Century Enka Ltd Directors Report.

Dear Shareholders,

The Directors present the 55th Annual Report and Audited Financial Statements of the Company for the year ended 31st March, 2021.

FINANCIAL RESULTS

Rs. / lacs

Particulars This Year Previous Year
Net Revenue from Operations 1,22,082 1,42,348
Profit before Depreciation, Finance
Cost, Exceptional Item and Tax 14,237 13,544
Add/(Less):
Depreciation (4,088) (4,550)
Finance Cost (155) (349)
Exceptional Item (Note 1) (819) --
Taxation (Net) (2,083) 908
Net Profit 7,092 9,553

Note1: Exceptional item represents impairment provision on some polyester spinning machines at Bharuch Plant.

DIVIDEND

The Company recommends a dividend at the rate of 80% (i.e. Rs. 8 per equity share of Rs. 10 each) for the year ended 31st March, 2021 (Previous year dividend at the rate of 80% i.e. Rs. 8 per equity share of Rs. 10 each). In terms of the provisions of the Finance Act 2020, dividend shall be taxed in the hands of shareholders at applicable rates of tax and the Company shall withhold tax at source appropriately.

TRANSFER TO RESERVES

The Company has proposed to transfer Rs. 1000 lacs (previous year Rs. 1,000 lacs) to General Reserve.

FINANCIAL PERFORMANCE

The net revenue from operations is lower atRs. 1,22,082 lacs compared to Rs. 1,42,348 lacs, mainly on account of lower volume in case of Nylon Filament Yarn (NFY) and lower realisation. The profit before interest, depreciation, exceptional item and tax (PBIDT) is, however, higher at Rs. 14,237 lacs compared to Rs. 13,544 lacs in previous year due to better margins. The net profit decreased by 26% from Rs. 9,553 lacs to Rs. 7,092 lacs as previous year’s net profit includedRs. 3,120 lacs being write-back of deferred tax liability on lowering of corporate income tax rate by the Government.

IMPACT OFC OVID-19

The Covid-19 outbreak has caused significant disturbances. The Company’s operations were impacted due to suspension of processes at both the sites in March 2020 pursuant to Government directives of lockdown. The operations were recommenced gradually at Bharuch site by the end of April 2020 and Pune site by the end of May 2020. The Board places on record its appreciation for all the employees for commendable performance and resilience shown by them in these difficult times.

Excise Duty Demand

The Customs, Excise and Service Tax Appellate Tribunal (Appellate Tribunal), vide its order dated 20th December, 2019, passed in the Company’s Appeal against the order of the Commissioner of Central Excise Raigad, in the Excise duty demand of Rs. 22,927 lacs plus equal amount of penalty and interest on duty amount for the clearance of the processed yarn from Mahad Site (Konkan Synthetic Fibres - Processed Yarn) upheld the denial of the benefit of Notification No. 6/2000 CE dated 01st March, 2000, which permitted concessional excise duty at specific rate of Rs. 2.87 per kg on texturised yarn (without benefit of MODVAT/CENVAT) as against ad-velorem duty at the rate of 36.80% with CENVAT/ MODVAT benefit. The Appellate Tribunal, having denied the benefit of above notification, remanded the proceedings to the Commissioner of Central Excise with a direction to compute the correct assessable value, allow the permissible deductions and determine the excise duty payable and allow the credit of CENVAT/ MODVAT. As regard the penalty, to continue that would be equal to demand of excise duty recomputed and interest on recomputed excise duty demand.

The Company has preferred an appeal against the order of the Appellate Tribunal denied the benefit of Notification No 6/2000 CE dated 01st March, 2000 before the Hon’ble Supreme Court of India on 22nd February, 2020 the Hon’ble Supreme Court of india tagged the matter with other appeals before it involving dispute of similar nature. An application has also been filed for stay on the recovery of interest and penalty.

The Commissioner, pursuant to the aforesaid order of the Appellate Tribunal, passed an order dated 8th September, 2020, recomputed the Excise duty and confirmed the duty demand of Rs. 730 lacs, (as against the original Excise duty demand of Rs. 22,927 lacs) imposed penalty equal to recomputed duty demand and interest on recomputed duty demand.

The Department of Central Excise, has filed an appeal on 22nd January, 2021, before the Appellate Tribunal against the order of Commissioner dated 8th September, 2020, for not following the procedure in recomputing the excise duty, granting CENVAT/ MODVAT credit and permissible expenditure.

The Company has been advised by legal experts that it has a reasonably good case to succeed before the Hon’ble Supreme Court of India.

EXPANSION AND MODERNISATION

The year 2020-21 was impacted by Covid-19 related disruptions and the Company’s focus was on smooth operation and accordingly Capex was incurred only on energy conservation schemes, modernisation and de-bottlenecking.

The Company has planned Capex of Rs. 309 Crs to strengthen its competitive position in tyre reinforcement market by modernising the plant and augmenting capacity by ~30% and Rs. 23 Crs to increase capacity of draw texturised yarn and mother yarn.

ENVIRONMENT

Both the Company plant sites are environment compliant in terms of environment regulations.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS ANDOUTGO

Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are set out in a separate statement and annexed hereto as Annexure-I and forms a part of the report.

MANAGEMENT’S DISCUSSION ANDANALYSIS

The Management’s Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms a part of the Annual Report.

CORPORATE GOVERNANCE

The Board of Directors reaffirm their continued commitment towards good corporate governance practices and has complied with the Corporate Governance requirements specified in Regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of Regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on Corporate Governance, pursuant to Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms a part of the Annual Report.

Policy on Directors’ Appointment

Policy on Directors’ appointment is to follow the criteria as laid down under the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Emphasis is given to people from diverse fields or professions.

Policy on Remuneration

Guiding policy on remuneration of directors, key managerial personnel and employees of the Company is that:

a) Remuneration to unionised workmen is based on the periodical settlement with the workmen union.

b) Remuneration to key managerial personnel, senior executives, managers, staff, and workmen (non-unionised) is industry driven in which it is operating, taking into account the performance leverage and such factors so as to attract and retain quality talent.

c) For Directors, it is based on the shareholders resolutions pursuant to the provisions of the Companies Act, 2013, and rules framed thereunder, circulars and guidelines issued by the Central Government and other authorities from time to time.

ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The Board Of Directors has laid down the manner in which formal annual evaluation of the performance of the Board, its Committees and Individual Directors has to be made. It includes circulation of evaluation templates to respective Directors for evaluation of the Board and its Committees, Independent Directors/non Independent Directors/ Executive Directors and the Chairman of the Company. The results of the evaluation were satisfactory and adequate and meets the requirement of the Company.

DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS

The Company’s Independent Directors have submitted requisite declarations confirming that they continue to meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013, and Regulation 16(1)(b) and Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Independent Directors have also confirmed that they have complied with Schedule IV of the Act and the Company’s Code of Conduct. The Company’s Board is of the opinion that the Independent Directors possess requisite qualifications, experience, and expertise of the industry and they hold highest standards of integrity. All Independent Directors of the Company have registered themselves with the Indian Institute of Corporate Affairs.

DIRECTORS’ RESPONSIBILITYSTATEMENT

The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, in the preparation of the annual accounts for the year ended on 31st March, 2021, and states that:

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

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 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 Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DIRECTORS

The details of Directors resigned and appointed during the year under review are as under:

APPOINTMENT OF DIRECTORS:

Mr. Suresh Sodani (DIN:08789604), on the recommendation of Nomination and Remuneration Committee, has been appointed as a Director as well as Managing Director of the Company with effect from 1st September, 2020 in the meeting of the Board of Directors of the Company held on 14th July, 2020. His appointment has also been confirmed by the members of the Company in the Annual General Meeting of the Company held on 13th August, 2020.

Mrs. Krupa R. Gandhi (DIN-00294629), on the recommendation of Nomination and Remuneration Committee, has been the appointed as an Independent Director of the Company by the Board of Directors with effect from 14th August, 2020, subject to approval of members in General Meeting. She meets the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013, and Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and has given her consent to act as an Independent Director of the Company.

Mr. Devajyoti N. Bhattacharya (DIN-00868751), pursuant to Section 161(1) of the Companies Act, 2013, ("the Act") read with Rule 8, 9, 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014, and Article 101-B of the Article of Association of the Company, has been appointed as an Additional Director of the Company on the recommendation of Nomination and Remuneration Committee of Directors by the Board of Directors on 12th October, 2020. He will hold the office up to the ensuing Annual General Meeting and will be appointed as Non-Executive Non Independent Director subject to approval of members in Annual General Meeting.

RETIRING BY ROTATION ANDR E-APPOINTMENT AS DIRECTOR:

Mrs. Rajashree Birla (DIN:00022995), pursuant to Section 152 of the Companies Act 2013 and the Articles of Association of the company, retires by rotation and being eligible offers herself for re-appointment. Further, in terms of Regulation 17 (1A) of the SEBI (Listing Obligations and Disclosure requirements) Regulations, 2015, a special resolution would require to be passed for her re appointment as she has attained the age of 75 years.

RESIGNATION OF DIRECTORS:

Mrs. Usha Sangwan (DIN02609263) resigned with effect from 16th May, 2020 due to personal and health reason.

Mr. B. S. Mehta (DIN:00035019) resigned as Director from 14th August, 2020, due to personal reasons.

Mr. O. R. Chitlange (DIN:00952072) resigned from the position of Director as well as Managing Director with effect from 1st September, 2020 due to opportunity of much wider role in VFY business.

The Board places on record its appreciation for their valuable contribution and the services rendered during the tenure with the Company.

NUMBER OF MEETINGS OFB OARD OF DIRECTORS

During the year, 7 (Seven) Board meetings were convened and held. The details thereof are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

A meeting of the Independent Directors, during the year ended 31st March, 2021, was held on 5th March, 2021.

DETAILS OFCOMMITTEES OF DIRECTORS

Composition of Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders’ Relationship Committee, Share Transfer Committee and Risk Management Committee of Directors, number of meetings held of each Committee during the financial year 2020-21 and meetings attended by each member of the Committee, as required under the Companies Act, 2013, are provided in Corporate Governance Report, forms a part of the Annual Report.

The recommendations of the Audit Committee, as and when made to the Board have been accepted by it.

KEY MANAGERIAL PERSONNEL

Following are the key managerial personnel of the Company:

Mr. O.R. Chitlange: Managing Director (resigned w.e.f. 1st September, 2020) Mr. Suresh Sodani: Managing Director (appointed w.e.f. 1st September,2020) Mr. K.G. Ladsaria: Chief Financial Officer Mr. C.B. Gagrani: Company Secretary (resigned w.e.f. 18th August, 2020) Mr. Rahul Dubey: Company Secretary (appointed w.e.f. 18th August, 2020)

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATEDP ARTIES

There are no transactions with related parties which require disclosure under Section 134(3)(h) of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014.

LOANS, INVESTMENTS ANDG UARANTEES BY THE COMPANY

There are no loans or guarantees given or securities provided by the Company to any entity, under Section 186 of the Companies Act, 2013. However, the Company has invested surplus fund of the Company in Intercorporate Deposits after due compliance with the provisions of the Companies Act, 2013.

I NTERNAL FINANCIAL CONTROLS

The Company has put in place adequate internal financial control systems that are commensurate with the size of its operations. Internal financial control systems and procedures are periodically reviewed to keep pace with the Company’s operations.

FIXED DEPOSITS

The Company has not accepted any fixed deposits from the public during the financial year ended 31st March, 2021, and there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014.

COMPLIANCE OFSECRETARIAL STANDARDS

The Company is in compliance with the Secretarial Standards specified by the Institute of Company Secretaries of India.

RISK MANAGEMENT

The Company has well-defined policies and mechanism to mitigate the risk. The Company reviews the policies/mechanism periodically, to align with the changes. A dedicated Risk Management Committee of Senior Executives has been appointed by the Company, to evaluate the risk and mitigation plan and monitor them regularly. Based on their evaluation, there is no element of risk identified by the Management that may, in the opinion of the Board, threaten the existence of the Company.

The Board in compliance with the SEBI Circular dated 5th May, 2021, has constituted a Risk Management Committee of Directors

WHISTLE BLOWER MECHANISM

The Company has in place a Whistle Blower Mechanism for Directors and employees to report genuine concerns about any wrongful and unethical conduct with respect to the Company or its business. The detailed vigil mechanism is given in Corporate Governance Report.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

During the year under review, the Company has not received any complaint under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company, in compliance with the provisions under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 have in place an Internal Complaint Committee.

CORPORATE SOCIAL RESPONSIBILITY

In terms of the provisions of Section 135 of the Companies Act, 2013, read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of the Company has constituted a Corporate Social Responsibility (CSR) Committee of Directors. The composition and terms of reference of the CSR Committee are provided in the Corporate Governance report, which forms a part of the report. The particulars required to be disclosed pursuant to the Companies (Corporate Social Responsibility Policy) Rules, 2014, are given in ‘Annexure II’ and forms a part of the Report.

Chief Financial Officer has given a certificate to the Board that the funds so disbursed have been utilised for the purposes and in the manner as approved by the Board.

ANALYSIS OFR EMUNERATION

Pursuant to Rule 5 of the Companies (Appointment and Remuneration) Rules, 2014, a disclosure on remuneration related information of employees, key managerial personnel and directors is annexed herewith as Annexure-III and forms a part of the Report.

AUDITORS

M/s. Khimji Kunverji & Co. LLP, Chartered Accountants, (ICAI Firm Registration No. FRN 105146W/W100621), has been appointed as the Statutory Auditors of the Company to hold office for a term of 5 (five) consecutive years from the conclusion of 50th Annual General Meeting held on 15th July, 2016, until the conclusion of the 55th Annual General Meeting of the Company.

The Board, on the recommendation of the Audit Committee, in its meeting held on 18th May, 2021, has considered and recommended the reappointment of M/s. Khimji Kunverji & Co. LLP, Chartered Accountants, (ICAI Firm Registration No. FRN 105146W/W100621), as Statutory Auditors of the Company to hold office for a term of 5 (five) consecutive years from the conclusion of 55th Annual General Meeting until the conclusion of the 60th Annual General Meeting for approval of members of the Company in the Annual General Meeting to be held on 13th August, 2021.

COST AUDITORS

The Board of Directors of the Company, Pursuant to Section 148 (3) of the Companies Act, 2013, read with Rule 14 of Companies (Audit & Auditor Rules), 2014. has appointed M/s. M.R. Dudani & Co., Cost Accountants, for conducting the audit of cost records of the products Nylon and Polyester maintained by the Company for the financial year ended 31st March, 2021.

The Company maintained the cost records as specified by the Central Government under Sub-section (1) of Section 148 of the Companies Act, 2013.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Sanjay Sangani & Co., Company Secretaries in practice (CP No. 3847), to undertake the Secretarial Audit of the Company for the year ended 31st March, 2021. The Secretarial Audit Report for the year ended 31st March, 2021, forms a part of the Report. The Secretarial Audit Report does not contain any adverse qualification, reservation or remark.

PARTICULARS OFEMPLOYEES

Disclosures pertaining to remuneration and other Particulars of employees drawing remuneration in excess of the limits as required under Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed here with as Annexure IV. and forms a part of the Report.

ANNUAL RETURN

Pursuant to Section 134(3)(a) of the Companies Act, 2013, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return under Section 92 of the Act, is available on the Company’s website, https://www.centuryenka.com/investor-relations/# parentHorizontalTab6%7CChildVerticalTab_211

BUSINESS RESPONSIBILITYREPORT

A Business Responsibility Report as required under Regulation 34(2) (f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms a part of the Report.

For and on behalf of the Board of Directors

S.K. Jain Suresh Sodani
Director Managing Director
DIN: 02843676 DIN: 08789604

Place : Pune,

Date : 18th May 2021