Centenial Surgical Suture Ltd Directors Report.

Dear Shareholders,

Your Directors are pleased to present the 24th Annual Report of the Company together with the audited financial statements of the Company for the year ended March 31, 2019.

Financial Highlights

Financial Results of the Companys operation for the year under review are as follows:

Rs. in Lakhs

For the year ended March 31 2019 2018
Net Profit before Depreciation & Taxation 353.61 301.40
Less : Depreciation 69.43 60.08
Provision for Deferred Taxation 0.00 0.00
Provision for Taxation / Written Off 82.54 87.10
Net Profit/(Loss) 201.64 154.21
Add : Balance from Last Year 2061.56 1907.35
Prior Period Profit adjustments 0.00 0.00
Less : Appropriation 0.00 0.00
Transfer to Reserves Profit / (Loss) carried to Balance Sheet 2263.20 2061.56

The financial year 2018 2019 was a tough year but again this year we reaffirmed our strong suture base and our team focused on sutures, yielding promising outcomes even in the face of extreme pricing and revenue pressures, intensified international competition and regulatory challenges. The competition in this business sector intensified during the year as more brands, both local and imported, entered the market to get a share of the demand. Your Company is fully committed to the global standards of excellence - from design and engineering to manufacturing and service. Your Company leverages the expertise and application knowledge of the global suture requirements for cardiovascular sutures in particular, to bring advanced atraumatic needle product development to our Indian Surgeons. Continuous innovation in the areas of design, research and development of atraumatic needle, simulation and validation, testing and services, are the key value creation driver for our company. Within the cardiovascular division, Centenial offers a wide range of product codes which includes over 300 codes produced catalogue that cover applications for CABG. Your Company enjoys deep manufacturing capabilities and know-how in Cardiovascular Sutures, materials and atraumatic needles, that makes it a trusted partner. Quality is of paramount importance for your Company. It has always been your Companys goal to consistently ensure high quality and product safety in all applications. As a part of CENTENIALs strategy, your Company has also widened the scope of quality to include two additional aspects efficiency and reliability. Your Company has achieved continuous cost and efficiency improvements. At the same time, your Company aims for better synchronised control, capacity utilisation, and optimised logistics. Your Companys plant is certified by ISO 9001:2015, ISO 13485:2016, WHO-GMP, ISO 45001:2018 and medical devices are in conformity to medical device directives 93/42/EEC, Medical Device Rules, 2017. Your Companys plant at Murbad, Thane, Maharashtra has set a benchmark in terms of quality and productivity. Year 2018 - 2019 was a year of stable progress in our journey and we increased investments in innovation, marketing, advertising and sales coverage to enhance long-term prospects for steadier, sustainable sales growth. We made significant steps in our portfolio transformation of cardiovascular atraumatic needles and general surgery codes and streamlining the product line ups in our ongoing businesses. We made this progress during yet another challenging year and earnings increased marginally. Despite these challenges, delivered steady sales within our range and productivity was above our initial expectations.

The quality and safety of our products are critical to our business and the Companys reputation of its brands, form the foundation of our relationships with SURGEONS and suppliers. Many of our brands have country wide recognition and our financial success is directly dependent on the success of our brands. The success of our brands can suffer if our marketing and advertising plans or product initiatives do not have the desired impact on a brands image or its ability to attract confidence in our SURGEONS. Our market environment is highly competitive with international, regional and local competitors. In many of the markets and industry segments in which we sell our products, we compete against other products. Additionally, many of the product segments in which we compete are differentiated by price tiers. We are well positioned in the industry segments and markets in which we operate, often holding a leadership or significant market share position.

The medical device industry is highly competitive. CENTENIAL competes with many domestic and foreign medical device companies ranging from small start-up enterprises that might sell only a single or limited number of competitive products or compete only in a specific market segment, to companies that are larger and more established than us, have a broad range of competitive products, participate in numerous markets, tenders and have access to significantly greater financial and marketing resources than CENTENIAL. In addition, the medical device industry is characterized by extensive product research and development and rapid technological advances. The future success of our business will depend, in part, on our ability to design and manufacture new competitive products and enhance existing medical devices / products. Our medical devices / product development efforts may require us to make substantial investments. There can be no assurance that we will be able to successfully develop new medical devices / products, enhance existing medical devices / products or achieve market acceptance of our medical devices / products, due to, among other things, our inability to identify viable new products; maintain sufficient liquidity to fund our investments in research and development and medical device / product acquisitions; obtain adequate intellectual property protection; gain market acceptance of new medical devices / products; or successfully obtain regulatory approvals from CDSCO. In addition, our competitors currently may be developing, or may develop in the future, products that provide better features, clinical outcomes or economic value than those that we currently offer or subsequently develop. Our failure to successfully develop and market new medical devices / products or enhance existing medical devices / products could have a material adverse effect on our business, financial condition and results of operations.

Your Company has been vigorously working to keep its surgeons abreast of technological advancements through revamp and upgradation of atraumatic needles with latest technology so as to ensure better sustainability. Your Company is working on a range of new atraumatic needles and combinations of atraumatic needles and sutures, products and services to consistently exceed SURGEONS expectations. This year CENTENIAL also emphasised on training its employees in PRODUCT THINKING for better and newer ways of marketing so as to foster a culture of innovation and substantial progress. We already have a capable organization with immense trust and loyalty of our surgeons. As we move ahead in our journey, we may need swift adaptation and tough decisions, especially for evolving to a product portfolio that is more focused on latest atraumatic needles innovation. As we look ahead, we see a year of continuing challenges but at the same time we are geared up to make the company more efficient, to take on the current and future competitive challenges. We are convinced that your support and cooperation will strengthen CENTENIAL. I would also like to express my appreciation to each of you, for your support and understanding as we move on into the new financial year with great hope.

The Financial year 2018 - 2019 under review witnessed fierce challenges with growing domestic competition and changes in surgeons preference for cardiovascular atraumatic needles. Further details of operations are given in the management discussion and analysis report, which forms part of this report.

I am also indebted to the Highly-Educated Members of the Board for their guidance and to the Honest, Loyal and Committed Employees, as always.

Our values always guide us, and our history and heritage as a Company, in one word, stands for Trust, service and high Quality.

Many of our key medical devices / products are manufactured at or distributed from single locations, and the availability of alternate facilities is limited. If operations at one or more of our facilities is suspended due to natural disasters or other events, we may not be able to timely manufacture or distribute one or more of our medical devices / products at previous levels or at all. Furthermore, our ability to establish replacement facilities or to substitute suppliers may be delayed due to regulations and requirements of the CDSCO / FDA and other regulatory authorities regarding the manufacture of our medical devices / products. In addition, in the event of delays or cancellations in shipments of raw materials by our suppliers, we may not be able to timely manufacture or supply the affected products at previous levels or at all. The manufacture of our medical devices / products is highly exacting and complex, due in part to strict regulatory requirements. Problems in the manufacturing process, including equipment malfunction, failure to follow specific protocols and procedures, defective raw materials and environmental factors, could lead to delays in product releases, product shortages, unanticipated costs, lost revenues and damage to our reputation. A failure to identify and address manufacturing problems prior to the release of medical devices / products to our customers may also result in quality or safety issues. A reduction or interruption in manufacturing or distribution, or our inability to secure suitable alternative sources of raw materials or components, could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our team enters 2019 2020 with confidence. CENTENIAL is an established leader in key growth cardiovascular suture markets, with a large and differentiated portfolio of medical devices, backed by well-respected brands. CENTENIAL have the footprint to command a meaningful presence in the Indian healthcare market, as well as the flexibility to move quickly and make sound business decisions. CENTENIAL has an exceptional track record for execution, underscored by our consistent ability to deliver steady growth in both revenues and margins. Finally, CENTENIAL has a sound strategy, a proven management and sales team, and dedicated employees. CENTENIAL moves forward committed to capitalising on these strengths to achieve our financial targets and reward the support of our shareholders. CENTENIAL stands for Quality, Reliability, Commitment, Integrity and TRUST.

Financial Statements / Disclosure of Accounting Treatment in the preparation of Financial Statements

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015. These are the Companys first Ind AS Financial Statements. The significant accounting policies which are consistently applied are set out in the Notes to the financial statements.

Dividend

In order to conserve resources for the operating business, your Directors after due consideration of the financial accounts of the Company have not recommended any dividend to the equity shareholders.

Change in nature of business

There has been no change in the nature of business of the Company. Your Company continues to be a medical device company engaged in manufacturing surgical sutures & other medical devices with sales mainly in India.

Material changes and commitments affecting the financial position of the Company

There have not been any material changes affecting the financial position of the Company between the end of the financial year and the date of this report.

Share Capital

The paid-up equity shares capital of the Company as on March 31, 2019 was Rs.364.83 Lakhs. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.

Deposits

The company has not accepted any fixed deposits from the public.

Directors and Key Managerial Personnel

Retire by rotation

In accordance with the provisions of the Act and the Articles of Association of the Company, Shri Devraj T. Poojary, Executive Director of the Company, retires by rotation at the 24th AGM and being eligible, offered himself for re-appointment.

The Board of Directors on the recommendation of the Nomination and Remuneration Committee has re-appointed Shri Vijay Majrekar as Managing Director of the Company for a period of 05 (Five) years with effect from October 1, 2019, subject to approval of shareholders.

Shri Bhushan S. Limaye (DIN : 00804930), Shri Sunil C. Modi (DIN : 03103966) and Shri Jagadish B. Shetty (DIN : 00731896) were re-appointed as Independent Non-Executive Directors of the Company for second term of five consecutive years w.e.f. 01-04-2019 subject to approval of shareholders in the forthcoming Annual General Meeting.

Independent Directors Declaration

All Independent Directors have submitted the declaration of Independence as required under Section 149(7) of the Companies Act, 2013 confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements [LODR]) Regulations, 2015 ("Listing Regulations"). The Board has Independent Non-Executive Director based on fit and proper criteria ~ qualification, expertise, track record, integrity etc. With the enactment of the Companies Act, 2013 (‘the Act) it is mandatory for every listed Company to appoint requisite number of ‘Independent Directors as defined in Section 149(6) of the Companies Act, 2013. The Company, in compliance with the Listing Agreement, has already appointed Shri Sunil C. Modi, Shri Bhushan S. Limaye, Shri Jagadish B. Shetty and Shri Neel M. Vora as Independent Non-Executive Directors of the Company on the Board. The Board is of the opinion that the existing Independent Directors fulfil the criteria as specified in Section 149 of the Companies Act, 2013 & the Rules made thereunder. Brief profile of the Directors proposed to be appointed / re-appointed and other information as stipulated under Listing Regulations and Secretarial Standard 2 are part of the Corporate Governance Report annexed to this Report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the Listing Agreement, a structured questionnaire was prepared after taking into consideration the various aspects of the Boards functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance. The performance evaluation of the Independent Directors was completed. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.

Managerial Remuneration Policy

The policy on appointment and remuneration of Directors and Key Management Personnel provides an underlying basis and guide for human resource management, thereby aligning plans for strategic growth of the Company. While deciding on the remuneration for Directors and Key Management Personnel, the Board and the Nomination and Remuneration Committee consider the performance of the Company, the current trends in the industry, the qualifications of the appointee(s), their experience, past performance and other relevant factors. The policy is pursuant to Section 178(4) of the Companies Act, 2013 and clause 49(IV) (B) (4) of the Listing Agreement.

Loans, Guarantees or Investments

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 are NIL during Financial Year 2018 - 2019.

Meetings of the Board

The meetings of the Board are scheduled at regular intervals to decide and discuss on business performance, policies, strategies and other matters of significance. The schedules of the meetings are circulated in advance, to ensure proper planning and effective participation in meetings. In certain exigencies, decisions of the Board are also accorded through circulation. During the financial year 2018 - 2019, the Board of Directors of the Company, met 06 (Six) times. The Meeting details are provided in the Corporate Governance report that forms part of this Annual Report The maximum interval between any two meetings did not exceed 120 days as prescribed in the Companies Act, 2013. Pursuant to the requirements of Schedule IV to the Companies Act, 2013 and the Listing Agreement, a separate Meeting of the Independent Directors of the Company was also held on March 27, 2019, without the presence of Non-Independent Directors and members of the management, to review the performance of non-independent directors and the Board as a whole, the performance of the Chairperson of the company and also to assess the quality, quantity and timeliness of flow of information between the company management and the Board.

Committees on Board

The Board of Directors has the following Committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Committee of Directors (Stakeholders Relationship Committee)

The detailed note on the composition of the Board and its committee is provided in the Corporate Governance Report.

Directors Responsibility Statement

In Compliance with Section 134(5) of the Companies Act, 2013, the Board of Directors hereby confirm the following:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The Directors had prepared the annual accounts on a going concern basis;

(e) The Company is responsible for establishing and maintaining adequate and effective internal financial controls with regard to its business operations and, in the preparation and presentation of the financial statements, in particular, the assertions on the internal financial controls in accordance with broader criteria established by the Company. Towards the above objective, the Directors have laid down internal financial controls based on internal controls framework established by the Company, which in all material respects were operating effectively as at March 31, 2019.

(f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. The Company has substantially complied with material provisions of such acts and regulations as are relevant for its operations.

Related Party Transactions

Transactions with related parties are in the ordinary course of business and also on arms length pricing basis. Prior omnibus approval from the Audit Committee are obtained for transactions which are repetitive and also normal in nature. Further, disclosures are made to the Audit Committee and the Board of Directors on a quarterly basis. Particulars of Contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed from AOC 2 is appended as Annexure F to the Directors Report.

Explanation or comments on Qualifications, Reservations or Adverse Remarks or Disclaimers made by the Auditors and the Practicing Company Secretary in their Reports

The Auditors Report does not contain any qualifications, reservations or adverse remarks. However, the Secretarial Audit Report contain qualification pursuant to Regulation 31(2) of Listing Regulations for dematerialisation of promoter shareholding. The Company would like to inform you that promoters are having difficulty establishing contact and hence it very difficult to convert each Promoters physical shareholding into demat and whenever the company establishes the contact the conversion of the same as per Regulation 31(2) of Listing Regulations will be completed.

Auditors

Statutory Auditors

At the 23rd AGM held on Thursday, September 27, 2018, Members appointed Messrs A. Vijay Kumar & Co., Chartered Accountants, (Firm Registration No. 009824S), as Statutory Auditors of the Company, for a period of five years from the conclusion of the 23rd AGM till the conclusion of the 28th AGM, subject to ratification of their appointment by Members at every AGM. Pursuant to the provisions of Section 40 of the Companies Amendment Act, 2017, which was notified on May 7, 2018, Members are not required to ratify appointment of Statutory Auditors at every AGM. Pursuant to the provisions of Sections 139(1) and 141 of the Act, the Company has received Certificate from Messrs A. Vijay Kumar & Co., Chartered Accountants, certifying that if they are appointed as Auditors, their appointment would be as per the conditions prescribed by the said Sections.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed M/s. HS Associates, Practising Company Secretaries, to conduct the Secretarial Audit of the Company for the Financial Year 2018 - 2019. The Secretarial Auditors Report is annexed as Annexure A and forms an integral part of this Report.

Reporting of frauds by Auditors

During the year under review, the Statutory Auditors and the Secretarial Auditor have not reported to the Audit Committee under Section 143(12) of the Companies Act, 2013, any instance of fraud committed in the Company, by its officers or employees.

Particulars of employees

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is as per Annexure E.

Corporate Governance Code

In compliances with Regulation 34 of the Listing Regulations a Report of Corporate Governance is included in the Annual Report and the certificate from M/s. HS Associates, Company Secretaries confirming the compliance of conditions on Corporate Governance is annexed thereto. Annexure B

Management discussion and analysis

Managements Discussion and Analysis Report for the year under review, as stipulated under the Listing Regulations is presented in a separate section forming part of the Annual Report.

Policy on Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules thereunder. An Internal Complaints Committee has been constituted to inquire into complaints of sexual harassment and recommend appropriate action. During the year under review, the Internal Complaints Committee has not received any complaint of sexual harassment.

Conservation to energy, technology absorption, foreign exchange earnings & outgo

The particulars as prescribed under Sub-section (3)(m) of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are enclosed as Annexure C to the Directors Report. Your Company continuous to focus on research and development activities towards the upgradation of technology, development, testing and certification of atraumatic needles and sutures for conformity to new Indian / International standards and export market. The Company has installed new machinery designed to its special requirements and has been able to save in cost of production and also manufacture products to various surgeons specifications. Besides development work for several new product codes for exports has been undertaken. Emphasis on new product codes development and process improvement will continue to be the priority areas of our research and development activity, enhancement in quality and service to our customer.

Extract of Annual Return

An extract of the Annual return has been annexed as Annexure D to the Directors Report in compliance with Section 92 of the Companies Act, 2013 read with applicable Rules made thereunder.

Internal Control Systems and their adequacy

The Company has an adequate Internal Control System, commensurate with the size, scale and complexity of its operations. M/s. Utsav Shah & Associates, Chartered Accountants, are appointed with scope of the Internal Audit duly approved by the Audit Committee. To maintain its objectivity and independence, the Internal Auditor reports to the Audit Committee. The Internal Auditor evaluates the adequacy of the internal control system in the Company on the basis of statement of operations procedure, instruction manuals, accounting policy and procedures.

Whistle Blower Policy / Vigil Mechanism

The Company has implemented a whistle blower policy, whereby employees, Directors and other stakeholders can report matters such as generic grievances, misconduct, misappropriation of assets and non-compliance to code of conduct to the Company. The policy safeguards the whistle blowers to report concerns or grievances and also provides direct access to the Chairman of the Audit Committee. The Vigil Mechanism Policy is available at the website of the company: www.centenialindia.com/corporate.

People and Safety

CENTENIAL values all our employees and makes effort through Quality of work life to help their growth. Your Company has always placed emphasis on our people and safety at workplace. Industrial relations in the Company were cordial throughout the business year under review.

Environment and safety

The Company accords the highest priority for maintaining safety standards and a pollution-free environment.

Transfer of Unpaid and Unclaimed Amounts to IEPF

Pursuant to the provisions of Section 124(5) of the Companies Act, 2013, dividend which remains unpaid or unclaimed for a period of seven years from the date of its transfer to unpaid dividend account is required to be transferred by the Company to Investor Education and Protection Fund (IEPF), established by the Central Government under the provisions of Section 125 of the Companies Act, 2013. Since no dividend has been paid this section is not applicable.

Subsidiaries and Joint ventures

The Company has no subsidiary and not entered in joint ventures.

Employee Stock Option Plan (ESOP)

The Company does not have an Employee Stock Option Plan (‘ESOP).

Research and Development

The Companys research & development activities continue to be directed towards up gradation of technology and development of new product codes and packaging lines. Your Companys commitment is to meet and exceed those expectations.

Familiarisation Programme for Independent Directors

The details of training and familiarisation programme are provided in the Corporate Governance Report. Further, at the time of appointment of an Independent Non-Executive Director, the Company issues a formal letter of appointment outlining his / her role function, duties and responsibilities. The format of the letter of appointment is available on our website : http://www.centenialindia.com/corporate/code_of_conduct/

Policy on Directors Appointment and Remuneration

The policy of the Company on Directors appointment and remuneration, including the criteria for determining qualifications, positive attributes, Independence of a Director and other matters, as required under sub section (3) of Section 178 of the Companies Act, 2013. The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future. During the year, there has been no significant material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

Statement Concerning Development and Implementation of Risk Management Policy of the Company

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed also discussed at the meetings of the Audit Committee and the Board of Directors of the Company.

Corporate Social Responsibility

The Provisions of Section 134(3)(o) and Section 135 of the Companies Act, 2013 read with Rule 8 of Companies (CSR Policy) Rules, 2014 regarding corporate social responsibility do not apply to the company for the period under review.

Credit Ratings

CRISIL continued to reaffirm their rating of "BBB / Stable" and "A3+", for various banking facilities throughout the year enabling your Company to avail facilities from bank(s) at attractive rates indicating a very strong degree of safety for timely payment of financial obligations.

Goods and Services Tax (GST)

GST, which was implemented on July 1, 2017 as ‘one nation one tax, is an all-pervasive event. It has comprehensively impacted consumption of all goods and services, triggering a colossal change in the way business dealings take place. GST, which is still evolving, provides an opportunity to reset the way business transactions could be optimized for efficiency in cost and quality. Due to its multifaceted impact, GST has become an important factor in competitive businesses environment. GST on sutures and other medical devices 12%. However, the increase in headline tax is likely to be offset by the tax efficiencies that may accrue on procurements. Your Company is geared to deal with the challenges thrown up as a result of numerous amendments made by our Government viz: implementation of E-Way Bill system, matching credit concepts, anti-profiteering provisions, etc.

ISO 9001:2015 : ISO 13485:2016 : WHO-GMP : ISO 45001:2018 : Medical devices conformity to 93/42/EEC medical directives.

Our Company is ISO 9001:2015, ISO 13485:2016, WHO-GMP, ISO 45001:2018 and medical devices are in conformity to medical device directives 93/42/EEC, Medical Device Rules, 2017 and these stringent system means effective control over every step to achieve true Quality Assurance for our medical devices.

Acknowledgments

Your Directors would like to express their appreciation for the assistance and co-operation received from the Food and Drugs Administration, CDSCO, Banks, Government Authorities, Surgeons, Hospitals, Nursing homes, the committed services by our Executives, Staff and Employees, to the members of the Board for their guidance who contributed to the success of our Company.

By Order of the Board of Directors

For CENTENIAL SURGICAL SUTURE LTD

Vijay MAJREKAR
Place of Signature : Mumbai, Maharashtra Managing Director
Date: August 9, 2019 DIN: 00804808
Registered Office :
Corporate Identification Number: L99999MH1995PLC089759
F-29, MIDC, Murbad, Thane 421401. MAHARASHTRA.
Email : admin@centenialindia.com / Website : www.centenialindia.com
Tel: (2524) 222905 : Fax : (2524) 222872