Damodar Industries Ltd Directors Report.

To the Members,

The Board of Directors (Board) are pleased to submit its report on the performance of the Company, along with the audited standalone financial statements for the year ended 31st March, 2020.

FINANCIAL RESULTS

Particulars 2019-20 2018-19
Revenue 76792.21 77137.83
Other income 269.67 234.11
Total Income 77061.88 77371.94
Expenses
Operating expenditure 72494.69 73506.50
Depreciation 2303.83 1240.62
Total expenses 74798.52 74747.12
Profit before finance cost and tax 2263.36 2624.82
Finance costs 3379.85 1392.48
Profit before Tax (1116.49) 1232.34
Less: Provision for Taxation
Current Tax 0.00 265.55
Deferred Tax 422.49 395.79
MAT credit entitlement 0.00 (265.55)
Profit after Tax (694.00) 836.55
Add/(Less): Other Comprehensive Income (net of taxes) (618.53) 25.51
Total Comprehensive Income/(Expenses) for the year (1312.53) 862.06
Opening balance of retained earnings 5997.13 5775.39
Profit for the year (694.00) 836.55
Less: Transfer to Reserves 200.00 200.00
Less: Dividend paid on Equity Shares 166.89 333.77
Less: Dividend Distribution Tax 34.30 68.61
Less : Remeasurement of Defined benefit plan 10.59 12.43
Balance carried forward 4891.35 5997.13
Earnings per share (EPS) -Basic/Diluted (in Rs ) (2.98) 3.76

DIVIDEND

During the years, your Directors have not recommended the payment of any dividend, because the Company has not earned any profit.

INDUSTRY SCENARIO

We would like to inform you that Company operates in a single segment i.e. “TEXTILE” as such disclosure requirements as per Indian Accounting Standard (Ind AS) 108 issued by the Institute of Chartered Accountants of India, New Delhi, are applicable. We would also like to inform you that the year gone by, has been a very difficult period for Textile Industry. The increase in the prices of raw cotton without the corresponding increase in the yarn prices coupled with decline in demand for cotton yarn affected the financial performance of the Company. The exchange rate fluctuations and reduction in export incentives further aggravated the problems and affected companys performance during the year. Inspite of the challenges, Company has been able to maintain its Topline at 767.92 crores as against Rs 771.38 Crores in the previous year. However, the export at Rs 443.28 Crores has shown a decline of 10.1% as compared to previous year. The profitability of the Company was severely impacted because of the reasons mentioned above and it suffered a loss of Rs 6.94 crores during the year under review.

In the current year, the outlook for the Textile Industry seems to be Positive but Covid- 19 plays a very crucial role this year, may impact the performance of sector. Your Management expects that company will be able to put up a reasonably good performance in the Current Year.

TRANSFER TO RESERVES

The Company proposes to transfer Rs 2.00 Crores to the General Reserve out of the amount available for appropriations and an amount of Rs 48.91 Crores is proposed to be retained in the Profit and Loss Account.

RESERVE AND SURPLUS

Reserves and Surplus stood at to Rs 98.13 Crores as at March 31, 2020 compared to Rs 110.10 Crores as at March 31, 2019.

SHARE CAPITAL DURING THE YEAR 2019-20

During the year under review, the paid up share capital has increased from Rs 11,12,58,120 to Rs 11,65,00,000 in the following manner:

Date of Allotment No. of shares allotted Mode Paid Up share capital (In Rs )
March 26,2020 10,48,376 Preferential Issue 11,65,00,000

The Company has raised funds through preferential allotment and fully utilized till March 31, 2020.

BOARD MEETINGS

The Board of Directors duly met 6 times during the financial year from April 1, 2019 to March 31, 2020. The dates on which the meetings were held are as follows: May 25, 2019, August 13, 2019, November 13, 2019, February 07, 2020, February 14, 2020 and March 26,2020.

POLICY ON DIRECTORS Rs APPOINTMENT AND REMUNERATION

The current policy is to have an appropriate mix of executive and independent directors. On March 31, 2020 the Board consists of five members, three of whom are executive directors or whole Time Director and Two are independent directors.

The policy of the Company on directors Rs appointment and remuneration including criteria for determining qualification, positive attributes independence of director and other matters as required under sub- section (3) of Section 178 of the Companies Act,2013 is available on our website www.damodargroup.com. There has been no change in the policy since the last fiscal year. We affirm that remuneration paid to directors is as per the terms laid out in the nomination and remuneration policy of the company.

As per SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, the listed Companies are required to formulate certain policies. As a good corporate entity, the Company has already formulated several corporate governance policies and the same are available on the Companys website i.e. www.damodargroup.com. The said policies are reviewed periodically by the Board to make them in compliance with the new Regulations/ requirements.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Directors Retiring by Rotation

Pursuant to Section 152 and other applicable provisions of the Act, and the Articles of Association of your Company, one-third of the Directors (other than Independent Directors) as are liable to retire by rotation, shall retire every year and, if eligible, offer themselves for re-appointment at every AGM. Consequently, Mr. Ajay D. Biyani (DIN: 00014896), retires by rotation and being eligible, offers himself for re-appointment in accordance with provisions of the Act.

Appointments

Mr. Ketan K. Patel, was appointed as an Independent Director, with effective from November 13, 2019 and the same was approved by shareholders (vide postal ballot concluded on March 17,2020).

Mrs. Farida Jambusharwalla, was reappointed as an Independent Director, with effective from March 30, 2020 to March 29,2025, subject to approval by shareholders in the ensuing Annual General Meeting.

The Board of Directors has appointed Mr. Pankaj Srivastava as an Additional Independent Director of the Company w.e.f. May 11, 2020 and holds office up to this Annual General Meeting and shall be eligible for appointment as Independent Director in terms of Section 149 and 152 of the Act at Annual General Meeting, subject to the provisions of the Act, your Company has received a notice in writing from a member proposing his candidature for the office of Independent Directors along with the requisite deposit. He qualifies to be an Independent Director pursuant to the provisions of Section 149(6) of the Companies Act, 2013.

Resignation

Mr. Girdharlal S. Daga an Independent Director of the Company, resigned as member of the Board effective November 12,2019 due to health issue as an Independent director of the Company and Mr. Raghavan Srinivas an Independent Director, resigned as member of the Board effective February 12,2020 to expire of current term of as an Independent director of the Company.

INDEPENDENT DIRECTORS

In terms of Section 149 of the Act, and Regulation 16(1) of the Listing Regulations Mr. Ketan Patel and Mrs. Farida Bomi Jambusarwalla are the Independent Directors of the Company as on March 31, 2020. The Independent Directors have submitted a declaration that each of them meet the criteria for independence as laid down under Section 149(6) of the Act read with Rules framed thereunder and Regulation 16 of the Listing Regulations and that they are not aware of any circumstance or situation, which exists or is anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence as required under Regulation 25 of Listing Regulations.

KEY MANAGERIAL PERSONNEL (KMP)

Pursuant to the provisions of Section 203 of the Act, the KMP Rs s of your Company for Financial Year 2019-20 were Mr. Ajay Biyani, Managing Director, Mr. R. Kumar, Chief Financial Officer and Mr. Subodh Kumar Soni, Company Secretary of the Company as on March 31,2020.

Mr. R. Kumar, Chief Financial Officer of the Company, resigned with effect from May 8,2020, due to health issue. Mr. Sheetal Prasad Singhal has been appointed as Chief Financial Officer of the Company with effect from July 31,2020.

BOARD EVALUATION

The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act. The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc. The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings.

CODE OF CONDUCT FOR THE PREVENTION OF INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with the requirement of the SEBI (Prohibition of Insider Trading) Regulations, 2015 and the Insider Trading Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for prevention of insider trading is available on our website www.damodargroup.com. All Directors and Senior Management Personnel have affirmed compliance with the Code. A declaration to this effect signed by the Managing and Chief Financial Officer of the Company appears elsewhere in this Annual Report.

CHANGE IN NATURE OF BUSINESS, IF ANY

During the year, there was no change in the nature of business of the Company.

SHIFTING OF REGISTERED OFFICE OF THE COMPANY

The Resolution has been passed by postal Ballot concluded on March 17,2020 by the shareholders for the shifting of the Registered Office of the Company from Mumbai to other state UT. The Company has initiated the process for the same.

CREDIT RATING

We are pleased to inform that the CARE Ratings Limited has re-affirmed the credit rating “BBB-/Stable” for long term debt instruments/ facilities, “A3” for the short term debt instruments/ facilities. The rating “BBB-” indicates stable and rating “A3” indicates “The rating of the Company is tempered by high gearing levels, decline in profitability in H1FY20 with losses at PAT level, project stabilization risk, susceptibility of margins to raw material price volatility and foreign exchange fluctuation, geographical concentration risk in case of exports and fragmented and cyclical nature of industry. Further the CARE Ratings Limited has re-affirmed the credit rating “BBB-/Stable” for Fixed Deposits.

DIRECTOR Rs S RESPONSIBILITY STATEMENT

In terms of Section 134(3) of the Companies Act, 2013, the Directors would like to state:

(a) that in the preparation of the annual financial statements for the year ended March 31, 2020, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made 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, 2019 and of the profit of the Company for the year ended on that date;

(c) that proper and sufficient care has been taken 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) that the annual financial statements have been prepared on a going concern basis;

(e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

(f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

DETAIL OF FRAUD AS PER AUDITORS REPORT

During the year under review, neither the statutory auditors nor the secretarial auditors has reported to the audit committee, under section 143 (2) of the Companies Act,2013, any instance of fraud committed against the Company by its officers or employee, the details of which would need to be mentioned in the Board Report.

COMMITTEE OF THE BOARD

The composition and terms of reference of the Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and CSR Committee have been furnished in the Corporate Governance Report forming part of this Annual Report. There has been no instance where the Board has not accepted the recommendations of the Audit Committee and Nomination and Remuneration Committee.

STATUTORY AUDITORS AND AUDITOR Rs S REPORT

M/s. Jitendra Mishra & Company, Chartered Accountants (FRN No. 125334W), have been appointed as the Statutory Auditors of the Company for an initial term of five years from the conclusion of the 27th Annual General Meeting till the conclusion of the 32nd Annual General Meeting of the Company.

The Report of the Statutory Auditors along with the Notes to Schedules forms part of the Annual Report and contains an Unmodified Opinion without any qualification, reservation, disclaimer or adverse remark.

The Statutory Auditors of the Company have not reported any fraud as specified in Section 143(12) of the Act.

M/s.Swati Kanse & Co., Chartered Accountants (FRN No. 132689W), have been appointed as the Statutory Auditors of the Company for an initial term of five years from the conclusion of the 32th Annual General Meeting till the conclusion of the 37nd Annual General Meeting of the Company subject to approval of Shareholder in ensuing Annual General Meeting of the Company.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Company had appointed M/s. Pramod Jain and Co., Company Secretaries in Practice, to undertake the secretarial audit of the Company for the year 2019-20. The Secretarial Audit Report is annexed as Annexure I.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD MEETINGS AND GENERAL MEETINGS

During Financial Year 2019-20, the Company has complied with the relevant provisions of Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.

COST AUDIT

The Board, on the recommendation of the Audit Committee, had appointed M/s. Dilip M. Bathija, Cost Accountants (FRN No.100106) as cost auditor to conduct the audit of Companys cost records for the financial year ended March 31, 2019. The Cost Auditors will submit their report for the FY 20 on or before the due date.

The Cost Audit Report, for the year ended March 31, 2019, was filed with the Central Government within the prescribed time.

In accordance with the provisions of section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, since the remuneration payable to the Cost Auditors for FY 21 is required to be ratified by the shareholders, the Board recommends the same for approval by shareholders at the ensuing AGM.

INTERNAL AUDITOR

As per requirements of Section 138(1) of the Companies Act, 2013 read with rule 13 of the Companies (Accounts) Rules, 2014, the Board of Directors of the Company had appointed Mr. Vikas kakani, Chartered Accountants, Employee of the Company as Internal Auditor of the Company to conduct Internal Audit of business processes, financial reporting controls, compliance with applicable laws, regulations etc. for the year 2019-20.

FIXED DEPOSITS:

Details relating to Fixed Deposits, covered under Chapter V of the Companies Act,2013, as under:

a. Accepted and renewed during the year : Rs 19,59,22,000/-
b. Remained unpaid or unclaimed as at the end of the year : 0.00
c. Whether there has been any default in repayment of deposits or payment of interest thereon during the year : Nil

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013, relevant amounts which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from to time to time on due dates, to the Investor Education and Protection Fund.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on August 13, 2019 (date of last Annual General Meeting) on the Companys website (www.damodargroup.com), as also on the Ministry of Corporate Affairs Rs website.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

CORPORATE GOVERNANCE

A separate section on Corporate Governance forms part of our Report. A certificate has been received from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Both appear elsewhere in the Annual Report.

RISK MANAGEMENT

The Company has laid down Risk Management Policy. The Policy aims to identify, evaluate, manage and monitor all types of risks associated with the business of the Company. The Board as well as Audit Committee regularly overseas the risk management process in the Company, as required under 134(3)(n) of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. Your Company is operating in Textile segment and has identified certain risks which may affect the performance of the Company. These are operational risks such as fluctuation in cotton prices, fluctuation in foreign exchange rates, Labour problems and regulatory risks such as change in Government Policy with respect to Textile Industry etc. The Companys Risk Management Policy aims to suggest the steps to be taken to control and mitigate the risk associated with the Companys Textile Business. We are of opinion that none of identified risk is such that which may threaten the existence of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS:

As required under Regulation 34(2) (e) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,2015 the Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.

VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES

The Company has established a vigil mechanism for directors and employees to report genuine concerns. The vigil mechanism provides for adequate safeguards against victimization of person who use vigil mechanism and also provide direct access to Chairman of the Audit Committee and Managing Director of the Company in appropriate and exceptional cases.

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www. damodargroup.com

SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

As required under the above mentioned Act, we report that in the year 2019-20 no case of sexual harassment of women was filed under the said Act.

MATERIAL CHANGES FROM END OF FINANCIAL YEAR TILL DATE OF REPORT

There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report other than those disclosed in the financial statements.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

During the year under review, no significant material orders were passed by the Regulators or Courts or Tribunals impacting the going concern status and your Companys operations. However, Members attention is drawn to the Statement on Contingent Liabilities and Commitments in the Notes forming part of the Financial Statement.

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

The information required under section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules,2014, is given in the Annexure-II to this report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form No. MGT-9 as per Sections 92(3) and 134(3) of the Act read with the Rules framed thereunder are given as Annexure-III, which forms part of this Report. The Annual Return for Financial Year 2018-19 is also available on the Companys website at www.damodargroup.com.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure- IV of this Report in the format prescribed under the Companies (Corporate Social Responsibility Policy)Rules, 2014. The CSR policy is also available on the website of your Company at http://damodargroup.com/investors/policies/ CSR Policy Final.pdf. For other details regarding the CSR Committee please refer to the Corporate Governance Report, which is a part of the Annual Report.

The Companys spend on the CSR activities has been less than the limits prescribed under the Companies Act 2013. This is because the company did not find any further suitable projects or programs during the year to spend, for achieving the prescribed limit as per the Companies Act,2013. However the CSR activities are scalable which coupled with new initiatives that may be considered in future, moving forward the Company will endeavor to spend on CSR activities in accordance with the prescribed limits.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The prescribed particulars of Employee required under section 197 read with Rule 5 of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure-V as form the part of Boards Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act and as advised, the Annual Report excluding the aforesaid information is being sent to the Members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any Member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.

PARTICULAR OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

There were no Related Party Transactions (RPTs) entered into by the company during the financial year, which attracted the provisions of Section 188 of Companies Act, 2013. However, there were material RPTs, which got covered as material RPTs under Regulation 23 of SEBI LODR 2015. During the year 2019-20, pursuant to Section 177 of the Companies Act, 2013 and Regulation 23 of SEBI LODR 2015, all RPTs were placed before Audit Committee for its prior / omnibus approval and taken prior approval from shareholders. The requisite disclosure in Form AOC-2 is furnished in Annexure-VI.

POLICY ON REMUNERATION OF DIRECTORS

Your Company has adopted a Remuneration Policy for the Directors, KMP, Senior Management and other employees, pursuant to the provisions of the Act and the Listing Regulations. The key principles governing your Companys Remuneration Policy and connected matter as provided in section 178(3) of the Act has been disclosed in the Corporate Governance Report which forms part of this Report. It is affirmed that the remuneration paid to Directors, KMP and all other employees is as per the Remuneration Policy of your Company. The Remuneration Policy for Directors, KMP and other Employees is uploaded on the website of your Company at http://damodargroup.com/ investors/policies/remuneration_policy.pdf.

FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTOR(S):

In compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has put in place a familiarization program for the Independent Directors to familiarize them with their role, rights and Responsibilities as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The details of the familiarization program are explained in the Corporate Governance Report and are also available on the Companys website at www. damdoargroup.com.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

According to Section 134(5)(e) of the Act, the term Internal Financial Control ( Rs IFC Rs ) means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

The Companys internal control systems are commensurate with its size and the nature of its operations. The Company has a strong and independent Internal Audit department. The Audit Committee also deliberates with the members of the management, considers the systems as laid down and meets the internal auditors and statutory auditors to ascertain their views on the internal financial control systems. Further details are provided in the Management Discussion and Analysis Report which forms a part of the Annual Report.

GENERAL DISCLOSURES

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

(A) Issue of share with differential rights

The Company has not issued any shares with differential rights and hence no disclosure is required as per provisions of Section 43(a) (ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014.

(B) Issue of Sweat Equity Shares

The Company has not issued any sweat equity shares during the year under review and hence no disclosure is required as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014.

(C) Issue of Equity Shares Under Employee Stock Option Scheme

The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no disclosure is required as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014.

ACKNOWLEDGMENTS

Your Directors wish to express their appreciation for the assistance and co-operation received from the Members, Banks, Government Authorities, Customers, Suppliers, Associates, Employees and Various Authorities. The directors of the Company thank all stakeholders for their valuable sustained support and encouragement towards the conduct of the proficient operation of the Company and look forward to their continued support during the year.