mr. Vasant B. Joshi Member Independent Director
Mr. Shreekrishna Marathe Member Independent Director *

Note: Mr. Shreekrishna Marathe (DIN: 08691908) has been appointed as Member of Audit Committee w.e.f. June 26, 2020.

The details regarding Composition, meetings and attendance of the members have been mentioned in the Corporate Governance Report.

All the recommendations of the Audit Committee during the year were accepted by the Board of Directors of the Company.

Establishment of Vigil Mechanism / Whistle Blower Policy:

The Company has established a vigil mechanism and oversees through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns about unethical practice. Any complainant canhave direct access to the Chairman of the Audit Committee via e-mail ID. The Vigil Mechanism Policy of the Company is placed on Companys website i.e., http://www.bedmutha.com.

Nomination and Remuneration Committee:

The Board of Directors has constituted the Nomination and Remuneration Committee in accordance with the Companies

Act, 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which comprises of the following members viz.:

Name of Member Designation Category
Mr. Narayan Kadu Chairman Independent Director
Mrs. VandanaSonwaney Member Independent Director
Mr. Vasant B. Joshi Member Independent Director

The details regarding composition, meeting and attendance of the members have been mentioned to the Corporate Governance Report.

The Board of Directors re-constituted the Committee with induction of Mr. Marathe as a Member of the Committee with effect from 11th November, 2020.

Policy for Selection, Appointment and Remuneration of Directors Including Criteria for Their Performance Evaluation

The Company has adopted a policy titled as "Nomination & Remuneration Policy" which inter alia includes Companys policy on Board Diversity, selection, appointment and remuneration of directors, criteria for determining qualifications, positive attributes, independence of a director and criteria for performance evaluation of the Directors.

The Nomination & Remuneration Policy as approved by the Board is placed on the website of the Company. (www. bedmutha.com)

Stakeholders Relationship Committee:

The Board of Directors has constituted Stakeholders Relationship Committee in accordance of the Companies Act,

2013 and Regulation 20 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details regarding Composition, meeting and attendance of the members have been mentioned to the Corporate Governance Report.

Corporate Social Responsibility Committee (CSR):

As per Section 135 of the Companies Act, 2013, every Company having net worth of Rupees five hundred crore or more, or turnover of Rupees one thousand crore or more, or a net profit of Rupees five crore or more during any financial year shall constitute the CSR Committee.

Considering the above threshold limit specified above, the Company is not required to constitute the CSR Committee.

RISK MANAGEMENT POLICY:

The Company has implemented Risk Management Policy and the Board of Directors has prepared a comprehensive framework of risk management for assessment of risks and to determine the responses to these risks so as to minimize their adverse impact on the organization. The policy as approved by the Board of Directors is uploaded on the Companys website. (www.bedmutha.com) The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Companys management systems, organizational structures, processes, standards, code of conduct and behaviors together form the Bedmutha Management System (BMS) that governs how the Group conducts the business of the Company and manages associated risks.

The Company has introduced several improvements to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities. This integration is enabled by all three being fully aligned in the Company wide Risk Management, Internal Control and Internal Audit methodologies and processes.

Risk & Mitigation:

The Company has identified various risks faced by the Company from different areas. As required under Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has adopted a risk management policy whereby a proper framework is set up.

Appropriate structures are present so that risks are inherently monitored and controlled. A combination of policies and procedures attempts to counter risk as and when they evolve.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed. Your Company has introduced several improvements such as Integrated Enterprise Risk Management, Internal Control Management and Assurance Frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and internal audit activities. Risk management and internal control frameworks are designed and implemented to manage rather than completely eliminated the risk of failure to achieve business objectives.

The Company has appointed M/s. Swati Ware & Co., Chartered Accountant as an internal Auditor to have check on the adequacy of controls in the overall operations and functioning of various departments. The monthly reports of the Internal

Auditors are placed before the Audit committee. It is a key component which assists the management in discovering controls, weakness, regulatory violations, policy violation and operational inefficiencies. This self-discovery of issues provides the management an ability to take corrective action in order to maintain the safety, soundness, profitability and integrity.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS HELD BY THE COMPANY UNDER SECTION 186 WITH DETAILS:

The 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.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF FINANCIAL YEAR AND DATE OF REPORT:

There are no material changes and commitments made which may affect financial position of the Company between the end of financial year and date of report.

STATUTORY AUDITORS:

Mr. A. D. Kulkarni (ICAI Membership No.: 049739), Proprietor of M/s. A. D. Kulkarni& Co., Chartered Accountants,Jalgaon (Firm Registration No. 115959) were appointed as Statutory Auditors of the Company at the Annual General Meeting held on September 25, 2017, for a period of five (5) consecutive years commencing from the conclusion of 27thAGM till the conclusion of the 32ndAGM of the Company.

Ractification Note : The requirement to place the matter relating to appointment of Auditors for ractification by members of every AGM has been done away by Companies (Amendment) Act, 2017 with effect from May 07, 2018 Accordingly no resolution is being proposed for ractification is being proposed for ractification of appoinment of auditors at the 30 th AGM.

AUDITORS REPORT:

During the year under review, there were no frauds reported by the Auditors to the Audit Committee or the Board under Section 143(12) of the Companies Act, 2013.

The Statutory Auditors have expressed qualified opinion in their report for the year ended March 31, 2020 in respect of following matters: a) During the quarter in respect of preparation of financial statements of the company on going concern basis for the reasons stated therein during the year the Company has incurred net loss of Rs. 71.33 crores resulting into accumulated losses of Rs. 269.60 crores. The Companys current liabilities exceed current assets. These matters require substantial debt reduction in the company also additional cash flow is required to fund the operations as well as other obligations.

Management Reply:-

The major loss is incurring due to heavy interest cost and non-utilization of capacity as there is shortage of working capital, resulting into current quarter losses.

The company is already in discussion with the lenders for restructuring as per RBI guidelines and one major milestone in restructuring process has been achieved i.e. obtaining RP4 rating from ICRA and CARE rating agencies for the resolution plan submitted.

Till the date of approval of this results, major milestone has been achieved as all the banks in consortium have issued their sanction letter for the restructuring proposal. Hence, the company is hopeful of restructuring process to be implemented from the lenders to put the company back on track.

Bank Name Sanction Letter Received Date
Punjab National Bank July 31, 2019
Bank Of Baroda March 07, 2020
Bank Of India April 08, 2020
Exim Bank June 08, 2020
Union Bank (Formerly known as Andhra Bank) June 20, 2020

Further as stated in our management reply for previous quarter the intention of the company is to reduce finance cost by restructuring loan with bankers and bringing funds from investor.

Features of restructuring package will be as follows:-

1) Company is in the process of restructuring its loan from bankers which will result in loan reduction by Rs.230 crs due to conversion of loan in CRPS.

2) Secondly, to improve the liquidity position and capacity utilization / Operations of the company, company is in the process of raising minimum funds of Rs.42.50 crs from Investors or NBFC. This is also a precondition from Bankers to pass the restructuring plan.

3) Also company has decided to sale its non-core assets to improve its liquidity for operations and also for Debt reduction. Accordingly, financial statements have been prepared on the basis that company is a going concern. b) In respect of investment of Rs.51.21 lakhs in Subsidiary, thathavesignificantaccumulated losses as at March 31,

2020. In absence of fair valuation of these Investments, we are unable to comment upon the carrying value of these investments and its impact, if any.

Management Reply:-

The Companys subsidiary in which 51.21 Lakhs is invested is mainly focusing on EPC Projects business. As Board has decided to go slow on EPC Projects business due to working capital shortage, it is decided to disinvest in this subsidiary for which Board of Directors approval and shareholders approval is already taken in AGM. The Company has identified few investor and is hopeful to disinvest soon. Hence carrying value of this investment will be explored in this process. We are hopeful that its impact will not be detrimental to the Company. Also amount obtained by disinvestment in this subsidiary will improve the liquidity for working capital of the Company. (The shares in the susbidary company disinvested on 22nd september, 2020)

INTERNAL AUDITORS:

M/s. Swati Ware & Co., Chartered Accountants, is the Internal Auditors of the Company and their reports are reviewed by the Audit Committee on periodical basis.

COST AUDITORS:

In accordance with the provisions of Section 148 of Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, your Company has to appoint cost auditors for conducting the audit of cost records of the applicable products of the Company for the financial year. Accordingly, during the year, your Company has appointed M/s. Deodhar Joshi & Associates, Cost Accountants (Firm Registration No.: 002146) to conduct the cost audit of the Company for the Financial

Year 2019-20. The ratification of the remuneration payable to the Cost Auditors shall be sought from shareholders in the ensuing Annual General Meeting.

COST RECORDS

The Company is maintaining the Cost Records as specified by the Central Government under Section 148(1) of the

Companies Act, 2013.

SECRETARIAL AUDITORS:

In terms of Section 204 of the Act and the Rules made there under, M/s. S. Anantha & Ved LLP (LLPIN: AAH-8229) had been appointed as the Secretarial Auditors of the Company for the financial year 2019-20.

The Secretarial Audit Report for the year under review is annexed as "Annexure 5" to this report. Necessary explanation to the observations made in the Secretarial Audit Report is given below:

1. The Company has not included the following disclosures / reports in the annual report of financial year 2018-2019: a) Detail of fees paid to the statutory auditor and all entities in the network firm/network entity of which the statutory auditor is a part; and b) Certificatefrom a Company Secretary in practice that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of Companies.

2. The Company has not filed the Statement on Impact of Audit Qualifications (for audit report with modified opinion) for the Consolidated Financial Results submitted with the Stock Exchanges for the quarter and year ended March

31, 2019, approved at the Board Meeting held on May 28, 2019.

3. The account of the Company with its consortium Banks had turned Non-Performing Asset during the previous financial year on various dates. In view of uncertainty the Company has not provided interest including penal interest and other dues for the year ended 31st March, 2020, on borrowings, to the extent, the same have remained unpaid.

The impact of the same on the loss for the year and its consequent effect on liabilities and Reserves & Surplus are reflecting in the Financial Statements;

4. The Financial Statement indicates that the Company has accumulated losses resulting in erosion of net worth fully.

However, the financial Statements of the Company have been prepared on going concern basis;

5. There are delays in filing some of the e-forms with MCA (Ministry of Corporate Affairs).

Management Reply:-

1. The Company has submitted its reply on April 03, 2020, undertaking to forward the required disclosure / Reports and no further clarification was sought by NSE in this regard.

2. In response to the NSE letter dated June 06, 2019, the Company has filed the Statement on Impact of Audit Qualifications (for audit report with modified opinion) for the Consolidated Financial Results for the quarter and year ended March 31, 2019 on June 17, 2019.

3.& 4. The major loss is incurred due to heavy interest cost and non-utilization of capacity as there was shortage of working capital, resulting into current quarter/yearly losses.

The company is already in discussion with the lenders for restructuring as per RBI guidelines and one major milestone in restructuring process has been achieved i.e. obtaining RP4 rating from ICRA and CARE rating agencies for the resolution plan submitted. Hence, the company is hopeful of restructuring process to be implemented from the lenders to put the company back on track.

Further as stated in our management reply for previous quarter, the intention of the company is to reduce finance cost by restructuring loan with bankers and bringing funds from investor.

Features of restructuring package will be as follows:- a) Company is in the process of restructuring its loan from bankers which will result in loan reduction by Rs.230 crs due to conversion of loan into CRPS. b) Secondly, to improve the liquidity position and capacity utilization/Operations of the company, company is in the process of raising minimum funds of Rs.42.50 crs from Investors or NBFC. This is also a precondition from Bankers to pass the restructuring plan. c) Also company has decided to sell its non-core assets to improve its liquidity for operations and also for Debt reduction. Accordingly, financial statements have been prepared on the basis that company is a going concern.

Company being a Mega project has un-accrued Incentive from Govt. of Maharashtra approx. to the tune of Rs.179 Crs. Only Rs.89 crs of the incentive has been accrued till March 31, 2019.

5. The Board has advised the Secretarial Department to File the E-Forms within due date to avoid such delay in future.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92(3) of the Companies Act, 2013 (‘the Act) read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of annual return in Form MGT-9 is annexed as Annexure 6 to this Report.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors of your Company hereby state that:

(i) In the preparation of the Annual accounts for the year ended March 31, 2020, the applicable accounting standards have been followed along with proper explanation related to material departure(s), if any;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2020 and of the loss of the Company for the year ended on that date;

(iii) The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv) The Directors have prepared the annual accounts on a ‘going concern basis;

(v) The Directors of the Company 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.

HUMAN RESOURCES:

Your Company enjoys cordial relations with its employees. The key focus of your Company is to attract, retain and develop talent. The Board wishes to place on the record its appreciation of the contributions made by all employees ensuring high levels of performance and growth during the year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information on conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo mentioned under Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed as Annexure 7 to this report.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND:

Your Company did not have any funds, being dividends lying unpaid or unclaimed for a period of seven years. Therefore, there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).

POLICY ON PREVENTION OF SEXUAL HARASSMENT:

The Company has in place Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of

Women at the Workplace (Prevention, Prohibition &Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year 2018-19, no complaints were received regarding sexual harassment.Further, the Company is conducting the awareness programs at regular interval of time.

OTHER MATERIAL INFORMATION:

During the year under review, there is noother material information to report.

SECRETARIAL STANDARDS ISSUED BY THE INSTITUTE OF COMPANY SECRETARIES OF INDIA (ICSI):

The Company complies with the Secretarial Standards issued by ICSI, one of the premier professional bodies in India.

CAUTIONARY STATEMENT:

Statement in the Directors report and the Management Discussion and Analysis describing the companys objectives, expectations or predictions, may be forward looking within the meaning of applicable securities laws and regulations.

Actual results may differ materially from those expressed in statement. Important factors that could influence the company operation include: global and domestic demand and supply conditions affecting selling prices, new capacity additions, availability of critical material and their cost, changes in government policies and tax laws, economic developments of the country and other factors which are material to the business operations of the company.

ACKNOWLEDGEMENT:

Your Directors wish to thank and acknowledge the contributions of Financial Institutions, Banks, Government Authorities, dealers, suppliers, business associates, auditors, consultants and the Companys valued customers for their assistance and co-operation and the esteemed shareholders for their continued trust and support. The Directors also wish to acknowledge members of Bedmutha Group at all levels for their spirit of commitment, dedication and support extended in challenging times.

For and on behalf of Board of Directors BEDMUTHA INDUSTRIES LIMITED

Vijay Vedmutha Chairman& Managing Director DIN: 00716056

Date: 14th November, 2020 Place: Sinnar

DECLARATION UNDER REGULATION 34(3) READ WITH PART D OF SCHEDULE VOF SEBI (LODR) REGULATIONS, 2015 WITH REGARDS TO COMPLIANCE WITH CODE OF CONDUCT

This is to certify that, in line with the requirement of Regulation 26 (3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, all the Directors of the Board and Senior Management Personnel have solemnly affirmed that to the best of their knowledge and belief, they have complied with the provisions of the Code of Conduct during the Financial Year 2019-20.

For and on behalf of Board of Directors Bedmutha Industries Ltd

Vinita A. Vedmutha

 

Officer SeniorChiefExecutive

Date: November 14th, 2020

Place: Sinnar