Classic Filaments Ltd Directors Report.

To,

The Members,

Classic Filaments Limited

The Board of Directors of the Company takes pleasure in presenting the 31stAnnual Report along with the Audited Accounts for the Financial Year ended 31sl March, 2021.

1. FINANCIAL RESULTS:

The Financial performance of the Company for the Financial Year ended 31stMarch, 2021, is summarized below:

Particulars Period/ year ended 31.03.2021 Period/ year ended 31.03.2020
Total Revenue 31.67 140.96
Total expenses (40.82) (146.67)
Profit/ (loss) before tax (9.14) (5.71)
Profit/ (loss) after tax (9.14) (5.71)

2. OPERATION:

With the outbreak of COVID-19 pandemic which has emerged as a challenge for the world has posed the slowdown in growth and prospect for the economy across the globe. The year saw a challenging business environment with lower GDP growth and slowdown in consumption. This resulted into a weakening consumer sentiment and lower demand for the category in which we operate. The Novel Coronavirus has affected not just human health but severely impacted businesses and the society at large. Government has imposed countrywide lock down from 24th March, 2020 which lasted till the end of May, 2020. Thereafter, the government started the process of unlock in phased manner. The 1st Quarter i.e. June, 2020 was widely affected by it as during lockdown period only essential businesses operating in essential products and services were allowed to keep their operations active. As you all are aware that our Company operates in a segment which is marked as non-essential items by the government and hence we were forced to shut down our operations in line with the directives of government. CoVID-19 has affected the Company dynamically and has weakened growth. The Company is going through a very lough phase and is facing hardship in retaining its operations. However, our management is in a constant endeavour get the Company back on trade. During the period ended 31st March, 2021, the loss suffered by the Company amounts to Rs. 9.14 lakhs as compared to loss suffered in the previous year 31st March, 2020 which was Rs. 5.71 lakhs. As we can evaluate from the current situation,

Company is facing a huge burden and continues to suffer the beating of the novel corona virus as demand for the companys product is declining sharply. Management is taking all the possible steps to revive the Company and make it competitive in a global market. The phase which Company is going through is temporary and our management is confidence to get back in the business soon.

3. DIVIDEND AND TRANSFER TO RESERVES:.

In view of losses incurred, no dividend was declared during the financial year under review and no amount was transferred to reserves during the year under review.

4. PUBLIC DEPOSITS:

Hie Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details relating to deposits covered under Chapter V of the Act or the details of deposits which are not in compliance with the Chapter V of the Act is not applicable. The borrowing from a Director during the year was to the extent of Rs.14,00,000/- and at the end of the year it stands at Rs.39,00,000/-.Further, in respect of amount borrowed from Director, the Company received a declaration that the said amount was not given by him out of borrowed funds.

5. REPORT ON THE PERFORMANCE OF THE SUBSIDIARIES, ASSOCIATES & TOINT VENTURE COMPANIES:

The Company does not have any Subsidiary, Joint Venture & Associate Company.

6. PARTICULARS OF EMPLOYEES:

During the Financial Year, the Company does not have any employee who was in receipt of remuneration exceeding Rupees One Crore and Two Lakh for the year or exceeding Rupees Eight Lakhs and Fifty Thousand per month or for any part of the year.

The Company is not required to give the ratio of the remuneration of each Director to the median remuneration of the employees of the Company and other details in terms of Sub-Section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as none of the Directors of the Company is receiving Remuneration from the Company.

7. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

The Board consists of 5 Directors, out of which 3 are Independent Directors including a Woman Director. During the year under review, there was no Change in the Constitution of the Board except the following:

Onthe recommendation of Nomination and Remuneration Committee, the Shareholders at their 30 Annual General Meeting held on 30th September, 2020 approvedthe re-appointment of Mr. Jayanti Gaudani (DIN: 03571671) as Managing Director for a further period of 5 years.

Further, also on the recommendation of Nomination and Remuneration Committee and the Board of Directors of the Company, the Shareholders at its 30th Annual General Meeting held on 30th September, 2020 approved the re-appointment of Mr. Subhash Patle(DIN:00369492) as Independent Director for 2nd term of 5 consecutive yearsw.e.f. 23rd May 2020. Further, no KMPs were appointed and none of the existing KMPs have resigned during the year under review.

The present tenure of Mr. Bhavesh Dholiya (DIN-07641315)and Mrs. ArunaKachchhi (DIN: 07915688), IndependentDirectors of the Company, will expire on August 9, 2022 and August 31, 2022 respectively. Based on therecommendation of the Nomination and RemunerationCommiltee, the Board at its Meeting held on August 6, 2021, has recommended to the shareholders asuitable resolutionfor their re-appointment for a second term offive years with effect from August 10, 2022 and September 1, 2022 respectively and for which suitable resolutions mentioned in the Notice of the 31st AGM.

Both Independent Directors, namely,Mr. Bhavesh Dholiya and Mrs. ArunaKachchhihave given written declarations that they meet the criteriaof independence as laid down under Section 149(6) ofthe Companies Act, 2013, and Regulation 16(l)(b) of theSEBI (Listing Obligations and Disclosure Requirements)Regulations, 2015.

As per the provisions of Section 152(6) of the Companies Act, 2013, Mr. Bharat Patel (DIN- 00249234), retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for reappointment as the Director of the Company.

8. COMMITTEES OF THE BOARD:

The Board has constituted Committees pursuant to provisions of Companies Act, 2013, and rules framed thereunder and as per the SEBI (LODR) Regulations, 2015.

The committees of the Board are Audit Committee, Stakeholders Relationship Committee and Nomination and Remuneration Committee.

Audit Committee Meeting:

The Constitution of Audit Committee is as per the requirements of the Companies Act, 2013 and the SEBI (LODR), Regulations, 2015.

Sr Name No. No. of Meetings held No. of Meetings attended
1. Mr. Bharat Patel 5 5
(DIN:00249234)
2. Mr. Subhash Patle (DIN: 00369492) 5 5
3. Ms. ArunaKachchhi (DIN-7915688) 5 5

Stakeholders Relationship Committee:

The Constitution of Stakeholder Relationship Committee is as per the requirements of the Companies Act, 2013 and the SEBI (LODR), Regulations, 2015.

Sr Name No. No. of Meetings held No. of Meetings attended
1. Mr. Bharat Patel (DIN:00249234) 4 4
2. Mr. Subhash Patle (DIN: 00369492) 4 4
3. Ms. ArunaKachchhi (DIN-7915688) 4 4

Nomination and Remuneration Committee Meeting:

The Constitution of Nomination and Remuneration Committee is as per the requirements of the Companies Act, 2013 and the SEBI (LODR), Regulations, 2015.

Sr Name No. No. of Meetings held No. of Meetings attended
1. Mr. Subhash Patle (DIN: 00369492) 2 2
2. Mr. Bhavesh Dholiya (DIN-07641315) 2 2
3. Ms. ArunaKachchhi (DIN-07915688) 2 2

9. NUMBER OF BOARD MEETINGS & ATTENDANCE OF DIRECTORS:

During the financial year under review, the Board of Directors met 5times. Board Meetings:

Sr Name No. No. of Meetings held No. of Meetings attended
1. Mr. Bharat Patel 5 5
(DIN:00249234)
2. Mr. Jayanti Gaudani (DIN: 03571671) 5 5
3. Mr. Subhash Patle (DIN: 00369492) 5 5
4. Mr. Bhavesh Dholiya (DIN:07641315) 5 5
5. Ms. ArunaKachchhi (DIN:07915688) 5 5

Li addition to the above and as required under Schedule IV to the Companies Act, 2013 l(One) Separate Meeting of Independent Directors was held on Monday, 15th February, 2021.

10. EVALUATION OF BOARD:

Pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR), the Board has carried out the annual performance evaluation of independent directors. A structured questionnaire was prepared after taking inputs received from the Directors, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance for the performance evaluation of Independent directors.The Nomination and Remuneration Committee reviewed the results of the annual performance evaluation of Independent Directors and expressed overall satisfaction on the performance of the Independent Directors, Non-Independent Directors, Chairman and the Board as a whole (including its Committees).

11. DIRECTORS RESPONSIBILITY STATEMENT;

As required under Section 134 (3) (c) of the Companies Act, 2013, your Directors confirm that:

i. In the preparation of the Annual Accounts for the year ended on 31s1 March, 2021, the applicable accounting standards have been followed along with proper explanation relating to material departures.

ii. The Directors have 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 slate of affairs of the company at the end of the financial year on 31st March, 2021and of the Loss of the Company for that period.

iii. The Directors have taken proper and sufficient care for the maintenances of adequate accounting records in accordance with the provision of the Companies Act, 2013 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 have laid down proper internal financial controls to be followed by the company and that such financial controls are adequate and are operating effectively.

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.

12. DECLARATIONS GIVEN BY INDEPENDENT DIRECTORS:

The Company has received declarations from all the Independent Directors that they meet the criteria of Independence as prescribed under the provisions of the Act, read with the Schedule and Rules issued thereunder, and the Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company and they have registered themselves with the Independent Directors Database maintained by the IICA.

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Act and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

13. AUDITORS^

In the 28th Annual General Meeting held on Friday, 28th September, 2018, M/ s B. Chordia & Co., Chartered Accountants, Surat (Firm Registration No. 121083W) were appointed as Statutory Auditors for a period of 5 years i.e. to hold the office from the conclusion of 28th Annual General Meeting till the conclusion of 33rd Annual General Meeting and the same had been approved by the Shareholders at their 28th Annual General Meeting.

14. AUDITORS REPORT:

The observations / qualifications / disclaimers, if any, made by the Statutory Auditors in their report for the financial year ended 31st March 2021 read with the explanatory notes therein are selfexplanatory and therefore, do not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.The Company has also received Consent and Eligibility Certificate from the said Auditors.

15. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

In terms of the information required under Clause (1) of Sub-section (3) of Section 134, it is to be noted that Global pandemic Novel Coronavirus has significantly impacted the? financial position and operating environment for the Company. Currently, Company is facing the heavy brink of the pandemic and trying to come out with the equation under which operations of the Company will be restored.

16. CONSERVATION OF ENERGY & TECHNOLOGY ABSORBTION:

Since the Company is not a manufacturing unit, provisions of Section 134 (3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, regarding conservation of energy, technology absorption, are not applicable to the Company.

17. FOREIGN EXCHANGE EARNINGS AND OUTGO:

During the period under review, there were no Foreign Exchange Earnings and Outgo.

18. WEBSITE LINK OF ANNUAL RETURN:

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013 the Annual Return is available on Companys website on https: / /classicfilamentsltd.com/investor-relation/annual- return/

19. SECRETARIAL AUDIT REPORT:

Pursuant to provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Ms. Cherry Poddar as Secretarial Auditors of the Company for the Financial Year ended 31st March, 2021. The Company has obtained Secretarial Audit Report which is annexed as "Annexure 1" to this Report.

Explanation on Remark Made by Secretarial Auditor in his Report:

The Promoters are in process of de-materialising the shares held by them.

20. ANNUAL SECRETARIAL COMPLIANCE REPORT:

As per BSE Circular LIST/COMP/12/2019-20 issued on 14thMay, 2019, it was clarified that the Regulation 24A of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 is not applicable to those Companies who have claimed exemption under Regulation 15(2) of SEBI (LODR) Regulations, 2015 and are not required to get the Annual Secretarial Compliance Report.

21. COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:

As per the recommendation of the Nomination & Remuneration Committee, the Board has framed a policy for selection and appointment of Directors and Senior Management Personnel including criteria for determining qualifications, positive attributes, independence etc., of a Director. As required by Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the prescribed details w.r.t. Policy of Directors Appointment is annexed as "Annexure - 2"to this report. However, presently, the Company is not paying remuneration or sitting fees (if applicable) to any of the Directors, Key managerial Personnel and Senior Managerial Personnel of the Company except to Mrs. Ankita Shroff, Company Secretary and Compliance Officer of the Company. The Policy w.r.t. the same is available on Companys website i.e.

vvvv w.cliissud Iainentsitd.com

22. INTERNAL AUDITORS:

According to the recommendation of the Audit Committee, the Board had appointed M/s. Ravindra Dhakar & Associates, Chartered Accountants, Surat, (FRN - 114030W) as an Internal Auditors of the Company for the Financial Year2020-21.The Internal Auditors were required to report to the Audit Committee of the Board after conducting comprehensive audit of operations of the Company.

23. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS PURSUANT TO SECTION 143(121 OF THE COMPANIES ACT, 2013:

During the year under review, there were no incidences of fraud reported by Auditors.

24. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL:

No orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Companys operations in future. However the Company had received a Demand Notice on 29-01-2021 from the Asst. Commissioner of State Tax imposing a penalty for wrongful availment of Input Tax Credit ascertained from July, 2017 to March, 2020 and to pay sum of Rs. 20,57,352/-.The Company is defending the matter before the authority.

25. PARTICULARS OF LOAN. GUARANTEES OR INVESTMENT:

The particulars of loans, guarantees and investments as per section 186 of the Act by the Company, have been disclosed in the financial statements.

26. CORPORATE GOVERNANCE RFPORT:

Pursuant to Regulation 15(2) of the SEBI (LODR) Regulations, 2015, the provisions of Regulation 17 to 27 and clauses (b) to (i) of Regulation 46(2) and Para C, D and E of Schedule V,are not applicable to the Company, as the paid up Share Capital of the Company is less than Rs. 10 Crores and Net worth being less than Rs. 25 Crores. Further, the Company is not required to obtain Certificate for Non-disqualification of Directors.

27. CORPORATESOCIAL RESPONSIBILITY:

The Company has not developed and implemented any Corporate Social Responsibility Policy pursuant to the provisions of Section 135 of the Companies Act 2013 and relevant Rules framed thereunder as the said provisions were not applicable to the Company as the Company had incurred losses during the relevant period.

28. PAR nCULARS OF CONTRAC IS OK ARRANGEMENTS VVI1H RELATED PARTIES:

None of the transactions with related parties fall under the scope of section 188 of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 is not applicable to the Company for the FY 2020-21 and hence does not form part of the Report. The policy on Related Party Transactions is available on the Companys website www.classicfilamentsltd.com.

29. INTERNAL FINANCIAL CONTROLS;

The Board hereby reports that the Internal Financial Controls were reviewed by the Audit Committee and there were adequate Internal Financial Controls existed in the Company with respect to the Financial Statements for year ended on 31stMarch, 2021and the Internal Financial Controls are operating effectively.

30. RISK MANAGEMENT POLICY:

Hie 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 and also discussed at the meetings of the Audit Committee and the Board of Directors of the Company.The Companys internal control systems are commensurate with the nature of its business and the size and complexity of its operations. Significant audit observations and follow up actions thereon are reported to the Audit Committee.

31. CAUTIONARY STATEMENT:

Statement in the Boards report describing the Companys objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

32. VIGIL MECHANISMAVHISTLE BLOWER:

The Board of Directors have set up the Whistle Blower Policy i.e. Vigil Mechanism for Directors and Employees of the Company to report concerns about unethical behaviour, actual or suspected fraud, or violations of Companys Code of Conduct or Ethics Policy. It also provides for adequate safeguards against victimization of persons who use this mechanism and direct access to the Chairperson of the Audit Committee in exceptional cases.The detailed Vigil Mechanism Policy is available at Companys website www.classicfilamentsltd.com.

33. PREVENTION OF SI AL AI FIAT ASSYILNI:

The Company has zero tolerance for sexual harassment at 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 framed there under. No complaints were received during the year under the said policy. Further, necessary steps are being taken by the Board for complying with provisions of the said Act including constitution of Internal Complaints Committee as referred in the said Act.

34. MAINTENANCE OF COST RECORDS:

Maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is not required by the Company and accordingly such accounts and records are not required to be made and maintained.

35. SECRETARIAL STANDARD:

The Company has complied with provisions of Secretarial Standard - 1 and Secretarial Standard - 2.

36. DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016:

During the year under review there was no application made or pending proceeding under the Insolvency and Bankruptcy Code, 2016.

37. DETAILS OF THE ANY DIFFERRENCE BETWEEN VALUATION DONE WHILE TAKING ONE TIME SETTLEMENT AND TAKING LOAN FROM TIIE BANKS OR FINANCIAL INSTITUTIQNSTIQN (FI):

During the year under review the company has neithermade any one time settlement norhave taken any loan from the Bank or FI.

38. MANAGEMENT DISCUSSIONS & ANALYSIS REPORT;

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements based on certain assumptions and expectations of future events. The Company, therefore, cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements can thus differ materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

INDUSTRY

Textile Industry in general is passing through a challenging phase due to multiplicity of reasons beyond its control and trying to cope up with challenges under the grave market condition. However, this phase is likely get over in couple of years and Company will again gain its momentum in the time to come. Further, Company is taking the futuristic view of the business and is under constant endeavor to improve the current condition in order to perform better.

BUSINESS OVERVIEW

The turnover during the year 2020-21 has slipped to Rs. 31.67 Lakhs which was significantlylower than the turnover during the previous year 2019-20 which stood at Rs. 140.96 Lakhs. Such a sharp decline change was attributable to inflation, economic conditions and countrywide lockdown from the middle of March, 2020 due global pandemic novel coronavirus. However, the decline is temporary and positive grow is expected in the coming years.

MARKETING

The Company is planning marketing strategy in line with changing situation posed by novel coronavirus to increase the bottom line as well as turnover.

SWOT

Our strength is our determination, weakness is the low equity base, opportunities are multiples and threats are posed by the current and unprecedented economic conditions. Current situation posed by novel corona virus has changed the equations of business conduct and operations. It has become very difficult to operate in the current market which is facing drastic set back. However, we are dedicated towards the Company and presently working on the model suitable to the existing situation.

INTERNAL CONTROL

The Company has an internal control system, commensurate with the size of its operation. Adequate records and documents were maintained as required by laws. The Companys audit Committee reviewed the internal control system. All efforts are being made to make the internal control systems more effective.

SEGMENT WISE REPORTING

During the year under review, the Company has achieved all sales through one segment only and hence segment wise break up is not available.

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RISKS AND CONCERNS

In any business, risks and prospects are inseparable. As a responsible management, the Companys principal endeavor is to maximize returns. The Company continues to take all steps necessary to minimize losses through detailed studies and interaction with experts.

HUMAN RESOURCES & INDUSTRIAL RELATIONS:

The industrial relations continued to be harmonious and cordial providing an atmosphere conducive to sustenance of growth and enhancement of value for shareholders. However, there are no employees in the Company.

CAUTIONARY STATEMENT

Statement in this Managements Discussion and Analysis detailing the Companys objectives, projections, estimates, expectations or predictions are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, finished goods prices, stock availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigations and labour negotiations.

39. ACKNOWLEDGEMENT:

The Board expresses its sincere thanks to all the employees, customers, suppliers, investors, lenders, regulatory and government authorities for their co-operation and support and look forward to their continued support in tuture.

By order of Board of Directors
For CLASSIC FILAMENTS LIMITED
JAYANTI GAUDANI BIIARAT PATEL
MANAGING DIRECTOR DIRECTOR & CFO
DIN: 03571671 DIN: 00249234
Date: 06.08.2021 Place: Surat